Key facts
- The CFPB is reviewing reverse mortgage disclosure requirements.
- The review aligns with President Donald Trump's executive order to reduce lending costs.
- Current disclosures for reverse mortgages are spread across multiple documents.
- The CFPB is exploring a unified disclosure form similar to TRID for forward mortgages.
- Regulators are examining the assumptions used in the Total Annual Loan Cost table.
- Attorneys expressed concern about the potential costs of overhauling disclosure rules.
The Consumer Financial Protection Bureau (CFPB) has initiated a review of disclosure requirements for reverse mortgages, a move that surprised some legal professionals but is seen as overdue by others. This review aligns with President Donald Trump's executive order aimed at reducing regulatory burdens and improving credit access.
Currently, reverse mortgage disclosures are fragmented across several documents, unlike the streamlined TRID Rule applied to forward mortgages. Attorneys like Kris Kully of Mayer Brown appreciate the CFPB's intelligence-gathering approach but acknowledge that any regulatory changes will incur costs and potentially have unintended consequences.
Colgate Selden, a founding member of the CFPB, suggested that a comprehensive, reverse-mortgage-specific disclosure regime is necessary for consumers to fully understand these complex products. He noted that the CFPB may have lacked the time to address these unique features during the original TRID rulemaking.
Beyond the structure, the CFPB is also scrutinizing the Total Annual Loan Cost (TALC) table, questioning whether its current assumptions for housing appreciation (0%, 4%, and 8%) accurately reflect market conditions. Alternatives, such as presenting cost growth in dollar amounts rather than annualized rates, are being considered to aid elderly borrowers in comprehension.
Senior counsels Richard J. Andreano and John L. Culhane of Ballard Spahr echoed the sentiment that reverse mortgage disclosures need streamlining. However, they cautioned that the industry's experience with the TRID rule implementation, which involved substantial costs, should temper expectations regarding the speed and expense of any new overhaul.