A new hearing in California is scheduled for April 29th to discuss a bill introduced by Senator Lois Wolk to establish reverse mortgage suitability standards. Introduced in February, SB 660 would require that lenders, brokers, or others who recommend the purchase of a reverse mortgage have objective and reasonable grounds for believing that a reverse mortgage is appropriate for the perspective borrower.
The suitability of a recommended purchase of a reverse mortgage shall be determined, with reference to the totality of the particular borrower’s circumstances, goals, and needs said a statement from the California Advocates for Nursing Home Reform.
The Legislative Counsel Digest states that:
This bill would provide that a lender, broker, person, or entity who recommends the purchase of a reverse mortgage owes the prospective borrower a duty of honesty, good faith, and fair dealing. The bill would require that a lender, broker, person, or entity that recommends the purchase of a reverse mortgage have reasonable grounds for believing that the reverse mortgage is suitable for the prospective borrower and to make reasonable inquiries to determine suitability.
The bill would require that the suitability of a recommended purchase of a reverse mortgage be determined, with reference to the totality of the particular borrower’s circumstances, goals, and needs and establishes specified criteria for the purpose of making this evaluation. The bill would provide that recommendation of the purchase of a reverse mortgage that is found to be unsuitable constitutes a breach of the duty of honesty, good faith, and fair dealing. The bill would permit any person injured as a result to bring a civil action for damages. The bill would require a lender, broker, person, or entity that recommends the purchase of a reverse mortgage to develop and maintain a system to achieve compliance with its provisions, as specified.
The text of the bill also lists 13 items which should help determine whether or not a reverse mortgage is suitable for a borrower. You can read the list at the link below. Thank you Shannon for the info.
