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Posts Tagged ‘bill’
Thursday, November 5th, 2009
 The US House of Representatives The new homebuyer’s tax credit extension that we have discussed extensively in the past week was passed by the House of Representatives today. Now that the bill has been passed by Congress, it will go to President Obama for his signature. The bill passed by a vote of 403-12 after it unanimously passed in the Senate. The bill is expected to be signed into law by the President tomorrow.
For more posts on this topic, please see:
Breaking News: Deal Announced to Extend New Homebuyer’s Tax Credit Through April 2010
Reflecting on the Impact of an Extended Tax Credit
Tags: bill, Congress, House of Representatives, law, new homebuyer's tax credit, Senate, tax credit
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Thursday, October 29th, 2009
 An appropriations bill has been proposed that will extend the FHA reverse mortgage limits until the end of 2010. The current limit of $625,500 is currently set to expire at the end of the year unless new appropriations are made. The appropriations bill still needs to pass the House of Representatives and the Senate. The extensions would also apply to Jumbo Conforming Loans and Conforming Loans, two kinds of forward or conventional mortgages.
Many in the industry appear to be hopeful that the bill will be passed before the limits expire. It is probably too early to become extremely concerned about the expiring limits, but with the bill needing to pass through both houses of Congress, it is something to keep an eye on.
Tags: appropriations bill, bill, conforming loans, Congress, House of Representatives, jumbo conforming loans, Mortgage, mortgages, reverse mortgage, reverse mortgages, Senate
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Monday, October 12th, 2009
 This weekend Gov. Arnold Schwarzenegger signed AB 329 into law in California. The bill finally establishes the Reverse Mortgage Elder Protection Act of 2009. The bill prohibits cross-selling, requires the lender to provide the borrower with no fewer than 10 nonprofit HUD-approved counseling agencies, and requires the lender to provide the borrower with a checklist of issues to discuss with the reverse mortgage counselor. The loan application will be unable to be approved without the signed checklist. However, given that the first two requirements are included in national legislation, the main feature of the bill will be the addition of the checklist to the reverse mortgage counseling process.
The provisions of the bill will be administered by both the California Department of Real Estate and the California Department of Corporations.
The bill can be found at: AB 329
Tags: AB 329, Arnold Schwarzenegger, bill, California, law, reverse mortgage, reverse mortgage counseling, reverse mortgages, Reverse Mortgages Elder Protection Act of 2009
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Thursday, August 13th, 2009
 The Wall Street Journal announced today that the House of Representatives is likely to propose a temporary measure to extend the estate tax, rather than allowing it to be repealed. Under a bill signed by former President George W. Bush, the estate tax will be repealed on January 1 if no action is taken. The House proposal is expected in light of the difficulty Senate Democrats and Republicans have had coming up with a permanent rate structure.
The conversations about the estate tax bill are interesting in light of recent discussions about possible ways for the proceeds from a reverse mortgage to be used as an estate planning tool. One way, using a reverse mortgage to pay for a life insurance policy in an irrevocable trust to be paid to the heirs upon the death of the borrower, was mentioned as an option in order to pass on money to heirs without having to pay taxes. Check back for more on these conversations.
Tags: bill, estate planning, estate tax, House of Representatives, life insurance, reverse mortgage, reverse mortgages, Senate, taxes, Wall Street Journal
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Friday, July 24th, 2009
 As the House continues to debate their appropriations bill, much recent reverse mortgage news has covered speculated and proposed changes in the bill, including questions as to whether the increased property value limit ($625,500) will be extended, and how the FHA will avoid the $798 million taxpayer subsidy requested for the program. The bill approved by the House Appropriations committee on last week instructs HUD to reduce the principal amounts borrowers can receive through the program.
However, the most important point at this time in the bill’s process is that nothing has been finalized. The bill must be approved by the House, then the Senate, then a Conference Committee made up of members from both houses of Congress meets to reconcile changes in the bill, and then the President must sign it for it to become law. This whole process will likely not be completed until well into the fall. I therefore think that at this time, the best course of action is not to panic or react to proposed changes before they become a reality. Obviously lobbying has its place in the legislative process, but at an early draft stage, it seems to be unnecessary for the industry to sit on pins and needles reacting to every change (or proposed change) to the bill before it is in front of the whole Congressional body. And even if a change passes the House or the Senate that is unfavorable, it is still likely that it might not pass through a conference committee in tact. Let’s give the complexity of the legislative process its due.
