State Bans Yield Spread Premiums For Reverse Mortgages

New Hampshire’s State Legislature passed HB 610 on June 24 which bans yield spread premiums (YSP) for reverse mortgages.  The bill is in the enrollment process and will be delivered to Governor John Lynch’s office soon.

HB 610 also includes a provision related to companies cross selling reverse mortgages with other financial products.  The provision reads:

A person, or its affiliate, brokering or funding a reverse mortgage shall not participate in, or be associated with, or employ any party that participates in or is associated with, any other financial or insurance activity and a mortgagor shall not be required, directly or indirectly, as a condition of obtaining a mortgage, to purchase any other financial or insurance product.

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So what does this mean for originators in New Hampshire?  It makes working for a bank or mortgage banker more attractive since they aren’t required to disclose any YSP on their good faith estimates.  The reality is that no one is making much on the back end these days, so I can’t say this is going to really protect seniors. 

Assuming Gov. Lynch signs the bill, it becomes effective July 31.

HB 610