2015 -- H 6157 SUBSTITUTE A

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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: Representatives MacBeth, and McLaughlin

     Date Introduced: May 01, 2015

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

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

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Mortgages" is hereby amended to read as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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of subsection 34-25.1-9(a).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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prospective mortgagor(s):

 

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

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

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

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

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and property tax deferral;

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

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

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

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

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public benefits of the mortgagor(s);

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

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

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pursuant thereto; and

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

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department of elderly affairs.

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

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

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

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

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limitation 24 CFR Part 206).

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     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

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

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

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counseling programs.

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     This act would take effect upon passage.

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