Wall Street Reform And Consumer Protection Act Of 2009

Floor Speech

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Ms. SCHAKOWSKY. Madam Chairman, I yield myself as much time as I may consume.

I want to thank Representative Titus for joining me in offering this important amendment to make sure that the new Consumer Financial Protection Agency has authority to regulate reverse mortgages. It is a proposal that is supported by the AARP.

Reverse mortgages are unique mortgage products that allow homeowners over age 62 to borrow against their homes to receive either cash or a line of credit. The loan is paid back when the homeowner dies or sells the home. In the past 3 years, more than 335,000 federally insured reverse mortgages have been issued to seniors.

Unfortunately, all is not well in the reverse mortgage market. An October report by the National Consumer Law Center found many of the abusive practices that were common in the subprime lending market before its collapse are also common in reverse mortgage transactions. Those practices include high fees, incentives for brokers that are harmful to borrowers, and lenders steering consumers to products that are more costly than necessary. Also, securitization, as in the subprime market, is becoming more common for reverse mortgages.

Unfortunately, the complexity of the loans and the age of the typical borrower have made the reverse mortgage market ripe for scam artists. We have to make sure that seniors who use reverse mortgages are protected against unlawful and unfair practices.

The amendment I am offering seeks to correct an oversight in the CFPA provisions of the bill. The bill, as written, gives the CFPA authority over a number of consumer statutes, but a majority of reverse mortgages today are FHA insured home equity conversion mortgages, which are primarily regulated by HUD under the National Housing Act statute. Therefore, as currently written, reverse mortgages may not clearly fall within the CFPA's authority.

My amendment would clarify that the CFPA director has oversight and regulatory authority over lenders and brokers that issue reverse mortgages and directs the agency to consult with HUD as it develops regulations.

My amendment would also require CFPA to begin a rulemaking within 1 year of the bill's enactment in order to develop regulations that will make sure that reverse mortgage transactions are not unfair, deceptive, or abusive.

I urge my colleagues to support this amendment.

I reserve the balance of my time.

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