Minnesota Governor Tim Pawlenty signed into law a bill to implement new reverse mortgage consumer protections on Wednesday.
SF 2430 includes a reverse mortgage provision which implements new counseling guidelines, a 7-day “cooling off” period and restricts the cross-sale of annuities and long-term care insurance said the National Reverse Mortgage Lenders Association in an alert to members.
“The provisions in the bill as passed are a result of a long series of ongoing conversations between various industry representatives and Minnesota lawmakers,” said Peter Bell, President of the National Reverse Mortgage Lenders Association in a comment on RMD last week. “They represent a compromise that is well-intentioned and practical.
The bill also requires a lender to refer the prospective borrower to an independent housing counseling agency prior to accepting a final and complete application or assessing any fees.
Additionally, once the borrower provides written acceptance of the lender’s commitment to make the reverse mortgage, the borrower has seven days to think it over, during which time they cannot be required to close or proceed with the loan.
The bill goes into effect on August 1, 2010.