FR4029_20240930_omb

Supporting Statement for the
Interagency Guidance on Managing Compliance and
Reputation Risks for Reverse Mortgage Products
(FR 4029; OMB No. 7100-0330)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years,
without revision, the Interagency Guidance on Managing Compliance and Reputation Risks for
Reverse Mortgage Products (FR 4029; OMB No. 7100-0330). Reverse mortgages are homesecured loans typically offered to elderly consumers. Financial institutions currently provide two
types of reverse mortgage products: the lenders’ own proprietary reverse mortgage products and
reverse mortgages insured by the Federal Housing Administration (FHA) within the U.S.
Department of Housing and Urban Development (HUD). Reverse mortgage loans insured by the
FHA are made pursuant to the guidelines and rules established by HUD’s Home Equity
Conversion Mortgage (HECM) program.1 HECM loans and proprietary reverse mortgages are
also subject to consumer financial protection laws and regulations (e.g., the regulations that
implement laws such as the Real Estate Settlement Procedures Act (RESPA) and the Truth in
Lending Act (TILA)).
The estimated total annual burden for the FR 4029 is 72 hours.
Background and Justification
In August 2010, the Federal Financial Institutions Examination Council (FFIEC), on
behalf of its member agencies,2 published a Federal Register notice adopting supervisory
guidance titled “Reverse Mortgage Products: Guidance for Managing Compliance and
Reputation Risks.”3 The guidance is designed to assist financial institutions with risk
management and efforts to ensure that their reverse mortgage lending practices adequately
address consumer compliance and reputation risks.
The reverse mortgage guidance discusses the disclosures and recordkeeping required by
federal laws and regulations and also discusses consumer disclosures that financial institutions
typically provide as a standard business practice. Certain portions of the guidance are
information collections subject to the Paperwork Reduction Act’s (PRA) requirements.
Reverse mortgages enable eligible borrowers to remain in their homes while accessing
their home equity in order to meet emergency needs, supplement their incomes, or, in some
cases, purchase a new home – without subjecting borrowers to ongoing repayment obligations
during the life of the loan. If prudently underwritten and used appropriately, these products

1

See 12 U.S.C. § 1715z–20; 24 CFR Part 206.
The Board, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the
Comptroller of the Currency, and former Office of Thrift Supervision.
3 See 75 FR 50801 (August 17, 2010).
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have the potential to become an increasingly important product for addressing certain credit
needs of an aging population.
Reverse mortgages can present substantial risks both to financial institutions and to
consumers. As with any type of home-secured loan, it is crucial that consumers understand the
product terms and the nature of their obligations. In addition to consumer financial protection
concerns that raise corresponding financial institution compliance and reputation risks, reverse
mortgage products may present other risks, such as credit, interest rate, and liquidity risks,
especially for proprietary reverse mortgage products lacking the insurance offered under the
federal HECM program.
The 2010 reverse mortgage guidance is designed to help financial institutions ensure that
their risk management and consumer financial protection practices adequately address the
compliance and reputation risks raised by reverse mortgage lending. The guidance discusses the
general features of reverse mortgage products, relevant legal requirements, and consumer
financial protection concerns raised by reverse mortgages. The guidance focuses on the need for
banks, thrifts, and credit unions to provide clear and balanced information to consumers about the
risks and benefits of these products.
Both proprietary products and HECMs are subject to various laws governing mortgage
lending including the Federal Trade Commission Act, RESPA, TILA, and fair lending laws.
HECMs are also subject to an extensive regulatory regime established by HUD, including
provisions for FHA insurance of HECM loans that protect both lenders and reverse mortgage
borrowers. The guidance supplements those requirements by advising lenders about additional
practices that should be implemented to manage the risks associated with reverse mortgage
products. This information is not available from other sources.
Description of Information Collection
The guidance describes disclosures and recordkeeping for both proprietary and HECM
reverse mortgages. A number of these disclosures are “usual and customary” business practices
for proprietary and HECM reverse mortgages, and these would not meet the definition of
“burden” under the PRA and its implementing regulations.4 Other included disclosure
requirements are currently mandated by federal consumer financial protection laws and
regulations for all reverse mortgage loans and information collections required by HUD’s rules
for HECM loans.5 Discussion of these requirements in the guidance is also not considered
additional paperwork burden imposed by the guidance.

