California Bill 329 should at least charge the lender a fee or penalty of some kind if the lender rescinds a RM for “any reason”.
The 30-day rescission “for any reason” provision may encourage twisting by less scrupulous lenders and for many other reasons is, in my opinion, potentially bad for lenders, borrowers.
If it did pass, they (the elder police) should at least track any other RM deals to that borrower during, for say a few months, to detect any untoward marketing/sales patterns by a new lender.
It’s ironic, but if a person, or team, recommends Life or Long Term Care Insurance, or an immediate annuity to anyone (even over age 62) it is called financial/estate planning, as long as they are licensed (hopefully experienced) professionals and have advised that person of the pros and cons and appropriateness of such recommendations, it’s all ok. But, beware of the senior that secures a RM and then decides on his own (or has decided before initiating the RM process) to buy one of these insurance products. He must now lie on the questionnaire that he does not intend to buy any of the banned products. Tell the truth and the loan goes bye, bye. Will someone (the elder police?) track his insurance purchases after he gets the RM money? Uh, Oh, he may have just dragged the lender into deeper water if he does buy a banned product and the elder police find out. Can the lender be sued,or will the questionnaire and other docs protect him?
Admittedley, this is far-fetched scenario, but last time I looked the law of unintended consequences was still in effect. Stay tuned.

Please a 30 day “right to rescind”? The process already takes 30 days to process & during that time a senior has every opportunity to have any “professional” they wish review their documents & advise them–even their dentist as 1 of my clients did recently– next was the garbage man.

With a 30 day receission lenders will have to hold back from funding which will cause most seniors even more financial distress. How many Reverse Specialist will want to continue offerring reverses if they have to wait over 60+ days to be paid! And what if after all a loan officers hard work a senior for “any” reason deceides to cancel! I know plenty of loan officers who would be looking for new career!

There are plenty of rules & regulations already in place to protect everyone involved in this time consuming process–politicians should refrain from making matters even worse! Don’t they have enough on their “plates” right now since they are already “experts” in Health Care, Car Manufacturing, Banking, Stock Markets, did I leave any industry out? Now they want to screw up Reverse Mtges!

On cross-selling: once the senior has the funds from the reverse mortgage, they can still obtain annuities, long term care insurance, etc. Just not from the originator, or anyone associated with him. Just as a senior cannot be stopped from gambling their in Las Vegas, or giving away their money to strangers (or family).

On the proposed 30 day rescission: notice you hear no protests from Stage Coaches, Flags, Blimps, etc. The big players know this is a grand opportunity to co-opt market share from the small players who have faithfully nurtured and cultivated the RM market the past several years. The large banks and affiliates will benefit from this regulation, making up in volume the increased transaction costs. The smaller brokers and individual originators will be forced out, along with any remaining “service” and personal touch.

Good day,

I don’t know how we got on the subject of the 30 day right of rescission? However, a 30 day rescission period is ridiculous. Those who are implementing it and pushing it is in La, La land.

Cross selling, which is the main issue is covered in many of the ML’s. Vague as far as an outright violation. Those of us who have been in the industry and appreciate it for what it is, know that cross selling is not part of our responsibility.

We should be their to sell our product only and try and keep the senior in the most secure position possible, that is our fiduciary responsibility.

Over the past year, I have seen more new rules and regulations surface by the agencies and even states than I have seen in years. You take HUD for an example. They have more laws on their books than they know what to do with. This goes for the states, FHA and any other agency related to our industry.

Can you imagine, if only 25% of the laws were understood by the employees in these agencies and 50% of the 25% were enforced. Wow, we would probably solve 60% of the problems we experience today.

