The Massachusetts Division of Banks (DOB) issued a letter on Tuesday reminding the reverse mortgage industry participants active within the state that relief allowing for telephonic or video-based Home Equity Conversion Mortgage (HECM) counseling will end as planned on December 15, 2021. Any loans originated in Massachusetts beginning on that date will require counseling sessions to be conducted in person. This is according to a notice released by the state DOB and obtained by RMD.
While the intensity of the pandemic has diminished over the past year with the broader availability of vaccines and the development of other treatments, cases across the country are again accelerating due to the more virulent nature of the recently-discovered “Omicron” variant, and cases have accelerated notably within Massachusetts over the past 30 days.
Considering that COVID-19 more prominently affects older people and combined with the presence of a more infectious variant, organizations including the Massachusetts Mortgage Bankers Association (MMBA) and the National Reverse Mortgage Lenders Association (NRMLA) have attempted to communicate the necessity of extending the deadline to the state’s legislature. The last time such a requirement interacted with the need for pandemic-induced physical distancing, reverse mortgage business was put on hold in the state.
A request for comment from the Massachusetts DOB was not returned as of press time.
According to reverse mortgage professionals active within the state, the announcement by the DOB caught many off guard since longer-term solutions designed to allow for the continuation of phone or video-based counseling have been deliberated for months, predating the last extension of the deadline that was handed down in June.
In a comment letter submitted by the MMBA to the state legislature last week and reviewed by RMD, the organization highlighted several counseling deficiencies that could be addressed by extending the December 15 deadline or establishing a more permanent solution. State-approved counselors that can offer the sessions are a minimal resource, with only five full-time counselors and one part-time counselor able to provide such services in the state. These figures regarding the number of available counselors are unchanged from figures shared with RMD six months ago.
In June of this year, Massachusetts Gov. Charlie Baker extended the pre-existing deadline allowing telephonic and video counseling an additional six months. While a bill that aimed to permanently address the in-person counseling requirement was filed as early as March of this year, the proposed legislation appears to be stalled without additional deliberation based on publicly-filed information made available by the Massachusetts state legislature.
Both MMBA and in-state reverse mortgage professionals have described a persistent lack of available counselors approved by the Massachusetts Executive Office of Elder Affairs and the U.S. Department of Housing and Urban Development (HUD). That shortage of available counselors remains the most immediate concern for the reverse mortgage business related to the state’s expiring relief.
During the COVID-19-induced state of emergency, more than 400 counseling sessions have been conducted through video or telephonic means according to MMBA, a measure taken to decrease the likelihood that older Massachusetts residents would be exposed to COVID-19 or its more aggressive variants. Massachusetts remains the only state in the country that requires reverse mortgage counseling sessions to be completed in person.
In-state impact of the expiring deadline
According to a Massachusetts-based reverse mortgage counselor, the fact that no action has taken place to provide a more permanent solution to these issues is baffling.
“I’m shocked that no action has been taken on this legislation,” said Jennifer Cosentini, housing director at Cambridge Credit Counseling Corp. based in Agawam, Mass. regarding the stalled bill. “Why is the state of Massachusetts willing to put our counselors and seniors at risk?”
A new pause in reverse mortgage business within the state could be worse than the pause seen in March 2020 according to George Downey, founder of Harbor Mortgage Solutions in Braintree, Mass. One of the reasons is that cases of infection within the state have spiked significantly within the last 30 days, with new infections on November 12 coming out to 3,988. On December 13, that number had ballooned to 11,672, according to data from the New York Times.
“We’ve had a considerable surge in COVID cases, and seniors being a vulnerable cohort have been advised to avoid gatherings and in-person meetings,” Downey told RMD in an interview. “[Counselors] are not having people come into their offices anymore. Just in terms of the logistics, we only have five people who can serve the entire state population. Looking at that and the burden this places on seniors with mobility issues, they must travel extraordinary distances. Island-dwellers at Martha’s Vineyard or Nantucket have to get on a boat or airplane.”
Late in the day on Tuesday, a potential deficiency in the DOB notice issued to industry participants was brought to light regarding the effectual date of December 15. The notice specifies that the date of “application” cannot be listed beyond December 15. However, in certain instances it’s possible that an application may arrive before or after the scheduled counseling session. It is not clear if, for instance, an application date of December 15 will permit counseling that is scheduled after that date.
What the reverse mortgage industry can do
When asked about what the broader reverse mortgage industry should keep in mind about the difficulties faced by Massachusetts-based reverse mortgage professionals, Downey emphasized the need to engage with state-level legislators to ensure they’re being given accurate information about the standards of the modern reverse mortgage product.
“This problem started in 2009 and emanated from a well-intended but misguided senior advocate who promoted legislation to mandate in-person counseling,” Downey explained. “It’s not what these people know, it’s what they don’t know, and as well-intentioned as this individual was, he was thoroughly unfamiliar with the inner workings of a reverse mortgage.”
Legislators are similarly unaware of the specific dynamics of a reverse mortgage and are often given inaccurate information by constituents that only serves to compound many of the negative – and more importantly, incorrect – perceptions about the product category, Downey says.
“One suggestion in various states would be for local providers to reach out to their legislators to explain and educate them about what the product is and isn’t, so they become less vulnerable to well-intentioned do-gooders who propose legislation,” Downey said. “Once legislation is enacted, it’s very difficult to get it changed. For 12 years we’ve been fighting this problem, and responsible people in this industry need to meet with their state legislators and agencies and educate them about what this program is all about.”
History of reverse mortgage counseling relief, pandemic’s impact on seniors
In March of 2020 during the earliest days of the COVID-19 pandemic, reverse mortgage business within Massachusetts was effectively shut down due to the imposition of virus mitigation measures and physical distancing requirements handed down by both state and federal health authorities, in concert with a state of emergency as declared by Gov. Baker.
In April 2020, the Massachusetts House of Representatives and state Senate passed a bill providing a statewide moratorium on foreclosures and evictions during the COVID-19 coronavirus emergency, which also featured a provision permitting telephone or video counseling for reverse mortgage transactions for the duration of the emergency. That state of emergency was terminated on June 15, 2021, but the deadline for phone or video counseling was extended to December 15.
In an interview in June, Cosentini told RMD that the impact on seniors seeking reverse mortgage counseling was readily apparent based on her conversations with clients.
“Our Massachusetts clients were absolutely thrilled that they did not have to come into the office,” Cosentini said in June. “When we compiled this data looking at how far these seniors would have to travel to come see us, it was hundreds of miles in a lot of cases. So, they were so happy that they didn’t have to do it. A lot of them were clients that we had counseled in the past, and now they were doing a refinance and thought they would have to come see us face-to-face. They were so happy they didn’t have to do that this time.”
According to a recent report published by the New York Times, the United States is on the verge of reaching a total death toll of 800,000 deaths attributable to COVID-19. Nearly 600,000 of those total deaths have taken place among people aged 65 or older.
“As the coronavirus pandemic approaches the end of a second year, the United States stands on the cusp of surpassing 800,000 deaths from the virus, and no group has suffered more than older Americans,” the report begins. “All along, older people have been known to be more vulnerable, but the scale of loss is only now coming into full view.”
Editor’s note: An additional detail regarding the DOB notice and how it could interact with counseling taking place prior to or after December 15 was added to the story.