The Consumer Financial Protection Bureau, on January 10, published revised examination guidelines for Mortgage Originators and Servicers. These examination guidelines, which can be downloaded by clicking here, provide an excellent "road map" and resource for mortgage companies to use in designing, reviewing, updating and maintaining their compliance, quality control, and internal audit programs, as well as their overall operational policies and procedures impacted by CFPB regulations.
In 2012, the CFPB originally published Examination Guidelines for its examination staff to utilize in the review, audit and examination of mortgage companies subject to its authority and jurisdiction. NRMLA reported on that effort in a prior Alert, which can be found here.
Since the original publication of the Examination Guidelines, the CFPB has continually updated and expanded upon its Examination Guidelines.
The Mortgage Origination Examination Guidelines was updated primarily to take into account the CFPB regulations going into effect in early January 2014, with a particular focus on the new Ability to Repay and Qualified Mortgage Rules, which Rules do not apply to reverse mortgages.
The revised Mortgage Origination Examination Guidelines carry forward prior exam guidelines on reverse mortgages, including direction to CFPB audit staff to perform the following reviews in their examination of a mortgage company that offers reverse mortgages and is subject to the CFPB’s jurisdiction and authority:
- Determine whether the entity offers or receives compensation from those offering other financial products, like an annuity or long-term care insurance, to be paid for with the proceeds of the reverse mortgage. If so, determine whether the entity provides timely, clear, and understandable information about these products.
- Determine whether the entity provides timely, clear, and understandable information about the costs and relative risks of reverse mortgages.
- Determine whether the entity provides timely, clear, and understandable information about the requirements to pay property taxes, insurance, utilities, maintenance, and other expenses after obtaining a reverse mortgage.
- Determine whether the entity provides timely, clear, and understandable information about the circumstances under which the borrower may be required to pay the loan in full.
- Determine whether the entity has adequate safeguards against improper marketing of reverse mortgages to seniors who have medical or cognitive problems or in situations raising concerns about undue influence by third parties.
The Mortgage Origination Examination Guidelines also make reference to separate TILA Examination Guidelines for the review of Reverse Mortgage Forms Review Procedures (both open- and closed-end), such as the TALC and other more general TILA disclosures. The TILA Examination Guidelines may also be found here.
Despite finalizing many rules, including the recently published and finalized Integrated Disclosures Rules, which combine RESPA and TILA application and closing disclosures but which will not go into effect until August 1, 2015, and which do not apply to reverse mortgages, the CFPB has not yet proposed any specific new or revised reverse mortgage regulations, nor has it to date indicated that it any plans to do so in 2014.