[Update] New Utah Reverse Mortgage Legislation May Impact Counseling

Reverse mortgage borrowers in Utah may face changes to the counseling process beginning May 12, under recently passed state legislation, S.B. 120.

The Utah Reverse Mortgage Act requires that before a prospective borrower signs a reverse mortgage application the prospective borrower “shall meet with an independent housing counselor,” as part of the process.

The new Utah legislation also requires that lenders and borrowers observe a seven-day cooling off period beginning May 12.


After a prospective borrower accepts, in writing, a lender’s written commitment to make a reverse mortgage loan, the lender may not bind the prospective borrower to the reverse mortgage earlier than seven days after the day on which the prospective borrower gives the written acceptance to the lender.

The legislation’s cooling off period requirement resembles somewhat that which California signed into law last year, which also included a “cooling off” bill.

The California law requires that a reverse mortgage worksheet be presented to and signed by all borrowers during the counseling process and a cooling off period of seven days after counseling before a lender can accept a loan application or assess any fees.

Read the enrolled copy of S.B. 120 here.

Written by Cassandra Dowell

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  • I feel Utah is going to far. The three day right of rescission period should accomplish the same.

    Another area of concern is with the lock of the price. The seven day cool off period before the application is taken can work against the borrower and be a cost burden. Sure, the argument can be the cost could go the other way as well but why play Russian Roulette?

    The counseling issue is very confusing, Utah needs to clarify exactly what they are referring to?

    The new cooling off period that Utah is implementing may create other states to consider passing something similar, I along with I am sure many other of my fiends in the industry hope we never see that happen!

    John A. Smaldone

  • Seems like more paternalistic overkill- the default is to assume that seniors lack the ability to manage their financial affairs. My experience is that first-time home buyers are just as unknowledgeable about forward mortgages as many seniors are about Reverse Mortgages. Why no effort to impose similar “protections” on them?

  • The California Law and hopefully the Utah law are the first steps to provide the consumer with the dedicated time and tools to determine if a reverse mortgage is suitable for their circumstances. The consumer is 100% responsible for determining if a reverse mortgage will benefit or irrepairably harm them. It’s a complex financial transaction with lifelong consequences. The 7 day waiting period is the only time for the consumer to obtain advice from trusted advisors such as legal and financial professionals and family members. It would be dangerous for a consumer to go through the entire application process and assume the 3 day right to cancel after signing the documents is time to determine if a reverse mortgage is right or wrong. If the consumer doesn’t determine suitability before applying they are risking (in most cases) their largest single asset.

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