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N.Y. Governor Proposes Stronger Reverse Mortgage Consumer Protections

Concerned that reverse mortgage borrowers are not afforded the same protections as other homeowners, New York Governor Andrew M. Cuomo (D) is proposing legislation that will protect seniors with reverse mortgages, as part of a comprehensive plan to safeguard New York seniors from financial exploitation and foreclosure.

The reverse mortgage and senior financial exploitation protections are part of a series of proposals unveiled by Gov. Cuomo for his 2017 agenda, which include initiatives focused on education, life sciences, child care, cybersecurity and more.

Specifically, the plan includes strengthening legislation that will protect senior homeowners with reverse mortgages, establishing an Elder Abuse Certification Program for banks located in New York State, and amending the banking law to empower banks to place holds on potentially fraudulent transactions.

“These proposals will help seniors keep their finances and assets from being vulnerable to thieves and unscrupulous practices, and stop those who seek to exploit them right in their tracks,” Gov. Cuomo stated in a press release issued Sunday.

Under current state law, the Governor’s office indicates that consumer protections available to homeowners, including settlement conferences, which are provided to New Yorkers facing foreclosure, are not provided to homeowners with a reverse mortgage.

In efforts to safeguard seniors from the risks of reverse mortgages and provide equal protections to all New York homeowners, Gov. Cuomo proposes amending the Real Property Actions and Proceedings Law and Civil Practice Laws and Rules to include reverse mortgages.

“This will require that the same consumer protections be provided to all homeowners, regardless of the lending product they utilize,” Gov. Cuomo’s office said in a statement.

Cuomo also intends to help prevent future foreclosures and further protect New York homeowners by directing the New York State Department of Financial Services (DFS) to revisit and revise any rules and regulations pertaining to reverse mortgages.

To help ensure New York seniors are protected, Gov. Cuomo proposes launching an Elder Abuse Certification Program that will be available for all banks located across the state. Designed by the N.Y. DFS, the program will include training bank employees on how to recognize the signs of financial abuse. Upon completion of this certification banks may display their certificate so consumers are aware of the special services they offer.

Currently, banks are insufficiently using their power to place holds on, or prevent suspicious transactions involving elder financial abuse, according to Gov. Cuomo, who is proposing new legislation to further empower banks to place holds on potentially fraudulent transactions in order to protect their consumers, and also be immunized for doing so in good faith.

Once potential fraud is identified and a transaction hold is applied, banks will be required to report to the appropriate state agencies to take action.

Gov. Cuomo’s proposals, specifically those pertaining to reverse mortgages, are a continuation of legislative efforts introduced by state lawmakers last summer following a series of news stories spotlighting New York reverse mortgage borrowers in foreclosure.

The legislation (A10745/S8177), introduced by New York Assemblywoman Helene Weinstein (D-Brooklyn) and Senator Jeff Klein (D-Bronx/Westchester), aims to provide reverse mortgage homeowners with the consumer protections given to other homeowners currently not included in many of the protections of New York State’s residential foreclosure prevention laws.

Currently awaiting further legislative action, if signed into law, the legislation would entitle homeowners to in-person mandatory residential foreclosure settlement conferences with the foreclosing entities under the oversight of the court.

“Exploitation of seniors is a particularly heartless and heinous crime and this administration is committed to doing everything in its power to stop this abuse and ensure these New Yorkers receive the protections they deserve,” Gov. Cuomo stated in Sunday’s press release.

Written by Jason Oliva