Maryland Reverse Mortgage Law Goes Into Effect

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

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