An amendment to a Massachusetts Senate bill, passed this week, would delay the implementation of a state requirement that all reverse mortgage borrowers must go through face-to-face counseling before obtaining the loan.
The implementation of the requirement would be delayed two years from the planned date of effect, originally scheduled for August 2012. The new date of implementation would be August 2014.*
The requirement, passed in 2010, mandates that all reverse mortgage borrowers in Massachusetts must receive face-to-face reverse mortgage counseling. The change was met with concern from reverse mortgage lenders as well as counseling agencies, which cited the lack of available in-person counselors in the state as presenting a challenge to consumers.
“On the surface, this seems like a good idea…” Wrote Cambridge Credit Counseling Solutions Housing Director Tony Lopes in a Banker and Tradesman article in April. However, he says, “Statistics show that 95% of seniors prefer telephone counseling even when an agency is nearby. Bills like HB 4934 strip seniors of that choice.”
The National Reverse Mortgage Lenders Association has worked with policymakers in Massachusetts toward amending the rule and changing the requirement, having testified at a September hearing before the State’s Division of Banks.
“NRMLA staff, along with local members, have had the opportunity to discuss with Massachusetts’ legislators the potential consequences to some seniors of requiring face-to-face counseling in a state with a limited number of counselors in some regions,” said Peter Bell, NRMLA president and CEO. “We are grateful to the Senate for voting to delay the implementation date for the face-to-face counseling requirement from this summer until 2014 to provide the opportunity to try to increase the availability of counseling. The next step will be for the House to accept the Senate bill in its entirety or accept this particular provision in conference.”
A similar version of the bill has been passed in the Massachusetts House, and the House and Senate will work to reconcile the two bills.
*Correction: A previous version of this article stated that the amendment will delay the implementation of the counseling rule; however the amendment must be reconciled by the House and Senate before being finalized. RMD regrets any confusion caused by the article.
Written by Elizabeth Ecker