California Reverse Mortgage Bill Amended, More Reasonable

Changes made to California’s AB 793 lighten up restrictions on how insurance brokers and agents can interact with borrowers interested in reverse mortgages.

Prior versions of the bill prohibited insurance agents from participating in the reverse mortgage process in any shape or form for the most part.

Earlier this week, Assemblyman Mike Eng (D-Monterey Park), the author of the bill, changed the bill to allow agents to work with consumers as long as they don’t receive compensation, commission, or direct incentive for providing reverse mortgage borrowers with a non-casualty insurance product that is connected to or a result of the reverse mortgage.

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“Existing law provides that all insurers, brokers, agents, and others engaged in the transaction of insurance owe a prospective insured who is 65 years of age or older, a duty of honesty, good faith, and fair dealing,” said the counsel’s digest.  “This duty is in addition to any other duty,whether express or implied, that may exist.”

The bill was referred to the Committee on Insurance and is scheduled for a hearing on April 13.

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  • There is no doubt that the statement by counsel is correct. That being the case, why would the new law include those under 65 as well as those over 64?
    Chairman Eng needs to refine his amendment still further.

    However, it is important to point out that even the amended version of the proposal may not become law. It is still possible that the original version could be what gets passed if anything gets passed at all.

  • The bill does not amend the reverse mortgage portion of the California Civil Code. It amends what is called the California Insurance Code. It is a bill that directly impacts insurance producers and their employers, not reverse mortgage companies or their employees.

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