The invoice seeks to determine a state-level “data abstract” for the Federal Housing Administration (FHA)-backed House Fairness Conversion Mortgage (HECM) program. The abstract would “present discover of mortgagor’s proper and obligations underneath reverse mortgage loans issued underneath the [HECM] program of the federal Division of Housing and City Growth (HUD).”
It will additionally require each “approved lender” within the state to offer copies of those summaries inside 5 days earlier than the closing of a HECM mortgage. The abstract could be an “important element” of the reverse mortgage origination course of within the state, NRMLA argues, and the absence of such a abstract would successfully render a mortgage “null and void.”
However the present disclosures required underneath federal and state legal guidelines already serve to overwhelm reverse mortgage purchasers, the letter said, and state-level code already requires “quite a few” reverse mortgage disclosures to debtors in New York.
As a substitute, the proposed invoice duplicates present disclosure necessities underneath New York’s Code of Guidelines and Laws — apart from the addition of a brand new doc that NRMLA mentioned has extra potential for confusion than it does for enhanced shopper safety.
In an interview with HousingWire’s Reverse Mortgage Every day (RMD) earlier this month, carried out previous to the issuance of the letter, NRMLA President Steve Irwin indicated that the affiliation recognized issues with the invoice.
“This invoice will not be not like laws that was launched, however didn’t go in 2023, and we had contacted sponsors of that laws at the moment. Once more, it’s very regarding,” Irwin mentioned. “I wish to stress that our opposition to this laws relating to the disclosure will not be in opposition to shopper protections.”
Whereas each consumer getting into right into a reverse mortgage must be totally conscious of their obligations and the features of the product, the duplicative nature of the invoice and the potential to make a mortgage null and void is a step too far, Irwin mentioned.
“While you suggest a state legislation that might make the transaction null and void due to a disclosure, then that’s an issue,” he mentioned. “And the quantity of paperwork concerned in these transactions is already large, which strikes from originator by means of a number of events and finally to a custodian. And within the unlucky occasion that one thing’s misplaced, you may’t make all of the phrases and circumstances of a mortgage null and void for the absence of a disclosure.”
RMD tried a number of occasions to contact Comrie’s workplace for remark. After initially having acquired a reply, extra makes an attempt to safe views from the senator weren’t returned.
In line with New York Senate information, lawmakers have tried to introduce this invoice on a number of events. In 2017, the unique model was sponsored by former Sen. David Carlucci (D-Clarkstown), who went on to reintroduce the invoice twice within the 2019-2020 legislative session.
Comrie has subsequently labored to reintroduce the invoice into three newer legislative classes, together with the present one. In every prior occasion, the invoice has by no means progressed past being referred to a Senate committee for added debate. Following its most up-to-date reintroduction, it has been referred to the Senate’s particular committee on getting old.
New York state has handed no less than two consequential reverse mortgage legal guidelines lately. This features a 2019 legislation that took goal at what supporters referred to as “misleading practices.” It requires reverse mortgage lenders to offer supplemental shopper safety supplies whereas imposing extra restrictions on lenders associated to funds of insurance coverage premiums and property taxes.
In 2021, Gov. Kathy Hochul signed a invoice with a earlier model that had been vetoed by the earlier governor, Andrew Cuomo. It permits New York residents who’re no less than 70 years outdated to take out a reverse mortgage on a cooperative residing area. The legislation is proscribed to proprietary loans solely, nonetheless, because the FHA doesn’t allow HECM loans on co-ops.
