CFPB Reviews Reverse Mortgage Disclosures; Attorneys Cite Costs

The Consumer Financial Protection Bureau (CFPB) initiated a review of reverse mortgage disclosure requirements in July, seeking public input on potential revisions to reduce compliance burdens and enhance credit access. This initiative aligns with President Donald Trump's Executive Order 14393, which mandates federal agencies to assess regulations that might escalate lending costs or limit credit availability. The inclusion of reverse mortgages in this review surprised some legal professionals.

Kris Kully, a partner at Mayer Brown, expressed surprise at the inclusion of reverse mortgage topics but acknowledged the CFPB's effort to gather intelligence before implementing changes, noting that all regulatory adjustments carry potential burdens and unintended consequences. Current regulations mandate that consumers applying for or obtaining a reverse mortgage receive multiple, overlapping disclosure documents, including Truth in Lending disclosures, Good Faith Estimates, and HUD-1 settlement statements. Notably, reverse mortgages are excluded from the TRID Rule, which consolidated disclosures for forward mortgages into a single document.

The CFPB is considering the development of a unified disclosure form specifically for reverse mortgages, mirroring the approach taken by the TRID Rule for forward mortgages. Colgate Selden, a founding member of the CFPB, indicated that the bureau lacked sufficient time to address the distinct characteristics of reverse mortgages during the initial TRID rule development. The bureau's request for information aims to address these complexities and potentially streamline the disclosure process for reverse mortgage borrowers.