Model Reverse Mortgage Legislation: Are States Listening?

As industry representatives develop and circulate model legislation intended to guide state lawmakers in creating rules for reverse mortgage lending, there is some question about how much they are taking heed. “States are not paying too much attention to model legislation proposals right now,” concedes Joe Demarkey, regional sales director for MetLife Home Loans.

He spoke at a conference last week in San Diego sponsored by the Mortgage Bankers Association, which earlier this year issued its own model bill. The lead MBA spokesperson, Regina Lowrie, who heads an MBA reverse mortgage task force, said their model document is intended to “get ahead of the [legislative] curve and give [state lawmakers] a framework.” Lowrie pointed to three key issues addressed in the MBA’s model bill, including counseling (“it should be made mandatory”); cross-selling (“which is ripe for fraud”); and tax/insurance set-asides (“there should be a three-year account”).

Demarkey acknowledges that “states talk to each other” as evidenced by their separate proposals that, he says, were a “hodge-podge of what others have done.” He advises people to pay “close attention to the kind of state legislation that’s brewing,” adding that “you can’t communicate enough” on such matters. He cites as an example “what happened in New Hampshire [which] was quite a shock.” The Granite State passed a law this year, which completely prohibits Yield Spread Premiums and cross-selling in reverse mortgage transactions.


Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at

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  • I am a fan of Joe DeMarkey but I am no fan of the method adopted by the MBA to present a state model act. There are probably a few examples where getting ahead of the proverbial legislative curve has helped but I doubt if there is much that can be pointed to in the way of effective state model acts.

    As previously stated, it was a little disarming when coming into this industry that there was no state model legislation already in existence or any convention in existence for that purpose. Normally the parties to the convention are influential state lawmakers, their staff, prominent industry leaders and their attorneys.

    In discussing the status of such legislation about four years ago with leaders in NRMLA, there was a reluctance to move forward on this front. I still am not sure why exactly why. The attitude was almost, “it’s better to let sleeping dogs lie.”

    The unilateral actions of the MBA seem vain at best. Effective model acts arise from consensus, not from the undertakings of one party or the other. They usually take months, if not years to hammer out and it is usually the most mundane points that prohibit agreement until cooler heads take control. The MBA shows its willingness to dominate but not the willingness to work with state lawmakers to create the document. The attitude expressed from such unilateral conduct is “we know what is good for you” or “We do not have the luxury of time to work it out with you.”

    Until well received and recognized state lawmakers are involved, the states will continue to ignore the efforts of the MBA. I hope my prognostication is wrong.

  • I am curious: Would you brains in this business please tell me if the FHA HECM would work (would others buy the loans?) without the FHA Insurance
    (which of course as we all know the Senior Borrower pays for) that protects the mortgage holder against loss should the debt be greater than the value of the property at death (or when the Senior (last) leaves the home)? My reason for asking is simple–Since the Insurance is a FEDERAL enity, and not one offered by an individual State, why doesn't the Feds just tell the States to stop interfering in a Federal program? I find it amusing now as we try to fix Health Care Insurance on a Federal level and the complaint arises that the consumer cannot purchase a Health Insurance policy across State lines. We all know why: The States want fees, taxes, and Lobby contributions that come from the Insurance Industry. For years, the Feds have talked about taking over the Insurance Industy but State politics have always stopped the process. Perhaps our growing Federal debt and the spending challenges forthcoming will force common sense to prevail.

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