Aging Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-163

Title:

AN ACT PROVIDING PROTECTIONS FOR CONSUMERS APPLYING FOR REVERSE MORTGAGES.

Vote Date:

3/8/2016

Vote Action:

Joint Favorable Substitute

PH Date:

2/25/2016

File No.:

205

SPONSORS OF BILL:

Aging Committee

Sen. Mae Flexer, 29th Dist.

Rep. Cara Christine Pavalock, 77th Dist.

REASONS FOR BILL:

To provide consumer protections during the application process for a reverse annuity mortgage loan and ensure that applicants understands the reverse annuity mortgage loan process and the rights and responsibilities of the applicant and the institutions offering these mortgages.

The bill requires applicants for reverse mortgages to undergo housing counseling and specifies that either the loan origination or the counseling must be done in-person or by telephone. It would require institutions offering these mortgages to provide applicants with a list of independent counseling agencies and a worksheet containing issues for consideration with counselors.

Substitute Language – LCO# 2765

Substitute language (1) changes from three to five, the number of independent counselors, approved by the United States Department of Housing and Urban Development, loan originators must recommend; (2) deletes the requirement for loan originators to provide worksheets to applicants containing issues for consideration with counselors; and (3) clarifies signatories on certificate of in-person session with either loan originator or counselor.

RESPONSE FROM ADMINISTRATION/AGENCY:

Deb Migneault, Senior Policy Analyst, Connecticut's Legislative Commission on Aging: Supports the bill. Financial elder abuse exploitation is a growing social problem in Connecticut, reverse mortgage scams exist and older adults often sign for loans that are not appropriate for their situation leading them into damaging and difficult financial situations. A 2011 MetLife study estimated that older adults lose at least $2.9 billion due to financial abuse and exploitation. Additionally, older adults living with dementia are particularly at risk of predatory lending scams.

NATURE AND SOURCES OF SUPPORT:

None

NATURE AND SOURCES OF OPPOSITION:

Steve Irwin, Executive Vice President, National Reverse Mortgage Lenders Association: The proposed bill may conflict with current federal regulations, the Federal Housing Administration-insured Home Equity Conversion Mortgage program prohibit lenders from steering borrowers to a particular counselor. In addition, there is a lack of available housing counselors. There are only four counseling agencies in Connecticut approved by the Department of Housing and Urban Development. This bill will create unintended consequences of decreasing the availability of reverse mortgage competition while increasing the cost of credit to Connecticut seniors.

Reported by: Rich Ferrari/Robin Bumpen

Date: 4/20/2016