CA: Assembly Member Feuer introduced AB 329 Reverse Mortgage Elder Protection Act of 2009.
Click here to read AB 329
1. Prohibits a lender from referring a prospective borrower to a counseling agency, or paying for counseling agency. It also will require lenders to provide borrowers to all agencies in their home state. Requires the lender to disclose any payments or business affiliations between the lender & counseling agency.
a. My Thoughts:
i. The lender should be forbidden from paying, contributing or having a business affiliation with a counseling agency.
ii. HUD presently forbids lenders to pay for counseling.
iii. HUD has regulations requiring lenders to provide a list of 5 counseling agencies to all prospective borrowers. A full list will be over 6 pages long for CA. This is a waste of paper and ineffective.
2. The bill will give borrowers a 30 day right of rescission.
a. My Thoughts:
i. Presently there is a 3 day right of rescission.
ii. A 30 day right of rescission will delay borrowers in attaining their proceeds. This will cause significant hardship for many borrowers who need the reverse mortgage to pay for care, are having trouble paying bills or their mortgage.
iii. The HUD 3rd party counseling is an effective consumer protection that IS WORKING. The counselors are HUD approved and are independent from the lender.
iv. 30 day right of rescission will significantly inhibit the reverse mortgage for home purchase program. What seller will consider a buyer using a reverse mortgage for home purchase if they have the right to change their mind for 30 days?
3. The bill also provides lenders to hold a fiduciary duty to the borrower.
a. My Thoughts:
i. Yes, of course this is a no brainer. The profession needs to establish a nationwide professional designation including CEUs and annual ethics training as many other professions have done. The National Reverse Mortgage Association is in the process of creating a Reverse Mortgage Professional designation. Grievances and Ethics board violation processes are included in the designation being established.
Click here to read AB 329
1. Prohibits a lender from referring a prospective borrower to a counseling agency, or paying for counseling agency. It also will require lenders to provide borrowers to all agencies in their home state. Requires the lender to disclose any payments or business affiliations between the lender & counseling agency.
a. My Thoughts:
i. The lender should be forbidden from paying, contributing or having a business affiliation with a counseling agency.
ii. HUD presently forbids lenders to pay for counseling.
iii. HUD has regulations requiring lenders to provide a list of 5 counseling agencies to all prospective borrowers. A full list will be over 6 pages long for CA. This is a waste of paper and ineffective.
2. The bill will give borrowers a 30 day right of rescission.
a. My Thoughts:
i. Presently there is a 3 day right of rescission.
ii. A 30 day right of rescission will delay borrowers in attaining their proceeds. This will cause significant hardship for many borrowers who need the reverse mortgage to pay for care, are having trouble paying bills or their mortgage.
iii. The HUD 3rd party counseling is an effective consumer protection that IS WORKING. The counselors are HUD approved and are independent from the lender.
iv. 30 day right of rescission will significantly inhibit the reverse mortgage for home purchase program. What seller will consider a buyer using a reverse mortgage for home purchase if they have the right to change their mind for 30 days?
3. The bill also provides lenders to hold a fiduciary duty to the borrower.
a. My Thoughts:
i. Yes, of course this is a no brainer. The profession needs to establish a nationwide professional designation including CEUs and annual ethics training as many other professions have done. The National Reverse Mortgage Association is in the process of creating a Reverse Mortgage Professional designation. Grievances and Ethics board violation processes are included in the designation being established.
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