The Federal Register notice adopting the guidance explains that “a number of the guidance provisions are
currently standard business practice for proprietary and HECM reverse mortgages and, therefore, under the ‘usual
and customary’ standard, PRA clearance is not warranted.” 75 FR 50805. See 5 CFR 1320.3(b)(2) (excluding from
the PRA’s definition of “burden” the “time, effort, and financial resources necessary to comply with a collection of
information” that is “usual and customary” for those subject to the collection “in the normal course of their
activities”).
5 See OMB Control No. 2502-0524.
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Proprietary reverse mortgage products, however, are not subject to HUD’s rules for
HECM loans. To the extent that the interagency guidance encourages lenders to follow HECM
requirements for proprietary loans, this would meet the PRA’s definition of paperwork burden.
There are additional provisions in the guidance that apply to both proprietary and HECM
reverse mortgages that do not meet the “usual and customary” standard, are not covered by
already approved information collections and, therefore, likewise meet the PRA’s definition of
paperwork burden.6
Proprietary Reverse Mortgages
Financial institutions offering proprietary reverse mortgages are encouraged under the
guidance to follow or adopt relevant HECM requirements for mandatory counseling,
disclosures, affordable origination fees, restrictions on cross-selling of ancillary products, and
reliable appraisals.
Proprietary and HECM Reverse Mortgages
Financial institutions offering either proprietary or HECM reverse mortgages are
encouraged to develop clear and balanced product descriptions and make them available to
consumers shopping for a mortgage. They should describe how disbursements can be received
and include timely information to supplement TILA and other mandated disclosures.
Promotional materials and product descriptions should include information about the costs,
terms, features, and risks of reverse mortgage products.
Financial institutions should adopt policies and procedures that prohibit directing a
consumer to a particular counseling agency or contacting a counselor on the consumer’s behalf.
They should adopt clear written policies and establish internal controls specifying that neither
the lender nor any broker will require the borrower to purchase any other product from the
lender in order to obtain the mortgage. Policies should be clear so that originators do not have
an inappropriate incentive to sell other products that appear linked to the granting of a mortgage.
Legal and compliance reviews should include oversight of compensation programs so that
lending personnel are not improperly encouraged to direct consumers to particular products.
Financial institutions making, purchasing, or servicing reverse mortgages through a third
party should conduct due diligence and establish criteria for third-party relationships and
compensation. They should set requirements for agreements and establish systems to monitor
compliance with the agreement and applicable laws and regulations. They should also take
corrective action if a third party fails to comply. Third-party relationships should be structured in
a way that does not conflict with RESPA.
The Board understands that respondents use information technology to comply with
certain of these provisions, including with respect to: providing consumers with disclosures,
promotional materials, and product descriptions; and adoption of policies and procedures and
See 75 FR 50806 (noting that “there are provisions in the guidance that apply to both proprietary and HECM
reverse mortgages that do not meet the ‘usual and customary’ standard [and] are not covered by already approved
information collections”).
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internal controls, including regarding recordkeeping, cross-selling of ancillary products, and
third-party oversight.
Respondent Panel
The FR 4029 panel comprises state member banks, Edge and agreement corporations,
bank holding companies, savings and loan holding companies, foreign banking organizations,
and branches and agencies of foreign banks. The below burden estimate information reflects
state member banks that originate proprietary reverse mortgages and HECM reverse mortgages
(Board staff are not aware of any information indicating that Federal Reserve-supervised
financial institutions other than state member banks currently originate proprietary reverse
mortgages or HECM reverse mortgages).
Frequency and Time Schedule
Financial institutions are encouraged to maintain records for any proprietary or HECM
reverse mortgages that they offer.7
Public Availability of Data
Certain data related to this information collection are available to the public in the form
of lenders’ marketing and other promotional materials, product descriptions, and disclosures.
Legal Status
The information collection is authorized pursuant to section 11 of the Federal Reserve
Act (state member banks) (12 U.S.C. § 248); sections 25 and 25A of the Federal Reserve Act
(Edge and agreement corporations) (12 U.S.C. §§ 602 and 625); section 5 of the Bank Holding
Company Act of 1956 (bank holding companies and, in conjunction with section 8 of the
International Banking Act of 1978, foreign banking organizations) (12 U.S.C. § 1844) (12 U.S.C.
§ 3106); section 7(c) of the International Banking Act of 1978 (branches and agencies of foreign
banks) (12 U.S.C. § 3105(c)); and section 10 of the Home Owners’ Loan Act (savings and loan
holding companies) (12 U.S.C. § 1467a). This guidance is voluntary.
Because the documentation sought and encouraged by the guidance is maintained by each
institution, the Freedom of Information Act (FOIA) would only be implicated if the Board’s
examiners retained a copy of this information as part of an examination or as part of its
supervision of a financial institution. However, records obtained as a part of an examination or
supervision of a financial institution are exempt from disclosure under exemption 8 of FOIA
(5 U.S.C. § 552(b)(8)). In addition, the information may also be kept confidential under
exemption 4 of FOIA, which protects trade secrets and commercial or financial information
obtained from a person that is privileged or confidential (5 U.S.C. § 552(b)(4)).

