seniors, but we need to be careful not to constrain seniors’ access to credit.” The Trends In previous years, advocates focused on ensuring that state laws recognized the federal HECM program as a necessary building block for the industry, Milano says. Many states now do that in some form or another. But state lawmakers also sought to go beyond federal law. Some legislatures drafted laws requiring lenders to assess whether reverse mortgages were suitable for their borrowers, despite the plethora of requirements in federal law. “We haven’t seen that recently and, quite frankly, we don’t want to see it. We don’t think it’s needed,” Milano says. Lawmakers also address issues unique to their states. Consider New York state, where lawmakers recently enacted one of the most impactful pieces of state legislation affecting reverse mortgages. The new law touches on an issue unique to New York: the ability for co-op owners to access reverse mortgages. More than half of the residents of New York City live in co-ops, which involve ownership of a share in a building rather than a standard deed. The Federal Housing Administration does not allow HECMs on co-ops, but there is an opportunity for companies that offer private-label reverse mortgages to lend on co-ops. State law previously barred co-op residents from taking out reverse mortgages secured by their share of the equity in their co-ops. Changes have taken time. Former New York Gov. Andrew Cuomo vetoed the bill allowing reverse mortgages for co-op owners, but the bill eventually became law under his successor, Gov. Kathy Hochul. Regulators are still hashing out the details of how the program will work. But it is expected to attract a lot of interest in the country’s biggest city and fourth most-populous state. “You have a lot of seniors who live in co-ops,” says Soroush Shahin, a member at Weiner Brodsky Kider PC. “They love their apartments. They don’t want to move, they have a lot of equity, they want to age in place, and they want a reverse mortgage.” The Massachusetts law allowing remote counseling represents another major step forward for the industry. The remote option was originally added during the COVID-19 pandemic when seniors and certain counselors understandably shied away from face-to-face counseling. “They were one of the few states that required in-person counseling,” says Wright, a member of NRMLA’s board of directors. “Removing that barrier is reflective of the world we live in today where people have adjusted to doing everything remotely.” States this year also have been active in distributing money under the Homeowner Assistance Fund, a nearly $10 billion aid package created by the federal American Rescue Plan. The fund is designed to provide relief to vulnerable homeowners across the U.S. “Those funds have made a real impact, and they have brought a lot of loans out of default,” Wright says. Observers don’t expect states to make any major changes affecting HECMs in 2023. But if they do, here are the areas to watch. Consumer Disclosures Lawmakers often tweak the information lenders must share with potential borrowers. While federal law lays out numerous guidelines, state officials often wade in, as well. A bill introduced this year in the New Jersey Senate, for example, would require lenders to provide borrowers with a checklist of items to discuss with a counselor before their loans are finalized. New York legislators introduced a similar bill, requiring state regulators to develop a disclosure sheet for lenders to provide to borrowers before closing. A Pennsylvania bill, meanwhile, would require the use of at least a 16-point font on all reverse mortgage contracts and disclosures. States also act to require disclosures and counsel- ing for private-label mortgages, Shahin says. They are often similar to the HECM requirements from the federal Department of Housing and Urban Development, he adds. Technology Communication is not the only area where lenders may be hoping for more technological flexibility. Notarization is another. Tracking State Laws continued on page 26 Soroush Shahin REVERSE MORTGAGE / NOVEMBER–DECEMBER 2022 25
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