Over the weekend, California Governor Arnold Schwarzenegger signed AB 329, which establishes the Reverse Mortgage Elder Protection Act of 2009.
The bill is meant to provide senior homeowners with consumer protections to ensure that they’re informed about reverse mortgages. Specifically, the bill requires lenders provide prospective borrowers with a clear and informative written disclosure statement and a written checklist pertaining to the risks and suitability of a reverse mortgage, prior to borrower attending loan counseling.
“Fraudulent mortgage practices have become more prevalent as a result of the national foreclosure crisis that negatively impacted California’s housing market and economy,” says Mr. Schwarzenegger. “This legislation helps crack down on abusive lending practices by giving law enforcement the tools to effectively investigate mortgage fraud crimes and provides Californians with greater consumer protections to promote homeownership in a safe and accountable environment.”
The provisions of AB 329 will be administered by both the California Department of Real Estate (DRE) as to those licensees who are providing reverse mortgages using DRE licenses and the California Department of Corporations as to those providing reverse mortgages under California banking and California financial lender (CFL) laws.
