S.Amdt. 4014

SA 4014. Mrs. McCASKILL (for herself and Mr. Kohl) submitted an
amendment intended to be proposed to amendment SA 3739 proposed by Mr.
Reid (for Mr. Dodd (for himself and Mrs. Lincoln)) to the bill S. 3217,
to promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect

[[Page S3731]]

consumers from abusive financial services practices, and for other
purposes; which was ordered to lie on the table; as follows:

On page 1455, line 25, strike the period at the end and
insert the following: ``.

SEC. 1077. TREATMENT OF REVERSE MORTGAGES.

(a) In General.--The Director shall examine the practices
of covered persons in connection with any reverse mortgage
transaction (as defined in section 103(bb) of the Truth in
Lending Act (15 U.S.C. 1602)) and shall prescribe regulations
identifying any acts or practices as unlawful, unfair,
deceptive, or abusive in connection with a reverse mortgage
transaction or the recommendation or offering of a reverse
mortgage.
(b) Regulations.--In prescribing regulations under
subsection (a), the Director shall ensure that such
regulations shall--
(1) include requirements for the purpose of--
(A) preventing unlawful, unfair, deceptive or abusive acts
and practices in connection with a reverse mortgage
transaction (including the solicitation or recommendation of
a reverse mortgage transaction);
(B) providing timely, appropriate, and effective
disclosures to consumers in connection with a reverse
mortgage transaction that incorporate the requirements of
section 138 of the Truth in Lending Act (15 U.S.C. 1648), and
otherwise are consistent with requirements prescribed by the
Director in connection with other consumer mortgage products
or services under this title;
(C) making a determination of the suitability of a reverse
mortgage for a consumer--
(i) creating a presumption of unsuitability, if--

(I) the mortgagor plans to use the funds obtained from the
reverse mortgage to purchase an annuity or make an
investment;
(II) the mortgagor is married and the spouse of the
mortgagor is not a party to the mortgage; or
(III) a person is removed from the title to the dwelling in
the process of obtaining the reverse mortgage; and

(ii) taking into consideration--

(I) whether the mortgagor intends to reside in the property
on a long-term basis;
(II) if the mortgagor is married or has a dependent, the
potential impact of a reverse mortgage on the future economic
security of the spouse or dependent of the mortgagor and all
tenants of the home;
(III) whether a reverse mortgage will affect the
eligibility of the mortgagor to receive Government benefits;
(IV) whether the mortgagor intends to pass the residence to
an heir and the ability of such heir to repay the reverse
mortgage loan;
(V) whether a resident of the home who is not the mortgagor
could be displaced at the maturity of the reverse mortgage
against the wishes of the mortgagor, and, if any such
resident is disabled, the consequences of the displacement
for such resident; and
(VI) any other circumstances, as the Director may require;

(2) with respect to the requirements under paragraph (1),
be consistent with requirements prescribed by the Director in
connection with other consumer mortgage products or services
under this title;
(3) provide for an integrated disclosure standard and model
disclosures for reverse mortgage transactions, that combines
the relevant disclosures required under the Truth in Lending
Act (15 U.S.C. 1601 et seq.) and the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et seq.), with the
disclosures required to be provided to consumers for home
equity conversion mortgages under section 255 of the National
Housing Act (12 U.S.C. 1715z-20);
(4) prohibit any person from advertising a reverse mortgage
in a manner that--
(A) is false or misleading;
(B) fails to present equally the risks and benefits of
reverse mortgages; or
(C) fails to reveal--
(i) negative facts that are material to a representation
made in such advertisement;
(ii) facts relating to the responsibilities of the
mortgagor for property taxes, insurance, maintenance, or
repairs and the consequences of failing to meet such
responsibilities, including default and foreclosure;
(iii) the consequences of obtaining a reverse mortgage; or
(iv) any forms of default that might lead to foreclosure;
(5) prohibit a person from requiring or recommending that a
mortgagor purchase insurance (except for title, flood, and
other peril insurance, as determined by the Director), an
annuity, or other similar product in connection with a
reverse mortgage;
(6) require that each reverse mortgage provide that
prepayment, in whole or in part, may be made without penalty
at any time during the period of the mortgage;
(7) require that any mortgagor under a reverse mortgage
receive adequate counseling, including--
(A) in the case of a reverse mortgage in which a person was
removed from the title to the dwelling, information about--
(i) the consequences of being removed from such title; and
(ii) the consequences upon the death of the mortgagor or a
divorce settlement;
(B) general information about the potential consequences of
borrowing more funds than are necessary to meet the immediate
personal financial goals of the mortgagor;
(C) the responsibilities of the mortgagor relating to
property taxes, insurance, maintenance, and repairs and the
consequences of failing to meet such responsibilities,
including default and foreclosure;
(D) an explanation of the actions that would constitute a
default under the terms of the reverse mortgage and how a
default might lead to foreclosure;
(E) an explanation of the circumstances, if any, under
which the mortgagor, an heir of the mortgagor, or the estate
of the mortgagor, would be liable for any amount by which the
amount of the indebtedness of the mortgagor under the reverse
mortgage exceeds the appraised value of the dwelling securing
the mortgage upon termination of the mortgage;
(F) an explanation of the circumstances, if any, under
which the spouse, heir, or estate of the mortgagor would be
prevented from purchasing the dwelling securing the mortgage
upon termination of the mortgage; and
(G) any other information that the Director may require;
and
(8) require that any person that provides counseling to a
mortgagor under a reverse mortgage report to the Bureau any
suspected mortgage-related fraud against a mortgagor.
(c) Consultation.--In connection with the issuance of any
regulations under this section, the Director shall consult
with the Federal banking agencies, State bank supervisors,
the Federal Trade Commission, and the Department of Housing
and Urban Development, as appropriate, to ensure that any
proposed regulation--
(1) imposes substantially similar requirements on all
covered persons; and
(2) is consistent with prudential, consumer protection,
civil rights, market, or systemic objectives administered by
such agencies or supervisors.
(d) Deadline for Rulemaking.--The Director shall commence
the rulemaking required under subsection (a) not later than
12 months after the date of enactment of this Act.
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