After the Massachusetts Senate approved legislation requiring a certain group of seniors receive face to face counseling sessions before they enter into a reverse mortgage, the local press is picking up on how it could impact reverse mortgages in the state.
Sponsored by Sen. Susan Tucker (D-Andover), the changes were included as part of a bill meant to crack down on foreclosure procedures. The bill which passed the senate earlier this month requires that reverse mortgage borrowers who make less than half of their area’s median income and have assets worth less than $120,000 outside of their home get face-to-face financial counseling.
Despite the numerous protections and guidelines at the federal level for reverse mortgage counseling, Tucker feels more are needed. “One thing everybody agrees on is that these instruments are extremely complicated,” Tucker told WB Journal. “It sounds so easy, and they’re sold as lifestyle enhancers rather than instruments of last resort.”
The publication reports that lenders in the state say the new requirement would have little value for borrowers. Some even say the real problem is not that the loans are too easy to fall into, but that potential borrowers are scared away from them by misconceptions.
Dick Williams, senior vice president of mortgage lending at Rollstone Bank & Trust in Fitchburg, said the bank has been doing reverse mortgages for about five years and has done about 100 of them. Almost all of the borrowers the bank has helped have done counseling over the phone says Williams.
“That tells me that it’s more convenient for these seniors to do phone counseling, as opposed to getting in their car to do something face-to-face,” Williams said.
Bruce E. Spitzer, director of communications for the Massachusetts Bankers Association, said the proposed change would be logistically difficult. Especially for people in rural areas, and for those with limited mobility, he said in-person counseling could be a challenge. And he said the organizations that do the counseling would have to ramp up their staffing to handle more in-person contact.
The Senate bill provides an 18-month delay before the change would go into effect, but Spitzer said that might not be long enough to get everything in place.
In Massachusetts, there is a lack of physical counseling locations. The state requires counseling agencies be approved by the US Department of Housing and Urban Development and the Department of Elder Affairs.
When we wrote about this earlier, RMD asked Tucker what she would do to help ensure seniors would be able to find face to face counseling we received no answer. They were happy to discuss other aspects of the bill with us but when the tough questions were asked they were ignored.
WB Journal does a great job covering how the bill could impact the bill, definitely worth the read.