Are States Now Listening to Reverse Mortgage Advocates?

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

Join the Conversation (4)

see all

This is a professional community. Please use discretion when posting a comment.

  • Having looked into not only California Assembly Bill (“AB”) 329 but also e the MBA reverse mortgage state model bill, the claims made by the MBA are overblown.

    There are only four sections in AB 329. The first two are the naming of the Act and a preamble. Most of the Act is simply a reproduction of the old law with a few key changes and one substantial addition. The only area that might have been influenced to any extent by the MBA model bill are the provisions related to counseling but then only marginally so.

    The MBA model bill on cross selling is all but a repetition of the California rules enacted in 2006 updated for HERA. The new California cross selling rules repeat the 2006 law expanded for HERA but with one big difference. It now provides an exception for compliance with HERA. The MBA model has no such exception.

    The MBA model bill has a section for taxes and insurance set asides. Thank goodness, California did not follow suit. The California bill also has a disclosure requirement that exceeds anything reflected in the MBA model bill.

    All in all, there are few provisions in the MBA reverse mortgage state model bill that are actually reflected in California AB 329. While I agree that uniformity among state laws related to reverse mortgages, the MBA reverse mortgage state model act should not be used for that purpose. .

  • Washington State approved it's Reverse Mortgage Act unanimously this past legislative session. It took effect July 26th, 2009. It includes many new and additional proctions for senior homeowners.
    I wonder what Mr. Oswald finds objectionable with it.

  • It's truly sad that we must pass laws or regulations to protect Seniors against thieves. The FHA HECM is an outright blessing to help Seniors remain in their homes, instead of being forced into a nursing or assisted living facility. Sometimes Seniors even can justify an FHA HECM even when there is no immediate financial need–putting a line of credit or lump
    sum in place to protect against the unknown. ( When one ages, anything can happen to one's health at any time; life can suddenly change immediately.) If loan originators would always treat their clients as if they were in the Client's shoes or the Client was one of their Parents or Granparents, perhaps there would be far less cross-selling (which hopefully
    is disappearing), or other ploys to help the Senior spend his/her money.

string(99) ""

Share your opinion