The National Reverse Mortgage Lenders Association sent a letter Friday to express the association’s concerns regarding California Assembly Bill 793, which would prohibit most insurance agents from participating in the reverse mortgage process.
The bill, which was amended in April to allow agents to work with reverse mortgage consumers as long as the agents 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,” is still too vague and too broad, NRMLA says, and has unintended consequences that will impact seniors negatively. The bill has been referred to the State Committee on Insurance.
NRMLA’s letter, signed by the association’s president and CEO, Peter Bell, and sent to California State Senator Ron Calderon, states that “AB793 will have the unintended consequence of dictating to seniors when and how they can use their own funds.”
Instead, NRMLA suggests, “The bill could provide that no individual sales person can require a senior to purchase a reverse mortgage in order to obtain a more clearly defined other than non-casualty insurance product, and that no individual sales person can receive direct compensation from direct involvement in a reverse mortgage transaction.”
As another alternative, NRMLA writes that the bill could provide a “cooling off period” to take place following a reverse mortgage transaction, during which a senior could not obtain a more clearly defined other than non-insurance product.
The bill is moving through California state legislature with a hearing scheduled for Wednesday, June 8.
“When I took office in January, I vowed we would work to strengthen our consumer protection laws,” Insurance Commissioner Dave Jones said in a statement. “I applaud the authors of the bills I am sponsoring, which protect the rights of consumers and expand the opportunity to purchase and keep insurance. I will continue to work toward ensuring these important pieces of legislation win final passage and become law in order to protect the consumers, vulnerable seniors, and hard-working families of this state.”
View the letter from NRMLA.
Find out more about the bill.
Written by Elizabeth Ecker