The federal banking regulators on Monday issued final guidance warning banks about the risks from reverse mortgages.

The guidance called on banks to improve disclosures provided to reverse mortgage customers and avoid any conflicts of interest from marketing other products related to reverse mortgages. The final guidance will become effective 60 days after publication in the Federal Register.

The regulators said reverse mortgages, which are attractive to elderly citizens looking for extra income, may grow in popularity as the population ages and more Americans become eligible.

But the products are highly complex, they said, and as a result clearer advertising and disclosures are key.

The guidance also directs depository institutions to provide customers with a list of independent counselors specializing in reverse mortgage products.

"Reverse mortgages present substantial risks both to institutions and to consumers, and, as with any type of loan that is secured by a consumer's home, it is crucial that consumers understand the terms of the product and the nature of their obligations," the regulators said in the guidance.

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