Reverse Mortgage Guide

So far it’s just an idea on Capitol Hill, but if passed a Senate bill would significantly impact reverse mortgage originations.

S. 2490 — the Reverse Mortgage Proceeds Protection Act — was introduced in December by Sen Claire McCaskill(D-MO). The bill would get to an issue we have repeatedly noted — the use of reverse mortgages to ultimately fund high-cost annuities with steep prepayment penalties.

The legislation specifically provides that “not later than 6 months after the date of enactment of the Reverse Mortgage Proceeds Protection Act, the Secretary shall, in consultation with other relevant Federal departments and agencies, promulgate regulations to help protect elderly homeowners from the marketing of financial and insurance products not in the interest of such homeowners, including the marketing or sale of an annuity as a condition of obtaining any home equity conversion mortgage. In developing the regulations required under this subsection, the Secretary shall consult with consumer advocates (including recognized experts in consumer protection), industry representatives, representatives of counseling organizations, and other interested parties.”

It’s important to say that we have had several loan officers who have said that they are specifically prohibited from selling annuities in connection with reverse mortgages. If you are a loan officer with a similar standard please feel free to add your name to the list.
For background, see:

Should This Retiree Grab An Annuity?

Another Tale of Woe

How To Stop The Rip-Offs

This entry was posted on Tuesday, February 5th, 2008 at 3:19 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.