On September 30, California Governor Jerry Brown signed into law Assembly Bill 1700, which prohibits a reverse mortgage lender from accepting a loan application or assessing any fees until the lapse of seven (7) days from the date the borrower receives counseling from a HUD-approved counselor.
In addition to this new “cooling-off” period requirement, the bill revises the current reverse mortgage checklist disclosure and changes the name of the checklist to a “worksheet guide.”
The bill’s effective date is January 1, 2015.
The reverse mortgage worksheet guide provides a list of issues that the borrower is advised to consider and discuss with the counselor. Lenders are prohibited from taking a reverse mortgage application unless the borrower has received a copy of the worksheet guide from the lender before the borrower’s counseling session. However, if the borrower seeks counseling prior to requesting a loan application from the lender, the counseling agency must provide the borrower a copy of the worksheet guide. Furthermore, the reverse mortgage worksheet guide must be signed by the borrower and the counselor, if the counseling is done in person, and returned to the lender along with the certification of counseling.