The New York Department of Financial Services (DFS) has issued new updates to a series of regulations governing both Home Equity Conversion Mortgages (HECMs) and proprietary reverse mortgage products originated within the state, considering a series of industry comments submitted to the regulatory body by the National Reverse Mortgage Lenders Association (NRMLA). This is according to an email alert issued to members of the reverse mortgage trade association.
Among the series of regulatory changes being published in the New York state Register at the end of July, borrower and termination events are being defined in “a more consistent manner” with current regulations that govern the HECM program, according to the alert. The new regulations also remove the requirement of a letter of credit for lenders making proprietary reverse mortgage loans which have been fully funded at closing; and changes the counseling affidavit to a “counseling acknowledgment” while allowing a HUD Counseling Certificate to be allowed in place of the acknowledgment.
The new regulations also change specific terminology defining housing repairs for properties and how the presence of such repairs might affect the determined value of a property; while also providing that eligible non-borrowing spouses (NBS) have the right to remain in a property for the rest of their lives following the death of the borrower.
The mortgagee may also advance necessary funds to cover the costs associated with taxes and insurance on the properties if the funds are already overdue; the loan has already been declared due and payable; or a set aside has been established in conjunction with certain disbursement fees.
NRMLA expressed appreciation for the fact that its recommendations were considered in coordination with the adoption of the new regulations.
“While we are still waiting on the final publication of the final regulations, we are very pleased the Department took our submitted comments to heart and acted quickly to resolve many of the issues our members were facing under the prior set of enacting regulations,” said Steve Irwin, president of NRMLA in a statement to RMD.
2020 has been an eventful year for reverse mortgage regulations in the state of New York. Last week, a new bill requiring New York lenders to notify the state’s DFS and mortgagors of an impending foreclosure action passed both houses of the state’s legislature, and is awaiting the signature of Governor Andrew Cuomo to become law.
Earlier this year, the state implemented a series of sweeping new regulations for reverse mortgages which took aim at what it calls “deceptive practices,” requiring reverse mortgage lenders to provide supplemental consumer protection materials while imposing additional restrictions on lenders related to their payment of insurance premiums and property taxes.
The passage of that bill and lingering compliance questions led briefly to a pause in New York-area reverse mortgage business, as lenders grew concerned over how best to understand the impact that the new regulations would have on the business. Originations in New York largely resumed by the following month.