Model Reverse Mortgage Legislation: Are States Listening?

As industry representatives develop and circulate model legislation intended to guide state lawmakers in creating rules for reverse mortgage lending, there is some question about how much they are taking heed. “States are not paying too much attention to model legislation proposals right now,” concedes Joe Demarkey, regional sales director for MetLife Home Loans.

He spoke at a conference last week in San Diego sponsored by the Mortgage Bankers Association, which earlier this year issued its own model bill. The lead MBA spokesperson, Regina Lowrie, who heads an MBA reverse mortgage task force, said their model document is intended to “get ahead of the [legislative] curve and give [state lawmakers] a framework.” Lowrie pointed to three key issues addressed in the MBA’s model bill, including counseling (“it should be made mandatory”); cross-selling (“which is ripe for fraud”); and tax/insurance set-asides (“there should be a three-year account”).

Demarkey acknowledges that “states talk to each other” as evidenced by their separate proposals that, he says, were a “hodge-podge of what others have done.” He advises people to pay “close attention to the kind of state legislation that’s brewing,” adding that “you can’t communicate enough” on such matters. He cites as an example “what happened in New Hampshire [which] was quite a shock.” The Granite State passed a law this year, which completely prohibits Yield Spread Premiums and cross-selling in reverse mortgage transactions.

Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at [email protected]

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