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.