The Federal Trade Commission has filed comments in support of the Federal Financial Institutions Examination Council’s (FFIEC) proposed guidelines designed to protect consumers from deceptive claims and to help them make better-informed decisions about whether to obtain a reverse mortgage.

“FTC staff believes that the Proposed Guidance addresses important issues related to reverse mortgages and does so at a critical juncture,” said the agency in its comments. “Reverse mortgage products have become more prevalent in recent years, and during an economic downturn even more elderly consumers may seek to use such products to obtain funds they sorely need.”

At the end of 2009, the FFIEC issued proposed guidance for its members on how to deal with reverse mortgages. FFIEC members include the federal banking agencies – Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration – and the State Liaison Committee, which includes representatives from the Conference of State Bank Supervisors, American Council of State Savings Supervisors, and National Association of State Credit Union Supervisors.

According to the FTC, it specifically supports the FFIEC’s efforts to advise lenders of the importance of not making deceptive claims for reverse mortgages and to provide them with concrete guidance as to the circumstances under which claims may be deceptive in violation of Section 5 of the FTC Act. The comments also encourage reverse mortgage lenders and brokers under the FTC’s jurisdiction to review and consider the proposed guidance’s advice and examples relating to deceptive claims. The comments further note the value of testing disclosures and other measures in certain circumstances to confirm that they are clear and useful and do not create unintended consequences.

Included in the comments were details about the FTC’s activities related to reverse mortgages. According to the FTC, it has an active law enforcement program to assess and respond to problematic conduct in the reverse mortgage market. In addition to regularly monitoring complaints relating to reverse mortgages in its Consumer Sentinel database, FTC staff organized the Federal-State Reverse Mortgage Law Enforcement Working Group in the fall of 2008.

The purpose of the Working Group is to bring together federal and state law enforcement agencies to discuss issues and developments related to reverse mortgages. In addition, it’s intended to enhance coordination and cooperation among enforcement officials to enable them to respond quickly and effectively to unlawful activity related to reverse mortgages. The group has met and continues to meet on a regular basis said the FTC.

You can read the comments from the FTC here.

Pentagon Federal Credit Union (PenFed) and Sun West Mortgage Company (SWMC) announced a joint initiative that allows PenFed to offer reverse mortgage services to its members.

PednFed will initially market the Federal Housing Administration’s reverse mortgage program to its members in Washington, D.C., Maryland, and Virginia, with plans to roll it out nationwide after the pilot is complete.

The credit union will offer its members a HECM without an origination fee and the typical monthly servicing fee to make additional home equity available to the homeowner said a statement. “We have eliminated both of these fees because PenFed is committed to providing the best value to our members,” says Shashi Vohra, vice president of business development for PenFed. “PenFed’s HECM comes with no origination fee, no servicing fee, and a lower rate than is offered by most other financial institutions.”

As part of the initiative, SWMC will provide systems to originate and service the loans said Pavan Agarwal, executive vice president of Sun West. “We work with numerous providers of the HECM product, and we believe PenFed’s approach is a revolutionary, first-in-the-nation development. The bottom line is that seniors can now access their home equity at a much lower cost.”

“The reverse mortgage could be an excellent way for many seniors to supplement their income. We have removed the majority of the upfront fees, and we offer a very competitive interest rate on the existing HECM reverse mortgage product. Overall, we believe this is an excellent opportunity for our members,” stated Mr. Vohra.

PenFed will be able to offer the product to more than 950,000 of its members who have assets in excess of $14.5 billion. The credit union provides worldwide service to Army, Air Force, Coast Guard, Department of Defense, and Department of Homeland Security personnel; members of the VFW; employees or volunteers of the American Red Cross; and others in the military and their families.

Reverse Mortgage Daily and Sam Collins are presenting another free training session on April 6, 2010 at 2:00 PM where Sam will provide tips for managing your leads.

