New Hampshire’s governor signed a bill last month amending a consumer credit law that had previously prohibited yield spread premiums in a reverse mortgage transaction.
On July 24, Gov. Margaret Hassan signed House Bill 594-FN amending several provisions of New Hampshire’s general consumer laws, including a provision prohibiting yield spread premiums for reverse mortgages. The bill was sponsored by Rep. Mary Beth Walz (D-Merrimack, N.H.), and the amendment is effective Sept. 22, 2013.
The provision now reads, “In a reverse mortgage transaction, any credit derived from offering an interest rate higher than the par rate shall only be paid to the borrower or used to pay the borrower’s costs, and shall not be used as an additional source of compensation.”
However, the amendment is “problematic,” says the National Reverse Mortgage Lenders Association, because it doesn’t define what the par rate might be, and doesn’t specify what an “additional source” of compensation is.
NRMLA says it is following up with the New Hampshire Banking Department to see if the department plans to issue regulations to clarify the new law or provide more guidance.
Access H.B. 594 in its final version.
Written by Alyssa Gerace