The Vermont Legislature delivered a bill to Gov. Jim Douglas yesterday that would limit reverse mortgages to federal programs.
The state House of Representatives clerk said HR 222 was delivered yesterday. Votes in both the House and Senate were not available as they were conducted as voice votes, not roll call.
The bill states lenders must be approved by the Department of Housing and Urban Development. The loan must comply with all requirements for participation in the Federal Housing Administration’s home equity conversion mortgage program or “similar federal reverse mortgage loan program from time to time created.” It must be insured by the FHA or other federal agency, or be a government-sponsored enterprise reverse mortgage.
The bill would require face-to-face counseling in most cases and prohibits cross-selling of annuities until after the borrower’s right of rescission. HR 222 also regulates life settlements and senior advisory designations.
Rep. Warren Kitzmiller, chair of the House Committee on Commerce and Economic Development, said today the language of the bill was drafted by the state Department of Banking, Insurance, Securities and Health Care Administration. He said the department wanted the loans to be insured and consumer protections to “cut out shadier players in the field.”
Vermont Bankers Association President Chris D’Elia said today, “Given the make-up of our legislature, I was not going to win,” a battle on the provision that prohibits proprietary reverse mortgages. The organization in the end decided to support the bill because of its consumer protections. He said the VBA would revisit the issue if a banker in the future came up with a reasonable proprietary product.
He said there was “no question” the governor will sign the bill as it was not considered controversial.
Sounds interesting!