After being signed in to law in May, Maryland’s Reverse Mortgage Homeowners Protection Act act is scheduled to go into effect on October 1, 2010.
From a practical standpoint, HB 799 requires prospective borrowers receive a reverse mortgage counseling checklist prior to counseling.
The checklist includes seven points that borrowers are encouraged to discuss with a counseling agency counselor. They include a range of topics including the ability of the borrowers to finance necessary or catastrophic home repairs, the impact of a reverse mortgage on tax obligations, and government assistance programs.
In addition, borrowers must receive a list of no fewer than nine counseling agencies. Five of the agencies must be within the borrower’s state and one must be within reasonable driving distance to facilitate a face-to-face meeting. The other four must be national intermediaries (MMI, CCI of Atlanta/CredAbility, NFCC and NCOA).
The new law also requires proprietary loans meet current HECM guidelines, with the exception of the $6,000 HECM origination fee cap.
HB 799 also prohibits lenders from requiring borrowers to purchase annuities, long-term care products or any other financial or insurance products as a condition for the HECM loan. Flood, hazard or other peril insurance required for HECM loans is permitted however.
Written by Reva Minkoff
