Home Equity Conversion Mortgage (HECM) business in the state of Massachusetts has been effectively put on pause by the outbreak of the COVID-19 coronavirus pandemic, since a face-to-face counseling requirement within the state makes it impossible for seniors to move forward with reverse mortgage loans while adhering to business restrictions and social distancing guidelines put out by local, state and federal health authorities.
This is according to reverse mortgage originators who operate within Massachusetts, along with reverse mortgage counselors who are both based within the state and who operate nationally. Massachusetts’ face-to-face counseling requirement conflicts with the fact that older citizens have a higher level of becoming seriously ill if they contract the virus.
This means that reverse mortgage business within the state is effectively forced to stop until either the end of the virus’ far-reaching effects that will allow more businesses to resume operating in-person commerce, or until there are concessions made for alternative counseling methods by political leaders in the state while its virus mitigation efforts are still active.
Face-to-face counseling impossible while social distancing
“[The stall in Massachusetts business] is true,” said Jennifer Cosentini, housing director for Cambridge Credit Counseling Corp. based in Agawam, Mass. “We are waiting on legislation or an executive order to allow other modes of counseling in Massachusetts at this time.”
Massachusetts Governor Charlie Baker has announced several initiatives aimed at mitigating the spread of the virus, including limiting in-person gatherings, mandatory school closures through the end of April, and an order closing the in-person operations of all non-essential businesses. The governor also instituted a stay-at-home advisory, according to NBC Boston.
“Massachusetts is the only state that requires face-to-face counseling,” Cosentini continues. “Cambridge and every other agency in the state has stopped seeing clients in-person until further notice. I have been receiving calls and emails daily from concerned seniors trying to get this requirement completed so they can move forward with accessing their equity during this pandemic.”
Jackie Boies, senior director of housing and bankruptcy services at Money Management International (MMI), has also observed a pause in reverse mortgage business originating in Massachusetts.
“I would expect that those agencies providing in-person counseling in Massachusetts are working to regroup and get approval for alternative methods, such as Skype,” Boies tells RMD.
Still, additional action on the political front would be required for reverse mortgage business to resume there, she said.
“I hope that the Massachusetts state government is able to meet and reconsider their position on in-person counseling, especially during this pandemic, and make phone counseling available to their population,” she said.
RMD reached out to the office of Governor Baker, but did not receive a reply as of press time.
What originators in the state are doing
The turn of events in the state has effectively made reverse mortgages unavailable to area seniors, according to George Downey of Harbor Mortgage Solutions in Braintree, Mass. He described what the situation currently looks like on the ground in the state.
“In the past two weeks the ranks of certified reverse mortgage counselors in Massachusetts has declined from 25 to zero,” Downey told RMD in an email. “Reverse mortgage counseling is a mandatory requirement, thus the program is now unavailable to Massachusetts senior homeowners.”
This is particularly difficult for reverse mortgage practitioners in the state since demand for the products in general has risen across the country, as more seniors are looking for methods to secure their finances in the wake of the economic volatility introduced by the pandemic.
“Massachusetts is the only state that mandates in-person counseling,” Downey continued. “Although the [state] statute requires in-person counseling for mortgagors with income and asset levels below a stated threshold – the statute also stipulates that if a mortgagor should have been counseled in-person and was not – the loan will be deemed unenforceable. Consequently, all reverse mortgage lenders require all applicants to be counseled in-person.”
Counseling over the phone, which was standard in the state prior to August of 2014, and video counseling over the internet would provide simple solutions to the problems being faced by the reverse mortgage profession and seniors looking for additional financial options, Downey said. Those kinds of provisions, however, would require action on the part of the state government.
Additionally, borrower concern is very high at the moment for reverse mortgage prospects in Massachusetts.
“Clearly, prospective borrowers are puzzled and anxious,” Downey told RMD. “Until this problem is resolved by state officials they have to wait with no assurance that the issue will be, or when it will be solved.”
Massachusetts is the second state to deal with an interruption in reverse mortgage business activity this month. As previously detailed on RMD, New York’s business was recently put on its own “pause” stemming from recently-implemented regulations signed into law by Governor Andrew Cuomo in December.