New York Bill is looking for more disclosures for reverse mortgages
Sen. Leroy Comrie (D) introduced the bill, S2559on January 21. It aims to set up a “information overview” at state level for the Federal Housing Administration (FHA) -Backed Home Equity Conversion MortGage (HECM) program.
It would “provide a notification of Mortgagor’s law and responsibilities under reverse mortgage loans that were issued under the [HECM] Program of the Federal Housing and Urban Development Department (HUD) ‘, and it would require any’ authorized lender ‘in the state to provide copies of these summaries no less than five days before taking out a HECM loan.
The bill would also “determine a private right of action on violations of such provisions,” according to the summary of the bill.
Previous versions of the bill were introduced in four previous legislative sessions between 2017 and 2024. The current version has been referred to the permanent committee for aging the state of Senate.
In the text of the bill, the HECM program is castigated as confusing and full of opaque terminology, which is said to cause instability for consumers looking for such products.
“Reverse mortgages are complicated and expensive financial products,” states the bill in his “justification” section. “Many seniors do not understand how they work or what their real long -term costs are. The worsening of this problem are unscrupulous lenders who bring reverse mortgages to the market as public services or products sponsored by the government. “
With reference to an increase in standard settings of reverse mortgage compared to 2016, the bill says that such an increase was caused by “insufficient regulations of this industry.” They led more seniors to fall into shielding and lose “not only their houses, but also their most important financial assets.”
Subsequently, it claims that inverted mortgage-pressures have taken place against borrowers “for making payments, only money shortage of their tax or mortgage insurance accounts.” It added that lenders “would like to tap the equity in these houses, sometimes aggressive to shield out and see a return on their investment.”
This requires “extensive information about these products” for older customers, who can relieve the “real long-term costs of a HECM loan, conditions that lead to standard methods to reduce their tax obligation, available services to help them in the case of a standard and/or shielding, etc. “
The bill does not state or deals with reverse mortgage regulations that have been transferred by HUD or FHA since 2016. The bill states certain HECM requirements that exist-as the requirement that a borrower undergoes counseling from a HUD-approved provider but it argues that lenders-on condition that informative means for borrowers are currently insufficient.
‘[T]The information -heading sheet [would become] An essential part of future inverted mortgages and requires that the senior signs the magazine that confirms the receipt and that the founder maintains a copy, “the bill said. “The section will be enforceable through high compensation and lawyers for ruling claimants.”
The HECM program has introduced countless additional regulations and guarantees in recent years. These include different reductions into main limit factors (PLFs), which are designed to reduce the risk and losses for the program. PLFs were reduced in 2009, 2010, 2013 and 2017.
FHA issued a financial assessment requirement in 2014. Provisions designed to allow more non-loan spouses to stay in the building after the death or relocation of the Leen Spouse in 2015. For a second assessment of real estate, it was published in 2018.
At the end of 2023, Hud published a report that assessed the effects of this policy on the HECM program and discovered that most of them had their intended effects.
RMD contacted Comrie’s office for more information about what led to his decision to introduce the bill, but did not receive an immediate answer. A warning that last week to members of the National Reverse MortGage Lenders Association (NRMLA) said that the Trade Group and the Foreign Counselor will revise the bill and weigh the bill as soon as that assessment has been completed, in addition to a separate bill that was recently introduced in Hawaii.
The state of New York has adopted at least two consistent inverted mortgage laws in recent years. In 2019, then-gov. Andrew Cuomo signed a law that focused on what supporters called ‘deceptive practices’. It requires reverse mortgage lenders to provide additional material for consumer protection and at the same time impose additional restrictions on lenders with regard to payments from insurance premiums and real estate tax.
Two years later, Gov. Kathy Hochul A bill with an earlier verso Veto from Cuomo. This allowed residents of New York who are at least 70 years old to remove a reverse mortgage on a cooperative living space, but it is limited to their own loans, because FHA does not allow HECM loans on cooperatives.
