Written By JiJi Bahhur, Regulatory Compliance Counsel
Flood Insurance. On Friday, Congress approved an omnibus agreement that, among other things, provides a five-year reauthorization for the National Flood Insurance Program (NFIP). The law includes a NAFCU-backed clarification on lenders’ force-placement of flood insurance when coverage lapses. President Obama is expected to sign this into law soon as this issue goes to press. For the latest, check out NAFCU Today.
The CFPB’s Reverse Mortgages Report. Last Thursday, the Consumer Financial Protection Bureau (CFPB) sent a very lengthy report to Congress addressing reverse mortgages. While compiling the information for the report, the CFPB found that reverse mortgages are complex and difficult for consumers to understand, and increasingly, have resulted in unintended use.
Since Dodd-Frank gives the CFPB the authority to implement rules on reverse mortgage transactions, the CFPB is seeking information so that it can consider future rulemakings on the topic. From the report to Congress, the CFPB found four areas where additional research would help determine if additional consumer education or regulatory action is needed. Those four areas include:
- Factors that influence reverse mortgage consumers’ decision-making;
- Consumers’ use of reverse mortgage loan proceeds;
- Longer-term consumer outcomes of a decision to obtain a reverse mortgage; and
- Differences in market dynamics and business practices among broker, correspondent, and retail channels.
Although there are not many credit unions that offer reverse mortgages, this is something to keep an eye on. The request for information is published in the Federal Register with a 60-day comment period. Also, the CFPB published a four-page consumer guide to reverse mortgages.
NCUA Letter 12-CU-07. Last Thursday, the National Credit Union Administration (NCUA) released a letter to credit unions addressing interagency guidance designed to protect military homeowners changing duty stations. The NCUA Letter to Credit Unions on Mortgage Servicing Practices Impacting Military Homeowners (Letter No: 12-CU-07) details the steps that credit unions servicing mortgage loans to military families should take to implement the Interagency Guidance on Mortgage Servicing Practices Concerning Military Homeowners with Permanent Change of Station Orders, which we blogged on last week. The guidance addresses unfair, deceptive, or abusive practices in relation to homeowners serving in the military and who have received Permanent Change of Station (PCS) orders.
Hearing on Financial Services and Consumer Credit. Last Friday, FinCEN’s Director, James H. Freis, and CFPB’s Assistant Director of Card and Payment Markets, Marla Blow, testified before the Financial Services Subcommittee, on mobile payments. The gist of the testimony was that existing regulations would need to be examined to determine if there are barriers that need to be addressed, and if so, how to update the regulations to address potential concerns.