A California lawmaker is reconsidering a consumer protection bill that would include a “suitability” checklist for reverse mortgage clients.
According to the National Reverse Mortgage Lenders Association, Assemblyman Jose Medina has “expressed an interest in reviving” the bill, Assembly bill 553, that was first introduced last year.
The bill was tossed out in May 2013 after its February 2013 introduction.
But now, NRMLA explains in a member newsletter, Assemblyman Medina has the option to move the legislation through the state’s Banking Committee and off the Assembly Floor this month, or can reintroduce a new bill by February 21 and would have the entire legislative session to have it passed.
NRMLA has worked with Medina to explain why the legislation would introduce an unnecessary burden on the lending process, in that it would require an additional checklist seven days prior to counseling as well as a disclosure stating that a reverse mortgage is a complex financial instrument that may or may not be suitable for the person’s immediate and future needs.
“After NRMLA staff explained to Medina that in many instances, a prospective reverse mortgage applicant attends a counseling session prior to speaking with a lender, and that California law already required a similar disclosure explaining the complexities of reverse mortgages, the California lawmaker agreed to amend his bill,” NRMLA said in its newsletter.
Assemblyman Medina then substituted new language that would prohibit lenders from taking an application for a reverse mortgage or assessing any fees until seven days from the date of counseling, NRMLA explains. The lender would also be required to distributed a reverse mortgage worksheet guide to be signed by the client prior to application.
Written by Elizabeth Ecker