Changes to California AB 793 may allow insurance licensed reverse originators to keep working in both professions
As much as we might complain about lawmakers, the beauty of politics is the slow process of hearings and amendments. Yesterday the lawmakers in a California subcommittee committee amended (radically changed) the proposed addition to California’s Insurance Code (Assembly Bill 793) which is less harsh and frankly more realistic in its approach. In the first draft, the bill would have prevented anyone with an insurance license from participating, in, being associated with or employing any party that participates in the origination of reverse mortgages. I guess having drinks after work with an insurance-licensed friend would be out of the picture. Seriously, many reverse originators in California would have been forced to relinquish one license or the other.
The bill now has a provision that almost mirrors the existing “firewall” stating that if you hold both licenses, you cannot financially profit from the sale of any insurance product to a reverse mortgage borrower (casualty products are OK), and there must be ‘procedural safeguards’ against what we call cross-selling. The bottom line, if your hold an insurance license and originate reverse mortgages in California you’re in the clear for now, just act ethically and don’t cross-sell. The bill still must pass through committee in it’s final form and then go to the State Senate where future changes could be made. It strange how many state laws end up duplicating existing federal regulations in the end. You can read the full bill here and see the status here. We’ll keep you updated on any future changes.