Reverse mortgage stakeholders are working together to delay the impact of legislation that will require face-to-face counseling for some reverse mortgage borrowers beginning August 1, and could deter lenders from conducting business in the state.
In a meeting held last Thursday in Boston, Massachusetts reverse mortgage industry members as well as some national representatives raised awareness about legislation that has been looming since 2010 and would mandate face-to-face reverse mortgage counseling among certain qualifying seniors within the state’s boundaries.
During 2010, an amendment to a bill was passed into law that included the mandatory provision for certain low income seniors. Since then, the industry has worked toward postponing the mandate—succeeding in that effort twice. It is now scheduled to take effect August 1, following the end of the current fiscal year in Massachusetts.
While the face to face counseling would be required only of those deemed qualifying as low income, lenders have said one of two outcomes would take place as a result of the mandate: either all borrowers in Massachusetts would need to receive the counseling in person or lenders would cease lending in the state.
Stakeholders are working toward another delay in the mandate’s implementation citing a host of difficulties associated with requiring in-person counseling among all borrowers.
“There are housebound seniors, transportation issues, language issues and a host of restrictions,” says George Downey, founder of Harbor Mortgage Solutions in Braintree, Mass., noting a past brief face to face counseling mandate in Massachusetts that brought wait times for borrowers to two to four months. “The bottom line is it effectively will shut down reverse mortgage lending as we have known it in Massachusetts.”
During the meeting, participants pointed to a map produced by Cambridge Credit Counseling that plotted the locations of reverse mortgage counseling agencies across the state. A high concentration of counselors near Boston leaves a stark dearth of counselors in the western part of the state, adding to the challenge of face to face counseling.
“Geographically, trying to meet with people face to face would be extremely difficult,” says Tony Lopes of Cambridge Credit Counseling. “It would be difficult from a counseling standpoint to do these sessions. And we can’t deny someone counseling if they can’t afford to pay. If we’re rolling the fee into closing and half don’t end up taking out the loan, it’s tough to support those services.”
While the issue is pressing currently in Massachusetts, it could have implications for other states, like California, that have also seen legislation introduced—though not passed—including similar requirements. Currently, North Carolina has mandatory face-to-face counseling, but also has some state funding available to help agencies bear the costs involved.
“Unfortunately Massachusetts, like California is somewhat of a bellwether state, with potential for copycat legislation,” Downey says. “It’s important we put the pin back in the grenade.”
The meeting included lenders, counselors, appraisal professionals, National Reverse Mortgage Lenders Association representatives from Massachusetts and Washington, D.C., and local representatives, among others, who are supporting an amendment to be filed shortly in hopes it will be passed before the end of the legislative session and current fiscal year to be completed on August 31.
“All of the industry resources are in support,” Downey said. “It’s very difficult to un-ring the bell. The reception was marvelous.”
Written by Elizabeth Ecker