One of the things RMD readers asked for more of in our last survey, was an increase in updates regarding reverse mortgage legislation, so I’m doing my best to stay up to date. In Minnesota, Beth Paterson from Reverse Mortgages SIDAC has been playing an important role and was nice enough to send me an update on the status of the House and Senate bills.
I have testified at all the hearings and provided proposed amendments that provide the protections the AG and legislators are looking for but doesn’t negatively impact the seniors or restrict the originators and lenders. I had a meeting as well as some discussions prior to or after the hearings with the AG’s staff including the Assistant Attorney General, Carla Heyl, and gave her some good arguments for my positions. She said she liked my suggestions and is impressed with us and how we do business – a good sign.
As part of my efforts I reached out to other Minnesota originators who have recently have written the AG’s office and legislators outlining that the 10-day rescission would indeed have a negative impact on the seniors as well as the reverse mortgage industry. One of the counselors in the state also wrote to the AG’s office and legislators outlining the issues with the bills from their prospective.
The bill was passed on the Senate Floor April 6th with a few changes from the original bill including: removed the lender responsibility section (lender responsible for the originators); lender default, forfeiture section now excludes federally insured loans; removed the “funds received must be paid back” verbiage and replaced it with “The effects of a rescission shall be the same as provided in Regulation Z, title 12, Code of Federal Regulations, section 226.23.” But we still have the 10-day rescission and suitability. Additionally we still have the cross-selling as “no producer shall sell or encourage the purchase of an annuity, life insurance or long term care insurance product where the producer knows or should know that the purchase will be made using proceeds from a reverse mortgage.”
The House bill still has the Lender responsible for the actions of the originator section. I hope that it will be removed from the House also otherwise it could eliminate correspondents and only retail will survive. The bill passed through all of the House Committees and has gone from the House Floor to be compared to the Senate bill through a Conference Committee. From here it will go back to the House and Senate Floors for full votes before going to the governor.
The Minnesota Mortgage Association has played an important role in this whole process. Together, for the last few months I’ve brought the knowledge and experience of reverse mortgages to the legislators and MMA has coached me through the legislative process.
Nice work Beth.