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.
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.