Conn. Lawmakers Pass ‘Redundant’ Reverse Mortgage Counseling Bill

The Connecticut State Senate passed a bill last week requiring reverse mortgage lenders to ensure that prospective borrowers receive counseling — despite the fact that, as some lawmakers pointed out, that’s already a federally mandated part of the Home Equity Conversion Mortgage program.

The law would prevent reverse mortgage lenders from accepting an application until they receive a signed certificate from the potential borrower showing that he or she had completed a counseling program, either in person or by phone.

The legislation would also require lenders to provide a list of five independent housing counseling agencies from the Department of Housing and Urban Development’s approved crop of companies; furthermore, those agencies couldn’t receive any money from the reverse mortgage lender, originator, or servicer.


Violations of these rules would constitute “an unfair of deceptive act,” under the state’s trade and commerce laws, according to the bill.

Though the bill still must win approval from Connecticut’s House of Representatives, it sailed fairly easily through the Senate, passing 24-12 with bipartisan support; Sen. Tony Hwang, a real estate agent and Republican who represents the New York City suburbs of Fairfield and Westport, co-sponsored the bill along with Democratic Rep. Mary Mushinsky of Wallingford.

Of course, the language of the bill might sound familiar to those who have worked in the reverse mortgage space: Federal law requires all borrowers to undergo counseling, leading some Connecticut lawmakers to question the utility of the state law.

“It appears to me that this [bill] is overlapping if not redundant,” Republican Sen. Len Suzio told the Hartford Courant.

All 18 Democrats in the state senate voted for the bill, with six Republicans joining, according to the Courant.

RMD reached out to Mushinsky and Hwang for clarification on the reasoning behind the bill, but neither responded as of press time.

Written by Alex Spanko

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  • What is so odd about adding this requirement IF proprietary reverse mortgages can be originated in Connecticut maybe this is a very necessary step? But then again Democrats always seem to love to add bureaucracy wherever they can justify it.

  • Odd that it states “…counseling…either in person or by phone.”

    Apparently, Connecticut still has counseling by phone. I thought counseling was eliminated, nationally, a few years ago. Either that, or they haven researched their own issue properly.

    The present Connecticut state legislature has had a bad track record of being “out of touch” lately.

    They recently lost the General Electric headquarters to Boston, where General Electric moved their headquarters out of Connecticut over a totally avoidable issue. Now they’re putting a totally needless, extra burden on recipients by requiring them to worry about yet another must-produce form, on top of the recent Financial Assessment requirements.

    • Ed, the majority of counseling is done by phone. The counseling agencies (like the banks) have consolidated into phone only agencies. There is no counseling in person within 250 miles of San Antonio. There are a couple of states that do have mandatory face-to-face counseling and I feel sorry for them as they may not have counselors available.

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