State Senator Tony Hwang called the passage of his Aging Committee bill, Senate Bill 579, a win for consumers, particularly our senior population that are impacted by reverse mortgage financing of their residential property. The bill creates counseling requirements financial institutions must follow during the reverse mortgage process to ensure compliance and disclosure of consequences and implication of protecting one of their biggest financial assets.
“Often, senior citizens would apply for a reverse mortgage thinking it would provide financial stability during their retirement years,” Sen. Hwang said. “However, they would not fully comprehend the tax implications of the mortgage payout, or the rights, if any, that a non-borrowing spouse has upon their death. The financial institutions certainly weren’t volunteering to educate their clients. It’s a case of ‘buyer beware’ at its worst.”
Sen. Hwang said the bill requires reverse mortgage lenders to inform prospective applicants that counseling is required and provide them with a list of at least five independent housing counseling agencies approved by the U.S. Department of Housing and Urban Development. The lenders also must receive signed certifications from the applicant or his or her authorized representative that counseling was received and that the loan origination or the counseling was done in person.
“Requiring counseling and additional recordkeeping provides more protection for consumers, particularly our seniors, who might fall victim to predatory lenders,” he said. “This is absolutely the right thing to do.”
The bill was sent to the state House of Representatives for approval and signature by the Governor. If approved, the requirements become law on October 1, 2017.
Sen. Hwang represents the communities of Easton, Fairfield, Newtown, Weston, and Westport.
