Mass. Division of Banks to Hold Hearings on Reverse Mortgage Regulations

The Massachusetts Division of Banks has scheduled three hearings later this month to solicit comments on a bill signed last year that added additional consumer protections to reverse mortgages.  During the hearings, the DOB is requesting comments on the opt-in and counseling certification requirements of the law.

“In addition to any general comments on reverse mortgages, the Division is interested in the present availability of reverse mortgage counseling, personal experiences of counseling sessions, and the level of reverse mortgage foreclosure activity in Massachusetts,” they said.

The DOB also requests responses to the following questions:
  • At this time, what is the estimate of counseling sessions that take place over the telephone versus face to face?  What are the approximate lengths of the sessions?
  • How often do you see circumstances where borrowers request to be re-counseled based on their lack of complete understanding of the product?
  • What is the anticipated impact of the requirement that borrowers below an income/asset threshold must obtain in-person counseling?
  • What is the present activity level for a Home Equity Conversion Mortgage (HECM) refinancing transaction and what is a typical timeframe between transactions?
  • Should Massachusetts adopt an anti-tying prohibition so that a reverse mortgage loan cannot be conditioned upon the purchase of an insurance or financial product? Should there be a cooling-off period whereby such transactions are restricted following the closing, and, if so, what length of time should that encompass?

The bill signed last year also included a provision requiring that borrowers receive HECM counseling in person, but the National Reverse Mortgage Lenders Association was able to delay the requirement until August 1, 2012, to conduct a study on the impact.

The industry was concerned that borrowers would have a hard time receiving counseling after a “mystery shopping” experiment found only eight agency-approved face-to-face counselors in the entire state.  According to NRMLA, there were around 3,600 counseling sessions in 2008 and approximately 130 of those were face-to-face.

For more information on the public hearings, see here.


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