Mass. Division of Banks Publishes Reverse Mortgage Counseling Guidance

The Massachusetts state Division of Banks has issued new industry guidance related to the in-person counseling requirement for reverse mortgage loans as a result of the outbreak of the COVID-19 coronavirus. The guidance stems from recent legislation signed into law by Governor Charlie Baker last week, which features a provision permitting telephone or video counseling for reverse mortgage transactions for the duration of the current emergency.

“The Act […] provides that from the effective date of the Act until the termination of the Governor’s declaration of the State of Emergency, the in-person counseling requirement […] can be met by synchronous, real-time video conference or telephone in lieu of the in-person requirement,” the DOB guidance reads.

The change is described as only being in effect from the date in which the legislation was enacted (April 20), “until Governor Baker declares an end to the current State of Emergency,” the guidance reads. “Once the State of Emergency has concluded, in-person counseling shall once again be required.”

According to the guidance, any third-party counseling organization must still be approved to provide reverse mortgage counseling by the Massachusetts state Executive Office of Elder Affairs. It also specifies that for counseling verification forms issued by the U.S. Department of Housing and Urban Development (HUD), there is no option for the counselor to specify that counseling was conducted over real-time video conferencing. In that event, the counselor would mark the form for telephonic counseling.

This counseling guidance is equally applicable between Home Equity Conversion Mortgages (HECMs) as well as any state-approved proprietary reverse mortgage program, according to the DOB.

Late last month, the widespread effects of the COVID-19 coronavirus pandemic effectively stalled reverse mortgage business from being transacted within the state of Massachusetts, since the face-to-face counseling requirement was incompatible with a reverse mortgage loan moving beyond the required counseling phase.

Earlier this month, a piece of emergency legislation was drafted, with a relaxation of the face-to-face counseling provision being a component of a larger bill aiming to address a moratorium on foreclosures and evictions for the duration of the emergency stemming from the outbreak. The final form of that legislation is what was ultimately signed into law by the governor last week.

Read the full guidance document on reverse mortgage counseling at the state government of Massachusetts website.

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