A law that will impact reverse mortgage loans in Massachusetts goes into effect on November 1, 2010.
Signed by Governor Deval Patrick earlier this year, the law requires seniors with a gross income of less than 50 percent of the average area income or has assets valued at less than $120,000 (excluding a primary residence) receive written certification from a counselor that the applicant has received counseling in person on the suitability of the transaction. Additionally, the borrower that meets this description must affirmatively opt in writing for a reverse mortgage loan.
The HECM counseling agency must be approved by the Massachusetts Executive Office of Elder Affairs. If the borrower doesn’t provide documentation of attending counseling, the state can render the terms of the reverse mortgage unenforceable.
The National Reverse Mortgage Lenders Association was able to delay the in person counseling requirement until August 1, 2012, as it conducts a study on the impact of the provision.
Last year, there were around 3,600 counseling sessions in Massachusetts, with approximately 130 of those being face-to-face. Based on a “mystery shopping” experiment, the association found only eight agency-approved face-to-face counselors in the entire state.
Editor Update: A previous version of this article stated that counseling would be changing as a result from the new law which is incorrect. Because NRMLA was able to delay the in person counseling provision, the only real change is that the borrower must affirmatively opt in writing for a reverse mortgage. We apologize for the confusion.