Reverse mortgage lenders in Massachusetts have gained a two-year reprieve from enforcement of the state’s face-to-face counseling requirements that had been scheduled to go into effect on Aug. 1. Still for applications taken during a two-day period starting on Aug. 1, state banking regulators put out a note saying the rule must be complied with.
On Aug. 3, Gov. Deval Patrick signed H. 4243, titled “an act preventing unlawful and unnecessary foreclosures.” Included in that bill, under section 3 is a sentence which delays the implementation of the counseling requirement established in 2010’s “an act relative to foreclosures.”
That 2010 law required seniors getting a reverse mortgage to get written certification that they have received in-person counseling and completed an approved counseling program offered by a third party organization; the organization had to be approved by the office of elder affairs.
The in-person counseling requirement covered applicants for a reverse mortgage had a gross income of less than 50% of the area median income, as periodically determined by the Department of Housing and Urban Development; and had assets, other than their primary residence, valued at less than $200,000.
The 2010 law set a target date of this past Aug. 1 for the counseling requirement to be effective. The new law pushed the effective date back to Aug. 1, 2014.
Prior to Patrick signing the bill, HUD put out a notice warning Federal Housing Administration lenders that they needed to be ready to comply with the original statute, which also called for a seven-day “cooling-off” period.
The state Department of Banks has put out an industry guidance which states that for reverse mortgage applications taken from Aug. 1 through Aug. 2, where the borrowers would have been required to receive fact-to-face counseling, “lenders should ensure that the borrower(s) attend an in person counseling session prior to making the loan.”
