Chapter 135
2015 -- H 6157 SUBSTITUTE A
Enacted 06/26/2015

A N   A C T
RELATING TO PROPERTY -- REVERSE MORTGAGES

Introduced By: Representatives MacBeth, and McLaughlin
Date Introduced: May 01, 2015

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 this section 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) (e)(6) of this section. 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 this
section 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 this section. 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) of this section.
      (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) of this section 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):
      (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) (b), (c), (e) of this section 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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LC002524/SUB A
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