Tags: appropriations bill, bill, Congress, FHA, house, HUD, reverse mortgage, reverse mortgage legislation, reverse mortgages, Senate, Washington
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Friday, May 22nd, 2009
 Minnesota Governor Tim Pawlenty Minnesota Governor Tim Pawlenty vetoed the SF 489 on Thursday, the Reverse Mortgage legislation that was being debated in the state legislature there. Pawlenty wrote that while he agreed with the goal of the legislation, it might have the unintended consequence of making reverse mortgages less available in the state of Minnesota and increasing the costs. Governor Pawlenty also felt that the suitability criteria as defined in the bill was too vague, and asked the bill’s authors for greater specification in order to avoid unnecessary litigation.
The vetoing of the bill is a positive step, avoiding vague legislation, and helping to ensure that the goal of protecting consumers does not prevent the product from being available or accessible. In addition, Governor Pawlenty’s acknowledgement of the many benefits of a reverse mortgage and support of the product are other positive signs for the reverse mortgage industry.
Tags: bill, Governor Pawlenty, Minnesota, reverse mortgage, reverse mortgage industry, reverse mortgage legislation, reverse mortgages, state legislation, Tim Pawlenty, veto
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Thursday, March 26th, 2009
 At the end of yesterday’s post, I added a line on how government involvement in reverse mortgages was a good thing. And then I pressed publish. However, it took only a few moments for me to realize how complex an issue government involvement in reverse mortgages is–everything from government involvement in the financial market to the real estate market to reverse mortgages in particular. A throw away sentence is inadequate to address this issue. Should the government be involved in regulating reverse mortgages or not?
The reverse mortgage market is a particularly interesting one because it contains two sectors. Government insured loans comprise the majority of reverse mortgages. However, a smaller percentage (about 10% and growing) consist of proprietary reverse mortgages–mortgages carried out without the backing of the government.
Recently we have seen the state governments attempt to regulate the proprietary market. In several instances, these regulations extend some of the same protections offered to federally backed loans to proprietary loans. These protections help protect the consumer from fraud and the lender from a lawsuit and should be considered a good thing, for example allowing a reverse mortgage to be cancelled in the 10-30 days immediately after the closing and requiring the lender to notify the borrower of all the fees involved in the transaction. The federal government has a responsibility to help prevent fraud and protect its citizens. In an environment that is as economically predatory as this one, carrying this responsibility into the potentially dangerous world of reverse mortgages makes sense.
However, in some of the other parts of the proposed bills, government involvement is not as intuitive. For example, some of the new recommendations include complex new rules regarding the licensing of reverse mortgage lenders and brokers. While states have generally controlled who practices what in each state (medicine and law are the two largest examples of statewide certification; education is a close third) requiring specific reverse mortgage certification, even from lenders who are otherwise licensed to complete loans and mortgages, may seem a little extraneous. But given that every state does have different laws regarding reverse mortgages, it seems logical that state practitioners should be knowledgable of their state’s requirements.
So what should the state governments stay away from? Fundamentally, if a person chooses to complete a proprietary reverse mortgage, they have chosen to not receive the protections entitled to them in a federally insured HECM. This does not mean they should not be educated to make sure they are making the right decision, nor does it entitle them to be defrauded. However, the market for third party proprietary reverse mortgages is growing, indicating the demand for something outside of the government programs. The government should allow such a program to be executed by third parties, provided it is executed in such a way that protects its citizens and does not defraud.
Tags: Arizona, bill, California, federal, FHA, government, hecm, libertarianism, Minnesota, politics, Proprietary Reverse Mortgage, reverse mortgage, state, Washington
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Wednesday, March 25th, 2009
 The Washington state Capitol, one of the states where a new reverse mortgage bill has been introduced. Last week, we discussed the proposed reverse mortgage bill in Arizona. Today, we would like to highlight three other states where bills regulating proprietary reverse mortgages have been introduced in the last month. The three bills differ dramatically from each other.
