Arizona Reverse Mortgage Bill Passes House

201003220817.jpg The Arizona House of Representatives passed HB 2242 by a vote of 47-10 and now moves to the Senate. Sponsored by Representative Bill Konopnicki, the bill requires originators follow certain guidelines when originating reverse mortgages in the state.

Specifically, the bill requires that adequate financial counseling be provided by an independent third party which is not associated with or paid by a party who originates or services the reverse mortgage, funds the loan, or sells any financial or insurance products.

In addition, HB 2242 orders that at least ten days before closing, the originator must provide the borrower with access to a statement that informs the borrower of their liability under the reverse mortgage is limited and “explains the borrower’s rights, obligations, remedies with respect to temporary absences from the home, late payments and payment default by the originator and all conditions requiring satisfaction of the loan obligation.”

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The bill also directs the originator to fully disclose in writing all costs involved with the loan before entering into a reverse mortgage.

NB 2242 now moves on to the Senate, where the National Reverse Mortgage Lenders Association said it’s seeking additional technical changes be made to the bill. According to an alert to members, the chief sponsors of the bill have indicated their willingness to continue working with NRMLA to address these issues.

HB 2242

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  • Thanks to the bill sponsors for working with NRMLA and thanks to the volunteers on the state committee at NRMLA and the NRMLA staff for being on top of this bill.

    • This seems like a total waste of time to me. All of these provisions are already required by HUD. Another case of a state official not doing their research.

      • tryan1,

        Too many in our industry have little idea how the legal system related to reverse mortgages is structured. HUD HECM rules do not apply to proprietary reverse mortgages. Arizona like other responsible state governments are simply trying to plug up the holes in their system and at the time address issues that they believe need fixing even with HECMs.

        Unfortunately some who think they are providing more protections have veered so far afield that rather than protecting seniors, the passage of their proposals would end the origination of reverse mortgages in their states. Both Minnesota and California had such legislative proposals. In California, the legislators wisely listened to NRMLA and revised their legislation accordingly. In Minnesota, it took the veto of their governor to stop such well meaning but destructive legislation.

        If the states would simply emulate the HECM provisions as much as possible, they would find they had a fairly workable solution. It is hard to believe that their differences with the HECM program are really that helpful. Knowing the good people at HUD, if someone came up with a better idea, HUD and FHA would be the first to explore it for adoption.

  • This just imposes new burdens on multi-state originators – being forced to comply with different requirements for each state.

    NMLS was supposed to promote uniformity in state licensing. So far, the cost of licensing has gone uniformly up in all states.

    • HECM-Dude,

      You are right about the uniform licensing issue; however, unless there is some meaningful effort to bring the states together to make a responsbile proposal for a true multi-state reverse mortgage act, reverse mortgage laws at the state level will only become more divergent.

      Unfortunately the MBA proposal was worse than none at all.

  • Another layer of regulation is useless in Arizona. There are no state mortgage investigators on the payroll anymore. They were all laid-off weeks ago after their numbers were greatly reduced last year. I was told, personally, by AZDFI, that most current complaints (for mortgage fraud) were closed do to a lack of investigators. I was following up on a complaint that I filed in December 2009 and still have not heard anything to date. Felicia Rotellini did a great job with the department until her recent departure for a run at state attorney general. I wrote a letter to Gov. Jan Brewer explaining the situation and did not receive a reply. I appreciate NRMLA's efforts to keep an eye on this bill but the end result will be no enforcement, no supervision and some of the toughest lending statutes in the country that aren't worth the paper they are written on. Welcome back to the wild, wild west.

  • By definition, the HECM product is not subject to these new rules. The intent of the bill in its current state is to create certain protections for seniors when applying for a product other than a HECM. In short, the rules are meant to run somewhat parallel to federal law, but covering proprietary products.

    • Legal Mumbo Jumbo,

      I am no expert on Arizona law so please point out where the principles of law you espouse are stated in the bill or otherwise.

      I just quickly read through once again the bill and there is nothing that read: “By definition, the HECM product is not subject to….” Remember the HECM rules do not mandate anything other than what FHA will
      insure. If there is a rule that does not conflict with HECM requirements, the Arizona rule must be followed in Arizona, unless Arizona law provides an exemption.

  • Legal Mumbo Jumbo,rnrnI am no expert on Arizona law so please point out where the principles of law you espouse are stated in the bill or otherwise.rnrnI just quickly read through once again the bill and there is nothing that read: “By definition, the HECM product is not subject to….” Remember the HECM rules do not mandate anything other than what FHA will rninsure. If there is a rule that does not conflict with HECM requirements, the Arizona rule must be followed in Arizona, unless Arizona law provides an exemption.rnrn

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