2015 -- S 0918

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LC002704

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PROPERTY -- REVERSE MORTGAGES

     Introduced By: Senator Roger Picard

     Date Introduced: May 14, 2015

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 34-25.1-9 of the General Laws in Chapter 34-25.1 entitled "Reverse

Mortgages" is hereby amended to read as follows:

     34-25.1-9. Required counseling. -- (a) All lenders shall deliver to all reverse mortgage

loan applicants a statement, if available, prepared by the department of elderly affairs on the

advisability and availability of independent counseling and information services. With respect to

every reverse mortgage loan, the prospective mortgagor(s) shall complete a reverse mortgage

counseling program. An original certificate, dated and signed by both the counselor and the

mortgagor(s), certifying that the counseling required by § 34-25.1-9 has taken place, shall be

delivered to the mortgagee at least three (3) business days prior to the closing of the loan. The

lender shall not process a reverse mortgage loan application, other than ordering an automated

valuation model, ordering a credit report, obtaining information required for inclusion in a loan

application, including documenting and verifying credit, income, assets and property charges,

evaluating extenuating circumstances and compensating factors, evaluating the results of the

financial assessment in determining eligibility for a home equity conversion mortgage,

determining whether a life expectancy set-aside will be required and whether the set-aside must

be fully or partially funded, and completing a home equity conversion mortgage financial

assessment worksheet; and ordering a preliminary title search, until the counseling required by

this section has been completed and the certificate of counseling is delivered to the mortgagee.

      (b) The reverse mortgage counseling program shall include, but is not limited to, all

matters enumerated in subsections 34-25.1-9(e)(1) through (6). The department of elderly affairs

shall establish and maintain a list of counseling programs and agencies approved by the United

States Department of Housing and Urban Development and the Federal Housing Administration

that are deemed to satisfy the requirements of § 34-25.1-9 and shall make such list available to all

lenders and to the public. A counseling agency approved by the United States Department of

Housing and Urban Development to provide reverse mortgage counseling shall be deemed to be

approved to provide the counseling required by § 34-25.1-9, provided that: (1) the counseling

agency is not affiliated with the reverse mortgage lender; and (2) the counseling agency complies

with the counseling requirements of § 34-25.1-9. The director of the department of elderly affairs

shall have the right to prescribe the form of counseling certificate that will meet the requirements

of subsection 34-25.1-9(a).

      (c) Counseling shall comply with the following requirements: (1) It shall be conducted in

person; however, if the prospective mortgagor(s) cannot or choose(s) not to travel to a housing

counseling agency and cannot be visited by a counselor in their home, telephone counseling shall

be permitted by counseling agencies that are authorized by the department of elderly affairs the

United States Department of Housing and Urban Development or the Federal Housing

Administration to conduct telephone counseling. (2) The reverse mortgage loan shall close within

one hundred eighty (180) days after the prospective mortgagor(s) sign(s) the counseling

certificate. If the reverse mortgage loan does not close within such one hundred eighty (180) day

period, the parties shall be required to again comply with the counseling requirements of this

section. (3) Mortgagees shall provide prospective mortgagors with the name of at least three (3)

independent, authorized counseling agencies in the state approved by the United States

Department of Housing and Urban Development or the Federal Housing Administration. The

mortgagee shall not recommend a counseling agency that is an affiliate of the mortgagee.

      (d) In the event that counseling shall not be available free of charge, the mortgagee shall

be responsible for the cost of the counseling to the extent that all other legitimate sources or

funding the counseling by legitimate sources including, without limitation, non-profit

organizations and grants have not been obtained. In the event that 12 U.S.C. § 1715z-20 or the

federal regulations promulgated with respect thereto shall, at the time such counseling fee is due

and payable by the mortgagee, expressly prohibit a mortgagee from being responsible for the cost

of counseling, then subsection 34-25.1-9(d) shall not apply to a reverse mortgage loan that is

subject to 12 U.S.C. § 1715z-20 and the federal regulations promulgated with respect thereto.

      (e) Counseling shall include, without limitation, discussion of the following with the

prospective mortgagor(s):

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      (1) Options other than a reverse mortgage that are available to the mortgagor(s),

including other housing, social service, health, and financial options;

      (2) Other home equity conversion options that are or may become available to the

mortgagor(s), such as other reverse mortgages, sale-leaseback financing, deferred payment loan,

and property tax deferral;

      (3) The financial implications of entering into a reverse mortgage;

      (4) A disclosure that a reverse mortgage may have tax consequences, affect eligibility for

assistance under federal and state programs, and have an impact on the estate and heirs of the

homeowner(s), as well as an explanation of how the reverse mortgage may affect the estate and

public benefits of the mortgagor(s);

      (5) Such other topics as shall be required to be addressed during counseling with respect

to a reverse mortgage pursuant to 12 U.S.C. § 1715z-20, and/or any regulations promulgated

pursuant thereto; and

      (6) Such other topics as shall be required to be addressed by the director of the

department of elderly affairs.

      (f) Subsections 34-25.1-9(b), (c) and (e) shall not apply to any reverse mortgage loan

that is subject to 12 U.S.C. § 1715z-20 and the federal regulations promulgated with respect

thereto; provided that such loan complies with the counseling requirements set forth in 12 U.S.C.

§ 1715z-20 and the federal regulations promulgated with respect thereto (including without

limitation 24 CFR Part 206).

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY -- REVERSE MORTGAGES

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     This act would allow a reverse mortgage lender to order a credit report and other

information for a loan application prior to a mortgagor completing a counseling program, and

would also require that the department of elderly affairs maintain a list of federally-approved

counseling programs.

     This act would take effect upon passage.

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