Connecticut Governor Dannel Patrick Malloy signed reverse mortgage counseling legislation into law this week that emulates existing rules mandated under the federal Home Equity Conversion Mortgage program. The new law takes effect on October 1, 2018. The final version of SB 150 signed into law as Public Act 18-38 gives borrowers the choice to be counseled face-to-face or over the phone.
As originally introduced, the bill would have required either in-person counseling or in-person origination. On February 27, NRMLA submitted a letter to the Aging Committee informing state lawmakers that “under the FHA-insured HECM program, neither in-person counseling nor in-person origination is required. In addition, lenders are prohibited by federal statute from paying for a borrower’s counseling, or signing the counseling certificate.”
The new law also requires financial institutions, including state or federally chartered banks and credit unions, to inform prospective reverse mortgage clients of their right to be counseled, to provide clients with a list of five counseling agencies approved by the Department of Housing and Urban Development, and to retain a copy of the counseling certificate signed by the client (or client’s representative) and the counselor attesting that the client was counseled in-person or over the phone. It also prohibits a financial institution from paying for the counseling session.