Massachusetts is the only state in the country that has a legally-mandated in-person counseling requirement — a result of lawmakers and consumer advocates’ push to increase transparency between mortgage clients and lenders. While an in-person counseling requirement may not be a huge concern for many seeking forward mortgages, it can create logistical problems for seniors on the reverse side.
Reverse mortgage industry veteran George Downey, of Harbor Mortgage Solutions, did not seek out an opportunity to be responsible for helping to change the laws in his state — but he never backed away from the challenge either.
Downey recently sat down with RMD to discuss how he landed in the unique position of advocating for change to help seniors seeking reverse mortgages.
Downey started Harbor Mortgage Solutions in 1991 and became involved with the reverse mortgage product the following decade. While Downey is convinced about the utility of reverse mortgages for homeowners at or over age 62, he said the one ongoing issue is the reverse mortgage counseling requirement in Massachusetts.
“The mandated in-person counseling is often conflicted by the lack of supply of counselors, the location of the counselors, and the burden of older people being required to travel extreme distances just to attend an in-person session with virtually no alternative,” Downey said. “Therefore, [the in-person requirement] really denies the great majority of the population of the state access to the reverse mortgage products.”
Through Downey’s National Reverse Mortgage Lenders Association (NRMLA) board membership and Harbor’s affiliation with the Massachusetts Mortgage Bankers Association (MMBA), Downey and his business partner, Brett Kirkpatrick, have sustained an informal lobbying initiative since 2010.
Downey says that his campaign to change the rules started from necessity more than anything else.
“The problem is that the initial legislation that created [the in-person requirement] was embodied in the statutes,” Downey said. “So, the fix for it can’t be a regulatory fix that the state Division of Banks, Consumer Affairs or any of these state agencies can hand down. They do not have the ability to control that, you have to have a legislative change.”
That means convincing legislators that removing the in-person counseling requirement is necessary, Downey said. And that requires someone with the ability and product knowledge to walk legislators through the specifics of reverse mortgages, according to Downey.
“The challenge there was, of course, that they are dealing with a massive increase in the amount of legislative proposals, and they have little time,” Downey said. “And unfortunately, almost all of them had the misconception of the reverse mortgage product as the loan of last resort. They were susceptible to the reputational issues that have dogged the product for all these years.”
This takes time, which is where collaborating with professional lobbyists has been crucial. Through these collaborations, doors have opened for meetings with legislators, allowing Downey to explain why the in-person requirement can be a real hurdle for a reverse mortgage borrower.
Downey credits Kirkpatrick with playing an integral role in the conversations.
“Brett and I, gosh, I can’t count the number of times that we went up to the State House to meet with the various key legislators in the appropriate committees, financial services, right through ways and means,” he said. “That took some time. And then, fortunately, Governor Charlie Baker understood what the issue was.”
The potential long-term fix
The law that established the in-person requirement was passed a decade prior to the COVID-19 pandemic, so the impact of lockdowns and stay-at-home orders were not anticipated. When the state of emergency was declared by the Massachusetts governor in 2020, the in-person counseling requirement effectively halted any reverse mortgage business from taking place within the state.
Emergency legislation passed by the Massachusetts state Senate temporarily relaxed the state’s counseling requirement, but as pandemic impacts dwindled the following year, business was once threatened again by the expiration of the bill.
An extension was made in June 2021, but it was set to expire in December — which required another temporary action to extend the relief again through March 2023.
Now that 2023 has rolled around, Downey is optimistic that the state legislature will continue to allow them to do business while working on a more permanent solution. But, as of now, it’s hard to say, he said.
“We’ve got new legislators in there, so the education process has to resume,” Downey said. “We’ve got to confer with the MMBA and their lobbyists to determine who the strategic people are.”
State Rep. Kate Lipper-Garabedian (D) recently introduced a bill that could offer a permanent fix via telephonic or video counseling, Downey said, which will be refiled soon following the prior version’s expiration on December 31. It may have to be attached to a larger piece of legislation to move forward, but Downey is not ready to call it quits just yet.
“Will it survive that cut or die on the vine? I don’t know,” Downey said.