The California bill aims to protect seniors from being lied to and/or misinformed, including a lot of regulations surrounding impartial HUD counseling. Some highlights of the California Reverse Mortgage Elder Protection Act of 2009 include requiring lenders to provide prospective borrowers with a list of all approved HUD counselors in the state, requiring lenders to disclose any business relationships or potential conflicts of interest with the counseling agency to the prospective borrower, and allowing the borrower to cancel the reverse mortgage for any reason within the first 30 days. This bill apparently addresses the needs of the state, where seniors have been found to be misinformed or misled regarding reverse mortgages more often than in some of their neighbors.
Minnesota’s new bill addresses the issues of fraud and double dipping. It too seeks to ensure that lenders do not provide reverse mortgages to seniors who do not need them.
One of the key facets of the bill is that it prohibits cross selling involving reverse mortgages. The bill will also require mandatory counseling for proprietary reverse mortgages. There appears to be a lot of skepticism as to whether it is possible to ever really prohibit cross selling. However, it seems valuable to state that lenders cannot also sell annuities or insurance to the borrower if the payments will come from the reverse mortgage. Trust is a crucial aspect of the reverse mortgage program, and double dipping has the potential to undermine that trust.
The Washington bill protects both the lender and the consumer from eachother. The bill appears similar in some ways to the Arizona bill by mandating counseling. It requires basic protections, ensuring that there is a right of recession and that the payments go to the correct party. However, the bill is also notable because it adds provisions for the lender, helping to confirm that the lender can afford to make the payments in the reverse mortgage and that they are held accountable if they do not. The Washington bill appears to be designed to prevent court cases and help provide guidance to the courts in determining disputes. It also is likely to serve as an important step in protecting seniors in the proprietary reverse mortgage market–especially since one only needs to be 60 to qualify for a proprietary reverse mortgage in Washington State.
These bills continue to show the increased interest the states have been taking in regulating the proprietary reverse mortgage market during the recession. Reverse mortgages can help seniors and improve their lives. On the other hand, there also instances where getting a reverse mortgage may prove to not be the right thing for the senior and their family. Taking steps to protect the senior while helping to prevent lawsuits is a good thing. It is valuable that the states have gotten involved in regulating a market that is so at risk for fraud and manipulation.
Tags: Arizona, bill, California, law, lawsuit, Minnesota, Proprietary Reverse Mortgage, reverse mortgage, reverse mortgages, senior, state legislature, Washington
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Thursday, March 19th, 2009
 The Arizona State Capitol Building A new bill that just passed the House Banking and Insurance Committee in Arizona will seek to grant protections to reverse mortgages carried out by proprietary lenders. While many federal regulations are already in place to protect senior citizens applying for reverse mortgages, these regulations do not automatically apply to proprietary lenders, who are not insured or regulated by the federal government. While the federal cap on reverse mortgages is $625,000, a proprietary reverse mortgage may allow a homeowner to get more money for their home (though often with higher fees). Although loans regulated by the federal government account for 90% of all loans, the proprietary market is growing rapidly, especially as the economy gets worse and the interest in reverse mortgages rises. As a result, it makes sense that states would choose to extend the federal regulations to all reverse mortgages in the state.
The decision is even more sensible in Arizona, where “uninsured” reverse mortgages are still available in some areas. An uninsured reverse mortgage generally only provides monthly advances and must be repaid in full on a specific date. Since uninsured reverse mortgages do not offer the protection of reverse mortgages (i.e. you can lose your home), it is perhaps even more important for the state to ensure that lendees know what they are getting themselves into.
While there are counterarguments to many of the protections offered by the federal government, for example mandatory counseling by an impartial third party and written disclosure of all the terms and details of the mortgage, these protections help to inform the lendee of the terms of their mortgage. They therefore are basic, helpful requirements, especially in the unregulated world of proprietary loans.
As we have discussed, mortgage fraud is on the rise. Proprietary reverse mortgages are especially subject to fraud on the part of the lender, due to the fact that they are not regulated or insured by the federal government (if at all). If Arizona passes this bill, it will hopefully be a strong step towards protecting lendees from predators who may not have their best interests are heart. The bill will also help ensure that reverse mortgages are safely available to all those who qualify.
Tags: Arizona, AZ, bill, federal regulations, House Banking and Insurance Committee, Proprietary Reverse Mortgage, reverse mortgage, reverse mortgages, senior, state regulations, uninsured reverse mortgage
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