Connecticut Reverse Mortgage Law Again Moves Forward

Connecticut lawmakers this week advanced a bill that would introduce new requirements for reverse mortgage lenders in the state.

The state senate on Tuesday unanimously passed S.B. 150, which would prevent lenders from accepting applications for Home Equity Conversion Mortgages unless they clearly explained the pre-loan counseling requirements, provided a list of Department of Housing and Urban Development-approved counselors, and received a signed form attesting that the counseling process had been completed.

Lenders would then be required to retain a copy of the letter, signed by both the borrower and the counselor, for the duration of the loan.

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The Associated Press first reported on the passage of the bill.

Should lenders run afoul of the law, they would then be in violation of the state’s unfair or deceptive trade practice laws. Under those statutes, Connecticut’s consumer protection commissioner can issue cease and desist orders, seek restitution, and impose penalties of up to $5,000 for “willful violations.”

The bill was introduced by state Sen. Douglas McCrory, a Democrat, and State Sen. Kevin Kelly, a Republican. 

The proposal now goes to the state’s House of Representatives for further approval. 

The Connecticut state senate last year passed a similar bill, which some lawmakers at the time noted was “redundant”; HUD already requires all potential borrowers to undergo counseling as a condition of taking out a HECM.

Martin Looney, president pro tempore of the state senate, told the Associated Press that he’s received multiple reports of “reverse mortgage lenders preying on seniors in Connecticut.”

Written by Alex Spanko

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    • EricSD,

      All great questions but in these kinds of cases, anecdote (or even hearsay) that can be used to push a favorable result forward rarely is verified or thoroughly questioned as it needs to be.

  • Quote from the article:
    “The Connecticut state senate last year passed a similar bill, which some lawmakers at the time noted was “redundant”; HUD already requires all potential borrowers to undergo counseling as a condition of taking out a HECM.”

    That’s true. The last, similar legislation was pretty much meaningless because of existing, mandatory counseling. Now, there doing it yet again.

    Quote from the article:
    “Martin Looney, president pro tempore of the state senate, told the Associated Press that he’s received multiple reports of “reverse mortgage lenders preying on seniors in Connecticut.””

    It seems that the legislature is not conscientious (or doesn’t want to be) in finding-out the details of what the “lenders preying on seniors” is all about. The politicians probably don’t want to “offend the lenders” by regulating their behavior, relevant to the problem, and pass-off something like this as “we did something about it.”

    Which, of course, they haven’t. They (the politicians) haven’t even acknowledged that the lenders are even responsible for generating the complaints or are the very subject of the matter.

    In their complaints, the seniors are probably talking about the incompetence and nasty attitude of which they’re confronted, from the lenders’ customer service people. The lenders in turn deceitfully blame the seniors for “not understanding the program,” and the politicians choose to believe the lenders.

    This is a good example of why “nothing ever changes.” For the better that is.

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