Consumer Protection Bill Fails to Pass California Banking Committee

A reverse mortgage consumer protection bill failed to pass the California Banking and Finance Committee earlier this month.

SB 660 provides that anyone who recommends the purchase of a reverse mortgage owes the borrower a duty of honesty, good faith, and fair dealing.

Sponsored by Senator Lois Wolk, the bill prohibits the “dividing” of the reverse mortgage transaction into separate parts in order to evade application of the requirements.  This includes, but is not limited to “using the proceeds of the reverse mortgage to fund an annuity, insurance, or investment product within one year from origination of the reverse mortgage.”

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The National Reverse Mortgage Lenders Association told members it would “continue to monitor the situation in case any attempts are made to revive the bill.”

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  • Loan officers cross-selling products…not a good idea. Post HERA does not outlaw cross-selling but places heavy restrictions on such practices.

    The real question is how can you hold a loan officer responsible for what a borrower chooses to do with their funds up to one year after the loan closes? Are we asking LO's be take on the role of financial gatekeeper for our borrowers?

  • How does one “purchase” a reverse mortgage? What an odd term!!!

    I hope SB 660 has some limitations on what the term “recommends” means. Does that include a hair stylist, a postman, etc. saying they got one and you should consider getting one? That is a recommendation; the kind I like especially if at the end they advise their customer to call me.

    There is a great axiom in writing, say what you mean and mean what you say. Like other bills on reverse mortgages, this one most likely fails to do just that.

    While I do not know what right California has in telling seniors how to use proceeds in the first twelve months, FHA and Congress certainly have such rights as to HECMs. Like usual, California fails to specify what they mean by “fund;” I gues they are saying something like — “you know regulators will know what it is when they see it type thing” — ugh.

    Hopefully this bill will never see the light of day in the full California Senate.

  • I think the sub-prime mess at its base demonstrates that some people just don't care what product their purchasing as long as they get immediate satisfaction. Had all the people that couldn't afford their mortgage product asked the right questions or even cared that they couldn't afford it – we might not be in this big of a mess. It's like blaming the ice cream maker for obesity. You cannot legislate fiscal responsibility!

  • I think the sub-prime mess at its base demonstrates that some people just don’t care what product their purchasing as long as they get immediate satisfaction. Had all the people that couldn’t afford their mortgage product asked the right questions or even cared that they couldn’t afford it – we might not be in this big of a mess. It’s like blaming the ice cream maker for obesity. You cannot legislate fiscal responsibility!

  • It's the same old thing – politicians think that only they know what is best for folks and that they (or one of their agencies) are morally superior… yet they are (generally speaking) more corrupt than any other profession. It’s like Reagan said: “Politics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the first”

  • It’s the same old thing – politicians think that only they know what is best for folks and that they (or one of their agencies) are morally superioru2026 yet they are (generally speaking) more corrupt than any other profession. Itu2019s like Reagan said: u201cPolitics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the firstu201d

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