Reverse mortgage counseling relief in Mass. poised to end, endangering state business again

Reverse mortgage counseling in the state of Massachusetts has been allowed to progress remotely via video conferencing or telephone for most of the year, but the relief allowing for such measures is poised to expire yet again absent additional action from the state’s legislature and the office of Gov. Charlie Baker (R).

This is according to previously-released guidance and perspective from reverse mortgage professionals operating within the state, including counselors and originators.

The issue of remote counseling

Massachusetts is the only state in the country that requires reverse mortgage counseling to be conducted face-to-face, a requirement that had previously clashed with safety issues created by the COVID-19 coronavirus pandemic. Early on after a state of emergency was declared stemming from the pandemic, the state House of Representatives and state Senate passed a bill providing a statewide moratorium on foreclosures and evictions during the COVID-19 emergency, which also featured a provision permitting telephone or video counseling for reverse mortgage transactions for the duration of the emergency.

That state of emergency was terminated on June 15, 2021, but the deadline for phone or video counseling was extended to December 15.

By that point in mid-December, the Massachusetts Division of Banks (DOB) issued a letter reminding the reverse mortgage industry participants active within the state that relief allowing for telephonic or video-based Home Equity Conversion Mortgage (HECM) counseling would end as planned on December 15, 2021. Any loans originated in Massachusetts beginning on that date would revert to requiring counseling sessions to be conducted in person.

Several weeks later, the state congressional bodies extended the relief yet again to July 15, 2022. While there are indications that some movement has taken place regarding an extension or even a potentially permanent fix to this issue, it has yet to materialize and it is likely that there will be yet another disruption to reverse mortgage business within the state resulting from this piecemeal approach to relief.

Where things currently stand

While the situation remains generally suboptimal since the counseling agencies and lenders need to wait for relief from the government once more, movement on the issue and the involvement of both the Massachusetts Mortgage Bankers Association (MMBA) and the National Reverse Mortgage Lenders Association (NRMLA) have been instrumental in seeking out more relief and potentially other more robust solutions. This is according to George Downey, founder of Harbor Mortgage Solutions in Braintree, Mass.

“While all of this is going on, I think it needs to be noted that the people within the industry here, the two associations, have really stepped up to the plate to promote the interests for the consumers,” Downey told RMD in an interview.

While these issues generally don’t appear to be impacting customer perceptions about reverse mortgages or their own patience with them, the industry within the state is well-equipped to handle this disruption because it was the norm for so long. This is according to Brett Kirkpatrick, partner at Harbor Mortgage Solutions.

“We lived through six years of in-person counseling only in Massachusetts, beginning in 2014 up to the emergency declaration in 2020,” he said. “Seniors were seriously stressed to find transportation to a location that was very far away from them. These are all the difficulties that we’ve been trying to explain to the legislature for all those years. So, we are hopefully only temporarily back into that situation.”

For Jennifer Cosentini, housing director at Cambridge Credit Counseling Corp., the situation feels perhaps a little too familiar, and brings to mind a 1993 film starring actor Bill Murray whose character relives the same day over and over again..

“We are preparing for another pause,” she says. “I feel like it’s Groundhog Day. It’s the same thing over and over. We’re going to wait, we’re prepared now for in-house counseling face-to-face. But then, I feel like in August or September, we will be back to full counseling for a short time.”

The long arm of the pandemic

Another complicating factor is that the COVID-19 coronavirus pandemic continues, with more virulent strains leading to spikes in infection rates across the country. However, the current level of infections in Massachusetts is generally low, and certainly much lower than the wave being experienced the last time the counseling relief expired according to data from the New York Times.

However, because reverse mortgages affect a cohort that is more susceptible to serious illness from COVID-19, Downey feels that it remains a factor in the conversation that needs to be kept in mind by decision-makers.

“I think that [COVID-19] is still very much in play,” Downey says. “We’re dealing with perhaps the most vulnerable cohort in seniors and their vulnerability to it. We have this new COVID variant that is now being heavily publicized here as being extremely infectious, and so the recommendation for seniors is still very high in terms of avoiding contact. The other side of it is that the counselors don’t want the face-to-face counseling.”

Cosentini echoes concerns for senior clients.

“I’m worried for the seniors, to be honest with you,” she says. “I just don’t think they should have to come to a big office and meet with several different people. There are other meetings out there, but they’re going to be encountering several people, for no reason.”

Hope springs eternal

When reached, NRMLA President Steve Irwin described the ongoing work taking place by the association and what the hopes are for eventual results.

“There is currently a bill up for consideration which will extend the expiration date of the telephonic/video counseling,” Irwin told RMD. “NRMLA, in coordination with our Board Member George Downey, has been advocating, on behalf of our Massachusetts members and the seniors they serve, for the successful passage of this bill. Once we get the extension in place, we are hopeful for a successful passage of a bill that would permanently allow for consumer choice in their delivery of HECM counseling.”

While the disruption created by the expiration last time came in at roughly eight weeks, Downey does not believe that the business disruption this time will be as pronounced as what was seen the last time.

“Hope springs eternal,” Downey says. “I am not anticipating a major disruption at all. I’m pretty confident that minimally, we’ll see an extension that would kick the can down the road to sometime next year. But hopefully, the other bill would get passed and we would have a permanent solution. So, I’m not anticipating a major disruption.”

He is, however, anticipating that there will be a short period between the expiration of the current relief and the time that the governor signs a bill that will effectively cease most reverse mortgage counseling inside Massachusetts.

Cosentini also remains optimistic that a fix is coming.

“I’m still optimistic, as I am every single time,” she says. “I always think they’re going to make this permanent, then they don’t. But I’m going to remain optimistic that they’ll make the change. This is going to be a big impact on our staff because we’re hybrid. Now, we have to make sure we’ve got staff in the office, and we need to know when they’re going to be there so we can have in-person sessions. It’s going to be difficult for a little while.”

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