Vermont Governor Signs Bill, Bans Proprietary Reverse Mortgage Products
June 3rd, 2009 | by admin Published in Legislation, News, Reverse Mortgage | 8 Comments
Earlier this week, Vermont’s Governor Jim Douglas singed H 222 which limits the availability of reverse mortgages to seniors in the Green Mountain State. H 222 contains several provisions to protect seniors who purchase certain types of lending and insurance products.
H 222 states that only HUD approved financial institutions can issue reverse mortgages and the loans must comply with all requirements for participation in the Home Equity Conversion Mortgage Program (or other similar federal reverse mortgage loan program from time to time created). It adds that it must be, “insured by the federal housing administration or other similar federal agency or is a government sponsored enterprise reverse mortgage loan.”
The bill also requires that borrowers receive face to face counseling in most situations and prohibits cross selling of reverse mortgages and annuities until after the rescission period.
At the signing of the bill, Governor Douglas said, “Vermont seniors are among our savviest citizens. But they are also among our most vulnerable populations and can become targets for financial exploitation. This bill helps protect the financial resources of older Vermonters by prohibiting opportunistic and unscrupulous practices that take advantage of seniors’ financial fears and circumstances.”
The provisions become effective July 1st. See a copy of the bill here.
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June 3rd, 2009 at 12:14 pm (#)
you have got to be kidding.
June 3rd, 2009 at 1:49 pm (#)
Compared to the proposed MN bill, this seems very liberal (to me) regarding cross selling. I hope the abusive pushers of annuities aren’t waiting for the day after the check arrives. At least they could have asked for warning stickers on the package and said that a consideration of tenure would be prudent for borrower and annuity seller.
No proprietary products allowed sounds a little bit like restraint of trade.
June 3rd, 2009 at 5:44 pm (#)
a little?
June 3rd, 2009 at 6:00 pm (#)
OK, all lot.
June 3rd, 2009 at 7:24 pm (#)
Wow…all I have to say is wow!
Who’s the short sightest genius in the Vermont legislature that said “Those proprietary reverse mortgages are the scourge of our great State. They must be banished immediately.”
Never mind the fact that a proprietary reverse probably hasn’t been originated there for a year (or more).
What happens to a Vermont senior when the reverse industry takes off and HUD takes on a much smaller role, as they have mentioned this as their long-term goal at past conferences? They would be forced to take a HECM when a proprietary may fit their personal situation much better.
Political grandstanding at its worst.
June 4th, 2009 at 8:56 am (#)
Geniuses?…I don’t believe in them anymore.
Unintended consequences…blocking or inhibiting our senior population from obtaining a reverse mortgage to meet their cash-flow needs…will only increase the senior homeowner’s foreclosure rate and thus increase the financial burden to the state.
Noble gesture, but this action will only increase the pain for the seniors and the state will be on the hook financially for many years…another example of winning the battle but losing the war.
Just my two cents…
Non-Genius
June 9th, 2009 at 6:06 pm (#)
[...] As more and more states propose reverse mortgage legislation, I’d rather be ready with a set of guidelines ready to go, instead of letting them draft their own protections which end up banning proprietary products like the legislators in Vermont. [...]
June 23rd, 2009 at 6:21 pm (#)
[...] like Washington and Vermont felt the same way and each passed its own bill addressing proprietary reverse mortgages, but both [...]