Sept/Oct 2021 Reverse Mortgage Magazine

Urban Development (HUD) or the Consumer Financial Protection Bureau (CFPB). “But the state regulators wield a significant amount of authority, and different states take slightly different approaches to the way reverse mortgage loans can be offered and administered,” says Wright, whose law firm has about 120 attorneys in its financial services group. Speaking generally, Wright notes that regula- tors focus on consumer protections and that COVID-19 will ramp up those efforts this year and beyond. For example, the regulators will focus on how well companies and servicers put into operation the various state and federal programs that gave assistance to homeowners during the pandemic. “For two or three years, they are going to be looking back to see how well everybody responded to COVID,” Wright says. Some Tips During a presentation at NRMLA’s Virtual Policy Conference in April, Cross offers various tips about how companies can best handle their duties, while outlining some of the efforts being made to streamline the work of regulators. He notes that much of his agency’s work focuses on the forward side of the mortgage industry, because that is where the bulk of mortgages originate. In reviewing data before his presentation, Cross says, the state system has not reported a lot of issues on the reverse side. “The good news is that there appears to be less of a need for examination of reverse mortgage lenders,” Cross says. “If there were problems, I can guarantee you that the states would be on top of examining this part of the industry and they would be aggressive about it. So, to me, simply the lack of numbers indicates that the industry is performing fairly well and there probably are not as many consumer complaints as you might find in the forward part of the market.” Irwin says he found that news encouraging. “State examiners found very few violations among companies that offer reverse mortgages,” he says. When there are issues, Cross points out, they tend to be recurring problems: • Failures to provide adverse action letters and timing of denials. “These things did pop up and those often are easy things to fix—giving out what you are supposed to give out and giving it out on time,” Cross says. • Inappropriate fee charges. This often involves compa- nies charging fees for appraisals before they should. • Application date issues and blanks on signed documents. “This is a little more concerning,” Cross says. While these oversights might seem efficient, they are sure to capture the attention of a regulator. “It’s not a good practice. Simply just don’t do it, if you are doing it. That is some- thing that is always going to be cited by state examiners.” • Problems with records retention. This might include not producing records when asked, not producing them in a timely manner or missing some records. Often, the issues are a mix, he says. • Truth in Lending violations. The so-called Reg Z regulations are difficult, so they lead to frequent mis- takes and regulators usually find something during an exam, he says. • Failure to provide the HECMhandbook to consumers. This is easy to fix, partly because they are free from the federal government, Cross also says. • Filing issues with Mortgage Call Reports. Irwin notes that the call reports, which include financial condition numbers and loan volumes, are critical. “Our members should pay particular attention to their call reports to ensure thoroughness and accuracy,” he says. Problems with quarterly Mortgage Call Reports are serious, Cross says. “Mortgage Call Reports are incredibly important,” he says, noting that an officer at a company must attest that the information is accurate, so the reports shouldn’t be taken lightly. “However, they are very frequently incorrect.” “We have found really bad reporting over the years. This information is not only vital to us, it is vital to you,” he says. “It is how we determine how your company will be examined, how many examiners will show up and what issues we will look at.” Mistakes create red flags that lead to more questions, and failure to correct bad reports can lead to enforcement actions, Cross notes. State Regulators continued on page 24 Jay Wright REVERSE MORTGAGE / SEPTEMBER-OCTOBER 2021 23