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Financial institutions are encouraged to maintain a copy of these records until the guidance is either superseded or
rescinded. If the guidance is rescinded, financial institutions are encouraged to maintain one copy of the records for
10 years after rescission.

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Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On March 29, 2024, the Board published an initial notice in the Federal Register (89 FR
22148) requesting public comment for 60 days on the extension, without revision, of the
FR 4029. The comment period for this notice expired on May 28, 2024. The Board did not
receive any comments. The Board adopted the extension, without revision, of the FR 4029 as
originally proposed. On September 30, 2024, the Board published a final notice in the Federal
Register (89 FR 79591).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR 4029 is 72
hours. National Information Center (NIC) data was used to determine the relevant subset of
impacted state member banks. Consolidated Reports of Condition and Income (Call Reports)
(FFIEC 031, FFIEC 041, and FFIEC 051; OMB No. 7100-0036) were used to determine which
institutions offered proprietary and HECM reverse mortgages. These recordkeeping provisions
represent less than 1 percent of the Board’s total paperwork burden.

FR 4029
Implementation of policies and
procedures
Review and maintenance of
policies and procedures
Total

Estimated
number of
respondents8

Estimated
Estimated
Estimated
annual
average hours annual burden
frequency per response
hours

1

1

40

40

4

1

8

32
72

The estimated total annual cost to the public for the FR 4029 is $5,029.9

8

Of these respondents, one is considered a small entity as defined by the Small Business Administration (i.e.,
entities with less than $850 million in total assets). Size standards effective March 17, 2023. See
https://www.sba.gov/document/support-table-size-standards. There are no special accommodations given to mitigate
the burden on small institutions.
9 Total cost to the responding public is estimated using the following formula: total burden hours, multiplied by the
cost of staffing, where the cost of staffing is calculated as a percent of time for each occupational group multiplied
by the group’s hourly rate and then summed (30% Office & Administrative Support at $23, 45% Financial
Managers at $84, 15% Lawyers at $85, and 10% Chief Executives at $124). Hourly rates for each occupational
group are the (rounded) mean hourly wages from the Bureau of Labor Statistics (BLS), Occupational Employment
and Wages, May 2023, published April 3, 2024, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are
defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing this
information collection is negligible.

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