Minnesota Reverse Mortgage Bill Heads to Governor for Signature

Minnesota has approved new reverse mortgage protections as part of SF 2430, a bill which is meant to require homeowners be notified when their homes are sold at foreclosure auctions.

Included in the bill is a provision which would implememnt new counseling guidelines, a 7-day “cooling off” period and restrict the cross-sale of annuities and long-term care insurance said the National Reverse Mortgage Lenders Association in an alert to members.

The bill also requires a lender to refer the prospective borrower to an independent housing counseling agency prior to accepting a final and complete application or assessing any fees.

Advertisement

Additionally, once the borrower provides written acceptance of the lender’s commitment to make the reverse mortgage, the borrower has seven days to think it over, during which time they cannot be required to close or proceed with the loan. The measure was approved by the state House and Senate and was sent to the governor Tim Pawlenty for his signature.

“This reverse mortgage legislation is controversial,” said Beth Paterson, President of Reverse Mortgage SIDAC.  “Any reverse mortgage legislation should not happen without a full hearing. And without all of us impacted, especially brokers and lenders who are not federal chartered banks having an opportunity to see and address any proposed legislation.”

Paterson voices her opinion in more detail here and is asking for everyone’s support in asking for Pawlenty to veto the bill.

The Governor vetoed a reverse mortgage bill last year because he said it could’ve had negative consequences for both seniors and reverse mortgage lenders in the state.

Join the Conversation (10)

see all

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

  • While generally supporting conforming state legislation, this legislation seems to go to extremes. If federally chartered banks and credit unions are exempt from this bill, then due to the 7 day “cooling off” period alone, it would seem all such lenders would only want to provide reverse mortgages through their own retail operations. This would effectively eliminate all other reverse mortgage competitors.

    Beth, wishing you the best in getting a veto.

    • If you read the bill it appears to include federally chartered organizations so there is no unfair playing field with this proposal. I may not agree with the 7 day cooling off period before proceeding with the application but overall the proposal seems to be a very reasonable compromise from what was vetoed last year.

      • Deb,

        While compromise is a reasonable response in most cases, this compromise does not appear to be equal to all. I am not a Minnesota attorney, so if you are, I back away from my position. But see Joe DeMarkey's remark below.

  • This is a terrible example of throwing the baby out with the bath water… Let’s hope the Governor has the same attitude as he did last year when he in fact vetoed a similar bill.
    When used correctly a reverse mortgage is an incredible tool for seniors to afford long term care insurance when otherwise they could not. And by the way, the National Council On Aging agrees! As I have said for years now…it’s about suitability and doing what’s right for the client, what’s ethical & moral… But of course, it would just be so much easier to make it all illegal!!!
    What a sad but accurate commentary for the current line of thinking in our government today.
    Good luck Beth & if you want any back up info please don’t hesitate to contact me.

  • I honestly don't agree with any of the objections here.
    1) There are no additional costs to consumers
    2) No cost is incurred by the state
    3)The anti-tying provisions in this bill seem to mirror those in the HERA legislation.
    4) As far as the $1,000 fine is concerned, it effectively regulates non-HECM products by ensuring that an independent counseling session takes place (which is already a HECM requirement). I believe that most responsible industry participants would embrace a madatory counseling requirement for any type of reverse mortgage.
    5)Lastly, most national banks do comply with the identical 7-day cooling off period that exists in the State of Massachusetts, so everyone would be subject to this provision.

    • Joe,

      Your personal input is greatly appreciated; however, legislated mandates on one group should be condemned as grossly unfair. While MetLife may voluntarily comply with the 7-day standard, others may not. It should not be optional, if it is not optional for all.

    • Joe,
      Since you are an employee of a federally chartered bank I see why these are your thoughts. Reading the language of the bill it does not state what you state. I’ve summarized how I see the issues with the bill for those of us who are not federally chartered banks. Why is it that federally chartered banks work so hard and spend so much money in implementing state laws that do not impact them and they could choose to ignore?

  • Joe,nSince you are an employee of a federally chartered bank I see why these are your thoughts. Reading the language of the bill it does not state what you state. Iu2019ve summarized how I see the issues with the bill for those of us who are not federally chartered banks. Why is it that federally chartered banks work so hard and spend so much money in implementing state laws that do not impact them and they could choose to ignore?n

  • Beth – You are correct. I am an employee of a federally chartered bank. However, where we are not connecting is the fact that my company would have to comply with the 7 day cooling off period (like any other entity). Federal pre-emption does not apply to such a provision, and quite honestly I do not see how it negatively impacts anyone. A lender issues a commitment letter in the normal course of business. The borrower signs it and returns it to the lender and the lender closes the loan at least 7 days from the date the borrower signed the commitment letter.

    The industry has lived with this comfortably in Massachusetts since 1999.

  • Beth – You are correct. I am an employee of a federally chartered bank. However, where we are not connecting is the fact that my company would have to comply with the 7 day cooling off period (like any other entity). Federal pre-emption does not apply to such a provision, and quite honestly I do not see how it negatively impacts anyone. A lender issues a commitment letter in the normal course of business. The borrower signs it and returns it to the lender and the lender closes the loan at least 7 days from the date the borrower signed the commitment letter.rnrnThe industry has lived with this comfortably in Massachusetts since 1999.

string(108) "https://reversemortgagedaily.com/2010/05/17/minnesota-reverse-mortgage-bill-heads-to-governor-for-signature/"

Share your opinion