NRMLA’s State and Local Issues Committee is actively monitoring activity in the state legislatures. Among the bills the committee is closely watching is New York Senate Bill 7184. NRMLA’s outside counsel Soroush Shahin of the Weiner Brodsky Kider law firm provided the following analysis.
On January 10, 2020, New York State Senator Andrew Gounardes, one of the sponsors of recently enacted Assembly Bill 5626/ Senate Bill 4407 (“AB 5626”), which regulates reverse mortgages issued under FHA’s HECM program in New York, introduced a bill, Senate Bill 7184 (“SB 7184”), that appears to be intended to “fix” AB 5626’s restriction on using, in the marketing or offering of HECM loans, the words “government insured” or similar language representing that HECM loans are insured, supported and sponsored by any governmental entity.
Specifically, SB 7184 would amend Section 280-b of the New York Real Property Law, which was created under AB 5626, to state that an authorized lender or any other party or entity, in the marketing or offering of HECM loans, is prohibited from using the words “government insured” or other similar language representing in a manner that falsely represents that HECM loans are insured, supported, and sponsored by any governmental entity in any commercial, mailing, advertisement, or writing relating thereto.
Essentially, it appears that this bill is intended to only prohibit using the words “government insured” or similar language to make false representations about HECMs in connection with a government entity (i.e., it appears to only prohibit using those words in misleading or deceptive marketing materials that do not accurately represent the government’s involvement in the HECM program). If passed, this would be a welcome change to AB 5626’s current broad language that does not appear to make a distinction between using such words in a manner that accurately or falsely represents that HECM loans are insured, supported, and sponsored by any governmental entity in any commercial, mailing, advertisement, or writing relating thereto.