Reverse Mortgages - OCC Controller Dugan Wants Protections

Comptroller of the Currency John C. Dugan, while acknowledging the benefit of reverse mortgages for some consumers, would like to see regulators step up their efforts towards ensuring that these type of loans, which have some of the same characteristics of subprime lending, are done in such a way that is prudent for both borrower and lender.

He expressed several concerns:

1. Aggressive cross selling of other products, sometimes as a condition of getting a loan.
2. Targeting the elderly, a group perceived to be more vulnerable.
3. Complexity of this loan type.
4. Substantial fees.
5. Inappropriateness of this loan type for some consumers.
6. Lack of escrows for insurance and taxes raises the risk of foreclosure.

“We need to be on constant alert to emerging risks and vigilant in our regulatory compliance responsibilities,” he said.