House Offer for Financial Reform Bill Includes Reverse Mortgage Provision

When members of the Senate and House Conference Committee meet on Tuesday to discuss the Wall Street reform bill, reverse mortgages will be a topic of discussion.

According to the House offer published by US Representative Barney Frank, chairman of the House Financial Services Committee, it has accepted the Senate’s proposal to house a new consumer protection bureau at the Federal Reserve as part of a package of changes to be debated according to Steve Adamske, spokesman for the Massachusetts Democrat.

Under the Senate plan, the Bureau would have independent authority to write and enforce rules about consumer lending in mortgages, credit cards and other financial products while being housed at the Fed.

The offer from the House adds a provision directing the Bureau to issue regulations on reverse mortgages.  The proposal requires the Bureau to conduct a study on reverse mortgages within one year to determine whether conditions or limitations on the transactions are necessary.  This includes whether it’s necessary or appropriate to protect borrowers who obtain a reverse mortgage for the purpose of funding investments, annuities, and other investment products.

The Bureau may also provide integrated model disclosures for reverse mortgages, consistent with requirements under the Truth in Lending Act and Real Estate Settlement Procedures Act according to documents published on Monday.

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