Conn. Lawmakers Consider New Reverse Mortgage Counseling Requirements

The National Reverse Mortgage Lenders Association (NRMLA) is working with legislators in Connecticut to address concerns regarding a bill that would mandate in-person counseling, the association announced Friday.

Connecticut legislators are considering a bill (HB 5651) that would mandate face-to-face counseling and implement a seven-day cooling off period between the completion of counseling and the completion of a reverse mortgage application.

The purpose of the proposed bill is “to implement the recommendations of the reverse mortgage task force to protect elderly homeowners from financial harm and unfair deceptive marketing of reverse mortgages,” the proposed bill says.


However, reverse mortgage industry members say face-to-face counseling mandates only hurt those borrowers who are unable to travel in person due lack of transportation, health or other restraints.

NRMLA Co-Chairman Joe DeMarkey testified on NRMLA’s behalf at a hearing last week before the Banking Committee in the Connecticut General Assembly. Massachusetts home equity conversion mortgage (HECM) counselor Tony Lopes testified on behalf of the reverse mortgage counseling community.

DeMarkey is also a principal member of Bloomfield, N.J.-based Reverse Mortgage Funding, and Lopes serves as housing director at Agawam, Mass.-based Cambridge Credit Counseling Corporation.

There are currently four HUD-approved counseling agencies in Connecticut and only four HECM counselors, according to research conducted by NRMLA.

With the four agencies covering only three of eight counties, the state faces a “severe capacity issue,” Lopes tells RMD.

“With only four agencies in Connecticut many seniors will be stripped of the choice to be counseled by phone and have to drive long distances to complete counseling,” he says.

Face-to-face mortgage counseling legislation is in effect in the state’s northern neighbor, Massachusetts. In October of last year, Massachusetts reverse mortgage lenders and counseling agencies rallied to delay face-to-face counseling, which became effective Aug. 1, 2014. Later, a legislative amendment to relieve problems that arose over implementation was filed. It was approved by the Massachusetts House of Representatives and the Massachusetts Senate, but failed to be accepted by the state’s governor before the legislative session ended.

“Numerous difficulties for seniors seeking counseling arose, including extended wait times due to inadequate counseling capacity, increased counseling costs, and the inability to travel to counseling offices,” says George A. Downey, founder and reverse mortgage specialist at Braintree, Mass.-based Harbor Mortgage Solutions, about the negative impact mandatory face-to-face counseling has had on the industry in Massachusetts.

In other states where face-to-face counseling is mandated, there is an “opt out” option (in California) and a hardship exemption (in North Carolina). These essentially allow prospective borrowers to choose to receive counseling over the phone or in person, he says.

“There is no opt out feature in Massachusetts,” Downey says. “Our seniors’ interests are being compromised. It’s a very toxic measure.”

As it stands, the proposed law in Connecticut does not provide for a type of opt out provision.

Written by Cassandra Dowell

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  • There appears to be no end to the motivation to stop a perfectly legal and logical fix for people running out of money in retirement while they have the fix in their home equity. The constant momentum to stop the reverse mortgage by forcing seniors to give up their interest in it is a miracle in itself.

    • wstrycker,

      Why do all blame the introduction of well intended legislation on the legislators? In part the introduction of such legislation lies in the inability of our industry to clearly demonstrate that such legislation is little more than excess with damaging consequences to the financial future of seniors due to the additional barriers such legislation brings. Much of that has to do with our neglecting to realize that the greatest danger of over legislation does not come from the political party which is generally named as our enemy but the one which is called our friend. California, Connecticut, Massachusetts, and Minnesota are the hot beds of such change and are known as blue states.

      Connecticut is more follower than leader at this point. The frustration you feel is in part is because our relationship with state legislators is so weak. If you have not met with and befriended legislators from both parties in your state, do not be surprised by how your state ends up dealing with reverse mortgages.

  • >>and a hardship exemption (in North Carolina)

    I’ve never heard of the hardship exemption for North Carolina before. A few years ago, I was emphasizing North Carolina, and HUD was about to make major changes to the program, and many of my clients couldn’t schedule a counseling session weeks before HUD’s changes took effect. During that timeframe I learned some counseling agencies would only counsel homeowners if they lived within specific counties.

    How does one apply for the hardship exemption? That’d be a good article for RMD.

  • I feel Wstrycker made a very valid comment. Every time we turn around another rule or law is being created and a great share of them do not protect or help our senior borrowers at all.

    Has anyone in these states that require face to face counseling ever consider this may be very intimidating to our seniors. At least by phone they are in the comfort of their home, which means a lot to these seniors.

    No, there are to many obstacles popping up for the seniors to cope with. It never seems to end, do the states and the Federal Government want to eliminate the HECM, which for many seniors is their only means left for a decent retirement!

    John A. Smaldone

  • Senior consumers already have a 2-3 month gestation period from when they first look into the HECM, then wait nearly 2 weeks just to get a counseling appointment, THEN wait another week for the “cooling off period”. Most are ready to proceed once they have had the opportunity to learn the details of the program and are eager to get the process over so they can begin receiving the benefits. In California where these rules already exist, there is no evidence the “cooling off period” benefits the consumer. How many counseling agencies have the capacity to meet clients face to face? How many seniors have the capacity to drive to the nearest counseling agency which may be many miles from home? Making it simpler with clearer disclosures is the solution, the added burden of face to face counseling and cooling off period adds to the problem.

  • I believe this legislation is well intended, however, many of the borrowers I speak with on a daily basis would be unable or even unwilling to meet the face-to-face requirement. I don’t really see how such a thing benefits the borrower anyway. My belief is that if we, as loan officers, do our job and educate the borrower on the front end properly and honestly then it should not matter how or where the counseling session takes place.

    • Ms. Funderburk,

      That is a nice sentiment but it has absolutely nothing to do with why counseling is there to begin with. Not only does counseling give HUD a good defense as to cries that we might deceive seniors to close a deal but it is also marketed by us as a benefit of HECMs.

      If face-to-face counseling gives more credibility to the idea that counselors have the opportunity to measure the reaction of counselees to the interaction that takes place in counseling, then so be it; HOWEVER, if a senior has any reason whatsoever for wanting telephone counseling, making that request should not be eligible to challenge by well meaning senior consumer advocates or by law somehow denied. Why should anyone mind is if it is the choice by default?

  • The _ Cynic,

    Very good points that you bring to the table! We do need to look at ourselves a lot more than we do.

    If we banded together and reached out to these legislators before legislation is introduced, like you said, we might avoid many of them coming to fruition.



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