New Hampshire Bill Drives Reverse Mortgage Lender Out of the State

Just a few weeks after the State of New Hampshire passed a bill banning yield spread premiums on reverse mortgages, Generation Mortgage announced to its brokers that was pulling out of the state.

HB 610 is scheduled to become effective July 31st and was passed to implement the Secure and Fair Enforcement for Mortgage Licensing Act and was meant to prohibit compensation methods that rewards brokers for selling a higher interest loan.

New Hampshire is the first state to ban YSP’s, but it looks like more might be on the way.  The Federal Reserve Board is pushing the mortgage industry toward paying originators a flat fee under a proposed rule it issued last week however lenders can continue to compensate loan officers and brokers based on the interest rate, according to regulatory experts.


American Bankers Association senior regulatory counsel Rod Alba told National Mortgage News that that the Fed is prohibiting compensation based on the terms and conditions of the loan transaction. "The proposed rule does not appear to ban the practice of compensating the mortgage broker through the interest rate. But it does intend to put limits on the more abusive uses of yield-spread premiums," Mr. Alba said.

The Fed also is seeking public comment on allowing lenders to compensate LOs and brokers based on the principal amount of the mortgage. The Fed notes that compensation based on the loan amount is a "common practice today."

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  • We can thank NRMLA and AARP for the loan origination cap! This of course is the unintended consequences of the loan origination cap.

  • Good day,

    I can't believe what I just read, this could be the demise of the Reverse Mortgage industry. Instead of compensating Reverse Mortgage originators more, they keep taking it away from us. Why attack the YSP's on a Reverse. I don't see the forward lending industry being attack the way we are. Don't these states and our legislators on the hill realize we need originators that are very educated and trained in the art of counseling seniors.

    If anything, why not tighten up on educational requirements for those in the Reverse Mortgage industry, Heaven knows we need that. Don't make it imposable for companies and educated originators to remain in the business. All that will be left will be the predators and crooks ready to scam the senior in any way they can. The states and Federal Government need to re-look at their priorities and what they are trying to accomplish.

    If the states and the Federal Government would re-consider their positions they are taking toward our industry and look at considering very rigid educational requirements for originators, this will solve the problems they think they have with us. Make it mandatory to take a required course and take an exam in order to receive a certification that will be a requirement for any one originating Reverse Mortgages.

    Their are so many different laws and bills proposed, by every governing agency you can think of, I can't keep up with who is trying to do what and for what reason, can you?

    I do know this, we are facing a very serious situation for our seniors and for all of us if this continues to go any further my dear friends. If we as an industry adopt strict educational requirements and mandatory certification of originators, NO one should mess around with our income and the ability for companies to make a gain on sale premium. Why can't we offer this as an alternative to everything that is either being proposed or that has been passed?

    The Federal Reserve Board, different government agencies as well as the states are slowly ending the life of the reverse mortgage. They are making a huge mistake that will haunt them, our seniors and all of us in the industry for what they are doing for many years to come.

    They know not what they are doing! A a wise man once said that. AARP and NRMLA, need to go forward with a plan to stop this and not let it go any further. Everyone of us will do what we have to do but something has to be done quickly! Please, someone listen to us, we have the answers believe it or not!

    God help us,

    John A. Smaldone

  • We are witnessing the death of common sense. The government is out of control.

    Has anyone seen today's GAO report? It relied on 2007 statistics and drew many conclusions made irrelevant by today's market conditions. Maybe RMD can post a link.

  • Legal, below is my statement when it comes to common sense.


    My name is John Smaldone as you know. I am a resident of Blount County, TN. Today I am sad to announce that we mourn the passing of a beloved old friend, Common Sense. Common sense has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as: Knowing when to come in out of the rain; why the early bird gets the worm; Life isn’t always fair; and maybe it was my fault.

    Common Sense lived by simple, sound financial policies (don't spend more than you can earn) and reliable strategies (adults, not children, are in charge).

    His health began to deteriorate rapidly when well intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.

    Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children.

    It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.

    Common Sense lost the will to live, as the churches became businesses; and criminals received better treatment than their victims.

    Common Sense took a beating when you couldn't defend yourself from a burglar in your own home and the burglar could sue you for assault.

    Common Sense finally gave up the will to live after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap and was promptly awarded a huge settlement.

    Common Sense was preceded in death by his parents Truth and Trust, by his wife, Discretion, by his daughter, Responsibility and by his son Reason.

    His 4 stepbrothers survive him;

    * I Know My Rights.
    * I Want It Now.
    * Someone Else Is To Blame.
    * I'm A Victim.

    Not many attended his funeral because so few realized he was gone.

    John A. Smaldone

  • We have the wrong people running our country and it is time to get them out of office and put the right people in. People who understand what it truly is to be an American and who truly is concerned about the real concerns of the American people.  Not those who are pandering to the Federal Reserve and their agenda.

  • We have the wrong people running our country and it has been and it is now important to get them out of office, republicans and democrates and put the right people in.  People who truly understands what it means to be an American and has the Americans peoples concerns at heart and not those of the Federal Reserve or other institutions who primary objective is to hinder the good of America and it’s people. If we don’t began a conscious effort to stop them now we may find ourselves in a position where it is to late.  NRMLA is going to have to step up as well or be replaced!

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