California Senior Group Says Reverse Mortgages are a Top-Ten Priority

Reverse mortgage reform is a leading concern in California, with the California Senior Legislature rating reverse mortgage transparency legislation as a top-ten state priority. In the past few months, the state has focused on other reverse mortgage legislation, recently passing a bill to prohibit reverse mortgage and insurance cross-selling.

The 31st Annual Legislative Session, which adjourned in October, released a list of California’s top ten state legislative proposals that were given priority for enactment into law in 2012. The Reverse Mortgage Transparency Act, AP-32, ranked third on the list.

“The Reverse Mortgage Transparency Act would require reverse mortgages to allow the borrower to determine the consequences of the mortgage based on their personal situation, financial circumstances, health and long-term needs,” reads a summary of the proposal.

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A California Senior Legislature spokesperson said that more information on the proposal will be available in January 2012.

The west coast state has recently taken other steps to reform reverse mortgage referral practices. In September, Governor Jerry Brown signed into law a bill that aims to prevent inappropriate conduct by insurance professionals toward seniors with reverse mortgages. The bill is designed to prohibit cross-selling and stop insurance agents from making referrals to anyone who is involved with selling reverse mortgages.

Other top-ten state proposals include a missing persons program to protect those suffering from Alzheimer’s or dementia who may wander away from home; requiring money wire transfer services to be included in the definition of mandatory reporters of suspected financial elder abuse; and increasing the penalty for identity theft of victims aged 65 or older.

The California Senior Legislature is a nonprofit, nonpartisan political organization whose members are elected by California seniors.

Written by Alyssa Gerace

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  • The best thing that most legislatures could do to protect seniors is not to craft new legislation but to provide adequate funding to the existing state regulatory entitities for investigations.

    Many state real estate and insurance and securities departments do not have the personnel or the funding to investigate allegations of misconduct, so they do nothing until a state resident files a formal complaint, That kind of prioritization may make sense with regard to some management realities, but it also has an element of the suureal to it. Can you imagine a homeowner telling a concerned neighbor’s warning that, “the alleged fire in that part of my house you’re telling me about cannot be independently confirmed at this time and thus we do not see it as an immediate threat.”

    Some have even told me directly that they ignore allegations or inquiries or warnings from other professionals about questionable market practices in those industries as a matter of policy. They are discounted as professional sour grapes with an anti-competitive motivation. That kind of institutionalized mistrust creates the opportunities for scammers to exploit.

    Work on these two areas of inadequacy before you add more Dos and Don’ts to the codes that threaten a valuable national program.

  • Mr. Peters is absolutely right.
     
    It is interesting to note that this organization is not a committee or subcommittee of the California legislative branch.  It does, however, have special powers to initiate bills into the legislative branch.  It is funded in part through a questionable check off box on California income tax returns, simply “identified as the ‘CA Fund for Senior Citizens.'”

    No doubt these individuals are well intended but most are those we would identify as senior consumer advocates.  They propose both federal and California law.  For example, in 2009 they proposed federal law to make HECMs available for manufactured homes manufactured BEFORE 1976.
     
    Here is what the actual proposal for this year states:
     
    “… HEREBY PROPOSES THAT ALL REVERSE MORTGAGE COUNSELING BE CONDUCTED FACE-TO-FACE WITH THE BORROWER;

    AND BE IT FURTHER RESOLVED, THAT THE COST OF THE REQUIRED FACE-TO-FACE COUNSELING BE INCLUDED IN THE REVERSE MORTGAGE COSTS OF THE BORROWER.”

    The organization wants face-to-face counseling on all reverse mortgages and such cost to be financed through borrower costs.  Notice they do not address how those who dropout will pay.

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