As more and more states are proposing reverse mortgage legislation I wanted to give everyone a better idea of what is happening in Minnesota.  S.F. No. 489 was introduced by Minnesota Attorney General Lori Swanson and other politicians to prevent reverse mortgage lenders from taking advantage of senior citizens.

Below is a video of testimony from a range of  people including Carla Heyl Assistant MN Attorney General, Darryl Dahlheimer of Luthern Social Services, Christeen Stone an AARP volunteer and Beth Paterson of Prestige Mortgage, Reverse Mortgages SIDAC who has testified at all of the hearings mentioned in this post. The bill approved and was sent to the Senate Judiciary Committee.

Fast forward to the Minnesota House of Representatives Committee on Commerce and Labor and Consumer Protection Division last week.  AARP’s executive councilmember Shirley Hunt Alexander read the following statement which you can read here.  Below is a couple snippets (AARP put specific words in BOLD):

• We support the suitability clause – intended to ensure that reverse mortgages are sold only to people who need them.  Lenders should be held responsible for selling loans that they know are bad for the particular consumer.
• We also support the prohibition of cross-selling.  Too often, the home equity of borrowers is depleted because they are offered inappropriate financial products, such as annuities or long term care insurance.  Consumers should be wary of anyone who tries to sell them something to be paid for with a reverse mortgage.  If anyone is trying to sell you something and recommending you use a reverse mortgage to pay for it, that’s generally a good sign that you don’t need it and shouldn’t be buying it.
• We also support the mandatory counseling provision of the bill; and are pleased that the timeframe in which consumers can reconsider their loan is expanded.  We are also pleased that the bill increases the responsibility of lenders so that the originator and the buyer of the loan can both be held responsible for any unscrupulous actions by the loan originator.

If you would like to see a video of this session, click here.

Next it moved on to the House Labor and Consumer Protection Division.