New California Disclosure Requirements Cause Confusion for Lenders

During a special workshop on the reverse mortgage landscape in California at the NRMLA annual meeting, it become clear after only a few minutes that there is immense confusion among lenders surrounding AB329, California’s Reverse Mortgage Elder Protection Act.

According to AB329, borrowers in California must now receive the Plain Language Important Notice Reverse Mortgage Disclosure before they go through counseling. 

However, what happens in a case transfer or when the borrower goes to counseling prior to meeting with a lender remains extremely unclear. One suggestion provided by the session was to give the disclosure out at the loan officer’s seminar, and have all the participants sign and date it.

While the panel expressed hope of a change in the law to clarify case transfers, it is up to individual loan companies to determine their policies so as to comply with the law in these circumstances.

RMD contacted the counseling agencies and confirmed the confusion.  The President of the National Housing Counseling Association, Michael Keene, said that there is, “no onus on the counseling agency to provide [the disclosures] at all.” He called the plain language notice, “strictly a lender obligation.”

Keene added that while what happens if the borrower goes to the counselor first is addressed in the new counseling checklist requirements, it has not yet been addressed in the plain language notice. “I don’t know if counseling agencies are prepared to provide a solution to that now,” said Keene, “We’re trying to get an industry-wide solution in the next couple of weeks.”

While the confusion surrounding the Important Notice Reverse Mortgage Disclosure remains widespread, NRMLA and the National Housing Counseling Association are working with the state of California to try to clarify the situation.

Write to Reva Minkoff

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