A recent public hearing in Massachusetts addressed state legislation on reverse mortgages and raised questions about reverse mortgage law in the Bay State. Testimony submitted by the National Reverse Mortgage Lenders Association last week and given by a MetLife executive presented concerns over face-to-face counseling requirements and seniors’ ability to opt out of the loan after loan documents have been signed.
The hearing, held by the Massachusetts Division of Banks, included testimony from within the industry as well as from Jacob Mandell representing H.O.M.E (Homeowner Options for MA Elders) and Mary Ann Clancy, General Counsel for the Credit Union League.
MetLife Bank’s Joe DeMarkey, assistant vice president, presented remarks including comments on the regulations and their unintended consequence of increasing costs to seniors.
“We urge the Division to reconsider the methods by which a senior can express an intention not to proceed with a reverse mortgage transaction once he or she has opted in, in writing, and indicated a decision to proceed with such a transaction,” DeMarkey said. The regulations, as written, allow a mortgagor to revoke an “opt in” either in writing or orally. This can be problematic especially after a senior goes to closing and executes loan documents, DeMarkey noted.
Additionally, if a borrower does decide to revoke his or her “opt in,” the regulations specify that any fees paid are to be returned to the borrower from the lender. DeMarkey’s testimony urges the state to revise the regulation to specify that only fees payable to the mortgagee need be returned, rather than all fees, including those collected by third parties.
With regard to the face-to-face counseling regulation set to take effect in July, that requirement could result in hardship and the inability of disabled borrowers to obtain reverse mortgages, DeMarkey said.
In terms of counseling capacity, he noted that there are eight approved counseling agencies in the state with 31 exam-tested, approved counselors available today. Of those 31, 27 are available for face-to-face counseling, and 20 of those require the senior to travel to the counselor’s office. The restrictions and associated costs could hamper or deter reasonable access to counseling, DeMarkey noted. Further, budget cuts that wiped out the majority of counseling funding previously provided by the government and have yet to be restored.
Without more counseling capacity, access will be limited, he said.
Written by Elizabeth Ecker