The “Filling the Funnel . . . Your Building Blocks to Success 
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• How to sort out the leads that flow into your funnel 


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Date: Tuesday, April 6, 2010
Time: 2:00 PM – 3:00 PM EDT

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Technorati Tags: Reverse Mortgage,News,HECM,FHA,HUD,Training,Marketing

Included in the bill introduced earlier this week by Senator Chris Dodd is a provision to create a new grant program to assist states in their efforts to protect seniors from misleading financial advisor designations.

Senators Herb Kohl (D-WI), Bob Casey (D-PA), Claire McCaskill (D-MO), and Al Franken (D-MN), all members of the the Senate Special Committee on Aging, hailed the provision to protect older Americans from fraud at the hands of unscrupulous financial advisors.

“Many of the professions in which consumers place their greatest trust, such as lawyers, doctors, and CPAs, cannot offer their professional services without certain standardized credentials. Seniors should not have to worry that the title after their financial advisor’s name is scarcely more than a marketing ploy, and that it was not earned through sufficiently rigorous financial education or training,” said Senator Kohl, chairman of the Special Committee on Aging.

“Currently, there is no nationwide standard governing the fiduciary responsibilities of financial planners. I will continue to work with Chairman Dodd in the coming weeks to enhance consumer protection and increase the accountability and oversight of this profession as part of regulatory reform.”

Senator McCaskill, who has taken an aggressive stance on her concern over abuses in the reverse mortgage business said, “Seniors have worked too hard for too long to become victim to scams that can leave their finances in ruin. I was glad to see that the financial reform legislation introduced today included language to help protect seniors.”

“Fraud costs our seniors over $2 billion a year. This bill will go a long way toward ending that now. It’s time we protect seniors from misleading and fraudulent marketing practices by making it harder for salespeople to overstate their certification or professional expertise. It’s time we make defrauding seniors like this a crime,” said Senator Franken.

In September 2007, the Special Committee on Aging held a hearing to examine some of the questionable practices used by so-called senior financial investment specialists in order to gain access to the retirement savings of older Americans. The Committee’s investigation revealed that many of these designations represent limited or no value with respect to advising seniors on financial matters, and that often these designations are obtained simply by attending a weekend seminar and passing an open-book, multiple-choice test. Many seniors targeted by salesmen using these designations have lost their life savings because they were steered toward investment instruments that were unsuitable for them, given their retirement needs and life expectancy.

Specifically, the new grant program would provides states with incentives to improve their own rules regulating the use of designations by encouraging them to adopt the North American Securities Administrators Association’s (NASAA) and National Association of Insurance Commissioners’ (NAIC) new model rules on the use of senior designations. The grants are designed to give states the flexibility to use funds for a wide variety of senior investor protection efforts, including: hiring additional staff to investigate and prosecute cases; funding new technology, equipment and training for regulators, prosecutors, and law enforcement; and providing educational materials to increase awareness and understanding of designations.

Cooper & Shein, LLC (dba Great Oak Lending Partners) announced it broke into the top 10 reverse mortgage lenders for the first time during February. According to data from the US Department of Housing and Urban Development, the company endorsed 90 units.

“Reverse mortgages reflect a growing market segment and Great Oak Lending is honored to be recognized as a top producer in this market,” said Joshua Shein, partner, Great Oak Lending Partners. “Our production volume is a direct correlation to our experience and expertise in helping the senior market understand this complicated product, demonstrating a confidence among this customer base.”

The Timonium, MD based reverse mortgage lender was fined $10,000 and put on probation by the Federal Housing Administration’s Mortgagee Review Board (MRB) for misleading advertising practices related to its reverse mortgage business at the end of January.

Cooper and Shein told RMD that the violations stem from a limited distribution (only 100 pieces) mailing that was used solely by one employee acting independently without any knowledge or approval from owners and managers of the company. After learning of the violation, management immediately initiated a proactive approach to stop all current mailings and to ensure it never happens again said Joshua B. Shein, Managing Partner at Cooper and Shein.

To see more data on Cooper and Shein, see the company listing at ReverseBase.