Rhode Island has amended its statute regulating reverse mortgage loans. As amended, the statute allows a reverse mortgage lender to perform certain actions in processing a reverse mortgage loan application prior to the applicant’s completion of a required counseling program.
These changes went into effect upon enactment of the amendment on June 25, 2015. Rhode Island Senate Bill 0918 and House Bill 6157 amended Rhode Island’s General Laws to provide that the following actions may be taken by a reverse mortgage lender before the loan applicant has completed the required counseling program and provided a certificate of counseling to the lender:
- Ordering a credit report
- Obtaining information required for inclusion in a loan application
- 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.
These changes appear to provide flexibility for reverse mortgage lenders to obtain information and begin the process of financial assessment, which is required by the U.S. Department of Housing and Urban Development (HUD) in connection with all home equity conversion mortgage (HECM) loans with case numbers assigned on or after April 27, 2015.
While these Rhode Island reverse mortgage amendments generally apply to all types of reverse mortgage loans originated in Rhode Island, FHA-approved mortgagees originating HECM loans also must comply with all applicable HUD rules and regulations for the HECM program, including with respect to the limitation on activities that permissibly may occur prior to the HECM applicant obtaining the required counseling.
Along with these changes, Rhode Island also amended its reverse mortgage statute to provide that the Rhode Island Department of Elderly Affairs must maintain an updated list of counseling programs that have been approved by HUD for reverse mortgage counseling.
(Editor’s note: The following memorandum was published by NRMLA’s legal counsel, Weiner Brodsky Kider, PC)