Massachusetts Clarifies Face-to-Face Reverse Mortgage Counseling Rule

In the latest development from the Massachusetts legislature, seniors who have already received reverse mortgage counseling on or prior to July 31, 2014, will not have to be re-counseled in person, despite the recent counseling updates that went into effect at the beginning of this August.

The update applies to seniors who have received counseling either on or before July 31, for which a proper counseling certificate has already been executed, issued and dated on or prior to that date and has been delivered to the lender, confirmed the Massachusetts Division of Banks to the National Reverse Mortgage Lenders Association’s (NRMLA) outside legal counsel on Wednesday.

The rule was birthed from legislation passed by Massachusetts in late July to delay the face-to-face requirement for borrowers that meet a low income threshold, as determined by the Department of Housing and Urban Development (HUD).

But while the delay pushes back major reverse mortgage counseling changes until 2016, Governor Deval Patrick added an amendment, thus delaying the signing of the bill into law and essentially implementing the rule until the legislation is finally passed.

Until then, current law that requires face-to-face counseling for lower income borrowers remains in effect.

The counseling requirement applies to “mortgagors,” which Massachusetts defines as an applicant for a reverse mortgage who has a gross income of less than 50% of the area median income, as periodically determined by HUD, and who posses assets, excluding a primary residence, valued at less than $120,000.

Under state law, no lender can make a reverse mortgage unless a borrower opts in writing for the loan; and has received written certification at or before closing from a counselor with a third-party organization that states a borrower has received and completed in-person counseling. Written certifications must come from counselors approved by the Massachusetts Executive Office of Elder Affairs.

Massachusetts’ legislature remains in informal session, however, non-controversial issues may still be addressed, including Gov. Patrick’s amendment.

Written by Jason Oliva

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