Reverse Mortgage Legislation Update – February 18, 2010

The New York Times is reporting that stock and insurance brokers are fighting a provision included in the financial overhaul legislation to ensure decisions are made in the best interest of their clients.  According the NY Times:

At issue is whether brokers should be required to put their clients’ interest first — what is known as fiduciary duty. The professionals known as investment advisers already hold to that standard. But brokers at firms like Merrill Lynch and Morgan Stanley Smith Barney, or those who sell variable annuities, are often held to a lesser standard, one that requires them only to steer their clients to investments that are considered “suitable.” Those investments may be lucrative for the broker at the clients’ expense.

The “suitability” issue is a topic which the reverse mortgage industry will need to address in the future.  Different states have proposed legislation but nothing has been passed yet.  The Times article provides great insight into debating the issue.

Advertisement

The LA Times reported earlier this week that lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation.

The National Reverse Mortgage Lenders Association (NRMLA) announced it’s pursuing a reduction in Florida’s intangible document stamp tax through House Bill 845 in its in Monday Report.

In addition, NRMLA submitted comments to the Federal Financial Institutions Examination Council (FFIEC) on proposed new guidelines for reverse mortgages.

Join the Conversation (5)

see all

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

  • It is odd how NRMLA chooses to inform about certain of its activities but not others. Is this because they only want to report what they believe will succeed and avoid acknowledgement of issues on which there is potential loss? Transparency is not high on NRMLA's list of virtues. In some cases it is understandable and necessary while in others, it is bothersome.

  • There is a good reason why salespeople do not want this level of responsibility. Many who are such on this website make it like it is a non-issue but it is. There is a huge difference between an investment advisor and a finanical product salesperson. But financial product salespeople deny that the hole big enough to drive three trucks through is an issue. If it isn't then why fight this provision?

    In California the Department of Insurance negotiated new law which applies this standard to all mortgage professionals except for employees of nationally chartered, state chartered, and credit unions. This standard is not applicable to DOI licensees.

    Let's get rid of the double standards and move forward. This pretense that employees of certain entities will not violate fiduciary standards is nonsense. It is time that the courts enter into this arena and disallow these inequities.

  • There is a huge difference between an investment advisor and a finanical product salesperson.”

    FYI: Most financial professionals CFP, CLU, ChFC and allied organizations have some form of code or ethics oath. Example: as I am a ChFC, I subscribe to this one: CODE OF PROFESSIONAL RESPONSIBILITY OF THE SOCIETY OF FINANCIAL SERVICE PROFESSIONALS
    And, I do consider myself a financial product salesperson.
    Literally anyone can claim to be a financial planner or adviser.
    Here is a fairly good article on the subject :
    http://articles.moneycentral.msn.com/Retirement

  • dduck12,

    Codes of ethics are interesting for trying to improve image but unless the punishment for violators have teeth, they are little more than PR material. There are some rules in some places regarding the use of names such as financial planner or advisor but they are rare. Anyone in California can call herself or himself a finanical planner or financial advisor; just like anyone can call themselves consultants.

    Of course, wherever enforcement is lax, people who are not qualified can call themselves MDs,attorneys, CPAs, architects, etc. A CPA I know is the head partner of a large CPA firm and when he is asked what his occupation is, he sticks out his chest, stands up straight and tall, and boldly declares: “I am first and foremost, the best salesperson my firm has.” He is right. Good salespeople should not be ashamed of what they do but that does not mean they are independent.

string(97) "https://reversemortgagedaily.com/2010/02/18/reverse-mortgage-legislation-update-february-18-2010/"

Share your opinion