California’s Senate Committee on Banking, Finance, and Insurance passed a new version of AB 329 by a 9-2 vote on Tuesday and is being referred to the Committee on Judiciary according to the Senate’s website.
AB 329 includes provisions which prohibit any person who participates in the origination process from requiring an applicant to purchase an annuity as a condition of obtaining a reverse mortgage. It also prohibits referring the borrower to anyone for the purchase of an annuity or other financial or insurance products prior to closing the reverse mortgage or before the borrower’s rescission period is complete.
AB 329 also revises the notice that must be provided by a reverse mortgage lender to a prospective borrower before the lender takes a loan application by adding the following language, and would require that the notice be given to the prospective borrower before that borrower receives counseling:
SENIOR CITIZEN ADVOCACY GROUPS ADVISE AGAINST USING THE PROCEEDSOF A REVERSE MORTGAGE TO PURCHASE AN ANNUITY OR RELATED FINANCIAL PRODUCTS. IF YOU ARE CONSIDERING USING YOUR PROCEEDS FOR THIS PURPOSE, YOU SHOULD DISCUSS THE FINANCIAL IMPLICATIONS OF DOING SO WITH YOUR COUNSELOR AND FAMILY MEMBERS;
The bill also requires that lenders give borrowers a list of 10 counseling agencies and goes beyond federal law by requiring the provision of a specified checklist to prospective borrowers, for their use when discussing the potential ramifications of a reverse mortgage with a HUD-certified housing counselor.
The Reverse Mortgage Elder Protection Act was introduced by California Assembly member Mike Feuer earlier this year and has support from the California Association of Nursing Home Reform and AARP California.