Differing Strategies on Reverse Mortgage Legislation

When it comes to lobbying state legislators conjuring new laws to regulate the reverse mortgage product in their individual jurisdictions, industry advocates take differing approaches.

These advocates claim some success in shaping both the debate and resulting statutes that affect reverse mortgage lending, already heavily regulated on the federal level. However, there is disagreement around the “MO”.

At the National Reverse Mortgage Lenders Association, for example, President Peter Bell says: “We’re not looking to move a model law,” although he acknowledges that “others are pushing it” – a veiled reference to the Mortgage Bankers Association. Bell’s reasoning: “Why go looking to push [a model law]” where they’re not thinking of such legislation in the first place? “That’s just sticking your head up to be shot at,” he notes colorfully.

Last fall, the lead MBA spokesperson, Regina Lowrie, who heads an MBA reverse mortgage task force, told RMD that the Association’s model document is intended to “get ahead of the [legislative] curve and give [state lawmakers] a framework.”

Sarah Hulbert, CEO, Senior Financial Corp. – and ex-officio chair of the NRMLA board – says model legislation “may serve as a starting point,” but meaningful dialogue between industry practitioners and lawmakers is more useful. While individual states “feel the need to protect their constituents” with reverse mortgage legislation, Hulbert says HECM “is the only reverse out there in today’s economic environment, and it already falls under numerous regulatory agencies and authorities.”

Many new state-level laws only serve to “create duplication,” she argues. In Hulbert’s state of Washington, a new law signed by the governor on April 21, 2009 gave state residents more access to reverse mortgage lenders and applied new safeguards intended to increase consumer security. Four other states passed laws in 2009 regulating reverse mortgages: California, New York, South Carolina and Vermont.

Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade. He can be reached at [email protected]

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