California Passes Reverse Mortgage Protection Bill

by Patrick Lunsford, CollectionIndustry.com

The California State Legislature has passed a bill that aims to address the growing trend of offering reverse mortgages to current homeowners. The measure seeks to increase the counseling borrowers must obtain before signing the loan documents.

Specifically, the new law requires borrowers applying for reverse mortgages to receive independent counseling from a Department of Housing and Urban Development-approved counseling agency.

According to BankNet 360, about 40% of all reverse mortgages are originated in California. Most federally insured reverse mortgages require some form of credit counseling. The new bill focuses on the growth of non-federally insured loans.

Hawaii, Tennessee, Massachusetts, North Carolina, and Minnesota all require credit counseling prior to the origination of any reverse mortgage.