Have a good weekend,

John Smaldone

Critic: I am sure any one of you can get information on insurance products a lot quicker from your personal insurance advisers (you do have insurance, don’t you). You will be more comfortable then getting it from an outsider like me. I’m not evading, but there is too much information on insurance products and each individual case would have to be analyzed on its own to determine whether tenure or an IMMEDIATE FIXED ANNUITY- NOT A DEFERRED FIXED OR VARIABLE ANNUITY-Mr Reverse, would be best. I can point to one area where it would, in my opinion, be remiss to not consider: an immediate annuity. It is when a borrower has a less than normal life expectancy. Then, an illustration for a “RATED immediate annuity” should be secured and the figures compared to tenure. All of the perceived pros and cons of an IMMEDIATE annuity still hold, but the higher lifetime (with optional guarantees of 10-20 years of payments to beneficiaries) income may be important.
I noted that you don’t seem to have the same level of concern regarding Long Term Care insurance. Is it because the commissions to the broker are smaller than an annuity, or is this an OK cross selling insurance product?
Once again, I am not selling any insurance products to any RM borrowers (I’m retired), I just wanted to try and clear some of the ill feelings caused by ABUSIVE cross sellers that could preclude clients from getting the most comprehensive financial advice. Unfortunately, sometimes over regulation has the unintended effect of making financial planning more complicated. But, hey, it’s an art too.
I also thank you for the opportunity to contact your colleague.

dduck,

I hope the following explains why many of us are gun shy of LTC insurance when it comes to HECM (litigation concerns based on the actions of HUD):

To encourage seniors to avail themselves of the benefits of LTC insurance, Congress passed and President Clinton signed into law a provision that waived the upfront MIP insurance on a HECM if the proceeds were used as required under that provision. American Homeownership and Economic Opportunity Act of 2000 (“AHEOA”, PL 106-569) became law on December 27, 2000 and was to have applied to all applicable HECMs closing on or after April 1, 2001.

AHEOA Section 201(c)(1) added Section 255(l) to the National Housing Act (“NHA”, P.L. 84 345) and was codified at 12 U.S.C. 1715z-20(l). You can read AHEOA Section 201(c)(1) at http://www.reverse.org/HECM%20Amends.htm.

HUD refused to implement Section 255(l) because of its marginal value (and perhaps detrimental harm) to those who HECMs were designed to help. A study was printed in 2003 summarizing these findings. You can read it at http://www.huduser.org/Publications/pdf/Actuarial_Final_5-13-03.pdf. HUD was also said to be concerned that LTC salespeople might misuse this Section 255(l) to convince seniors to buy policies when they were not warranted. Finally in recognition of the determination of HUD, Congress deleted Section 255(l) from NHA in HERA (the Housing and Economic Recovery Act of 2008, P.L. 110-289) Section 2122(a)(6) “by striking subsection (l).”

I hope this comment provides information you may not have been aware of and will also help to explain why responsible HECM originators do not necessarily recommend LTC insurance. And, yes, some of us have looked at current LTC products with their additional features and yet for many, LTC insurance continues to appear to provide marginal value at considerable cash flow risk.

Sorry, I meant to give you this link:
http://www.immediateannuities.com/

DDuck,

Would like to talk to you directly.

Kal-el

GOOOOOOOOOOOOOOOOOOOOOOOOOOD MORRRRRRRRRRRRRRRRRRRning REVERSE WORLD!!!!!! LOL, great to see the pent up weekend energy-

The point that I liked best was about the wagon, flag and blimp all sitting back in their board rooms wathing the dominos fall……hope you all work somewhere with a REAL plan.

Listen to the reversefortunes podcast this week – intereting point by J.Y. about the old school vs. new, and especially poignant considering the conversation above…

Have a great week of orinating, regardless of your backround!

With all this so called cross sale, is the government going to cause problems like in state of Washington;

No insurance, what about title insurance and hazard insurance???

Again, exactly how many annunites were funded through reverse mortgages????

Why are senior homeowner not able to make a financial decision for themselves??

All I do is rm’s and don’t give clients names to others, i do have issues about how everyone knows better for everyone elses issues. I guess since we are headed toward government control country, we need to get use to this time of control.

Hi there, I found your blog via Google while searching for first aid for a heart attack. Interesting post. Nice site.