Massachusetts Governor Deval Patrick signed a bill into law Friday that will delay a face-to-face reverse mortgage counseling mandate in the state for two years. The mandate went into effect briefly last week, starting August 1, prior to the governor’s signature. It will now be postponed until August 1, 2014.
As part of state requirement, the mandate would require that certain borrowers receive counseling in person rather than over the phone. The change was met with concern from reverse mortgage lenders as well as counseling agencies, which have cited the lack of available in-person counselors in the state as presenting a challenge to consumers.
“Cambridge is very happy that HB 4323 has been signed into law,” says Tony Lopes of local agency Cambridge Credit Counseling. “The bill will ensure that every struggling homeowner will be reviewed for a mortgage modification and will help to keep Massachusetts residents in their homes when it is deemed that there is more value in modifying their loan as opposed to the lender foreclosing on the property.”
Regarding the rule’s quick, but short-lived implementation this week, Lopes says the shift led to some frustration among borrowers who had scheduled reverse mortgage counseling sessions this week.
“While the face to face HECM Counseling requirement was in place for only a few days, Cambridge spoke with many frustrated borrowers that were unhappy with having to travel to a location to complete the counseling face to face,” Lopes told RMD. “Even in its short period of being in effect the requirement showed that it has serious flaws when it comes to execution.”
Representatives from the National Reverse Mortgage Lenders Association and Rasky Baerlein’s Jeff Terrey as well as advocates locally including Brett Kirkpatrick of Mortgage Financial Inc. and George Downey of Harbor Mortgage Solutions have worked toward delay of the rule in past months and over the last two years. As it stands, the rule would apply to specific “mortgagors,” who fall under a certain income threshold.
The postponement of the rule is good news, Lopes says, but it must be changed over the long haul to present the options borrowers need.
“We hope that over the next two years legislators will come to realize that while the requirement though well-intentioned on the surface, it will do more harm than good for seniors. The best way to ensure that every applicant understands the reverse mortgage they’re considering, is to focus on the quality of the counseling, as HUD is doing.”
Recent data provided by national counseling agency CredAbility indicates that 99% of borrowers in the Atlanta metro area prefer phone counseling when presented with the option to receive counseling over the phone or face to face.
Written by Elizabeth Ecker