Continued legislative activism around reverse mortgages at the state level featured a new law passed last month in California that requires reverse mortgage lenders to provide “additional, clear information to senior consumers interested in reverse mortgage products.” Among its specific provisions, the new law mandates lenders to provide a prospective borrower with a list of at least 10 HUD-approved reverse mortgage counseling agencies and a written checklist of issues to discuss with that advisor.
According to Christopher Oswald, director of state government affairs, at the Mortgage Bankers Association, “whole sections” of the new California law were “verbatim” representations of a model reverse mortgage bill the MBA had been advocating. “A couple of [early] bills [in California] started off pretty bad,” Oswald told RMD, but eventually the one that went to the governor “tracked closely” to MBA’s proposal, he maintained.
If so, it marks a turnaround in industry-state negotiations, at least according to comments from some reverse mortgage practitioners. Last month, at an MBA conference, Joe Demarkey, regional sales director for MetLife Home Loans, said: “States are not paying too much attention to model legislation proposals right now.”
Colleague Kris Kully, an attorney with K&L Gates, noted that individual activism reflected the fact that “states are on edge in trying to avert a crisis. They want to get on top of [any problems], perhaps to make up for any [prior] lack of focus on the subprime market.”
MBA’s Oswald predicted that more states would be looking to pass legislation on reverse mortgages. Currently on his radar screen is Washington State. “It only takes one to come up with a bill that is out of line and other states tend to copy (that),” he said.
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 firstname.lastname@example.org