Penn. Legislators are targeting reverse mortgage loan advice in their new bill
The Pennsylvania state official seeks counseling for reverse mortgages in a bill that is being proposed designed to reduce some of the “pitfalls” that come with products from reverse mortgages by limiting counseling to meetings in person only within the state. The information was that were released by the office of Representative sponsor Morgan Cephas (D) and an email she sent for the legislature of Pennsylvania.
Presently, Massachusetts is the only state in the United States that requires counseling in person for reverse mortgages. This is an area affected by issues after the policy was challenged by guidelines for health and prevention methods arising from COVID-19 pandemic that started in March 2020.
Although Rep. Cephas’ proposed legislation in Pennsylvania permits certain exceptions which aren’t incorporated into Massachusetts law however, the sector of the reverse mortgage is trying to collaborate with Green Day provides a payday loans online no credit check instant approval office of its representative to figure out how the industry’s participants as well as the trade association can help them in their efforts.
Reverse Mortgage Advice Bill proposal
In a memo sent on Jan. 19, to members of the Pennsylvania House of Representatives, Cephas mentions the economic challenges that seniors in the state face as a reason that could prompt the state’s seniors to look into reverse mortgage options. Cephas also explains the reasons the reasons why a new obligation to offer advice must be sought out by the legislature.
“Today there are many Pennsylvanians are facing economic challenges. As a result, some of our older citizens have decided to get reverse mortgages that allow homeowners to access the equity in their home in a lump sum, or a fixed monthly installment or a line of credit” Rep. Cephas notes in her letter. “While it can allow seniors to gain wealth without having to sell their homes, many could be paying more than they would have before and some may be forced to sell their house.”
Since many senior citizens may not be aware of the ways reverse mortgages can impact the financial position of their family, Cephas’ proposal aims to provide more clarity, while also permitting other forms of advice when speaking in person is not feasible.
“Pennsylvania’s elderly should be made aware of the possible risks prior to making a decision to take out reverse mortgages,” she writes. “That’s the reason I’m introducing legislation that requires a personal meeting with a certified financial advisor prior to committing to an application for a reverse mortgage. If the consultation cannot be conducted face-to face the potential borrower may be able to meet with the advisor via phone or video conference.”
Her letter closes with a request for co-sponsors to be a part of her when she introduces a legislation to the chamber. As no legislation has yet been presented, it isn’t yet available to the public.
General Public Statements
Cephas’ office Cephas also released a press release to inform the general public of the efforts they are making in connection with the possibility of a reverse mortgage advisory bill, describing the need to inform senior citizens the ways that reverse mortgages could impact their financial and their housing situation.
“Reverse mortgages can be a helpful tool for some seniors deal with financial issues,” Cephas said. “But for those who are elderly and their families reverse mortgages are confusing financial instruments that can be expensive, and can even end up costing some their homes. They are often difficult to manage, particularly for the most vulnerable of our population. Understanding how a reverse loan functions is crucial and that’s why I’m introducing legislation to ensure that seniors are informed about reverse mortgages prior to obtaining one.”
Cephas closes its announcement by repeatedly stressing the need for seniors to be aware of reverse mortgages.
“I am adamant that seniors in my district as well as all across the Commonwealth to receive the help they need when making crucial decisions that will affect their lives,” Cephas said in her announcement. “This law will ensure that seniors receive the care they need.”
RMD has reached out to Rep. Cephas’ office but was not able to get a answer as of press time.
Reverse Mortgage Industry Response
If asked about the matter, Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA) spoke to RMD that the trade group recognizes the efforts and is looking to work in direct contact to Rep. Cephas.
“I know there is a possibility that Rep. Morgan Cephas has been working on an act to introduce. Although Rep. Cephas indicates that the bill will require an in-person meeting however, she notes that there could be some exceptions to this requirement,” Irwin said. “NRMLA is working on contacting the bill’s sponsors to discuss the details and how we could support this bill.”
The support, naturally, will be contingent on the language of the bill in the form it’s given to lawmakers, Irwin said, and at that point , it will be put through the review process of the committee.
“NRMLA will collaborate in conjunction with the State and Local Affairs Committee when we have a better understanding of the legislative intent and substance in the legislation.”
RMD approached reverse mortgage professionals in Pennsylvania and were wary of the possible impact legislation might have on businesses operating across the country. There have been some who expressed concerns about the possibility of duplicate problems in Massachusetts and Pennsylvania, including Steve Broaddus, national manager of the reverse mortgage department for First Alliance Home Mortgage in Richboro, Penn.
“Some of the possible problems that pop up at the moment is a shortage advisers” Broaddus tells RMD. “Not only is this the case in dense regions where demand is greater, which would result in an overflow of appointments, but also in rural areas of the United States where housing counselors in the local area might be absent altogether.”
The issue of advisors’ availability was also expressed from Jason Eichmiller, reverse mortgage specialist at Key Home Lending in Ambler, Penn.
“Much of Pennsylvania is very isolated,” he said. “For certain Pennsylvania residents who live in the Poconos or the central region in the State, traveling for hours just to talk to an individual counselor isn’t an issue.”
Counseling requirements, difficulties in Massachusetts
Counseling for reverse mortgages is required for all borrowers who are part of the Home Equity Conversion Mortgage (HECM) transaction, as required by the U.S. Department of Housing and Urban Development (HUD). The counseling session must be conducted through an outside third-party, and is required to include all co-borrowers, borrowers and conservators, spouses who are not borrowing and guardians, as well as power of attorney for anyone who is incapable of attending an individual counseling session.
It has duplicated this requirement for its own offerings specifically designed for high-end homes. Rep. Cephas doesn’t refer to existing guidelines within her letters to the Legislature as well in the press release regarding her current legislative initiative.
There is a problem in Massachusetts which is the sole state with a requirement for reverse mortgage counseling in personbusinesses there ended in March 2020 after physical distancing as well as other virus protection measures were in conflict with the requirements for in-person counseling. There was no formalized alternative to situations in which the face-to-face session could not be held. A law of emergency adopted by local legislators reinstated the business in June 2021, when an additional extension until December 2021 was approved.
This extension is now in effect and has impeded the ability to conduct business in the state, as business owners await any new legislative action regarding the issue. It has seen cases of COVID-19 rise in the wake of the outbreak caused by the more dangerous Omicron variant of the and has seen a significant increase in the number of cases of the incidence of the virus.