Earlier this week, California Assembly member Mike Feuer introduced three different bills designed to help protect seniors vulnerable to abuse in nursing homes and exploitation in the marketplace. "Especially in this economy, we need to take every step we can to protect seniors who may be at serious risk of abuse or exploitation," said Feuer.
One of the bills, AB 329 would put into place the Reverse Mortgage Elder Protection Act of 2009 which would do the following:
- Prohibit a lender from referring a prospective borrower to a counseling agency, or paying any counseling service fees without first informing the prospective borrower in writing that this may create a conflict of interest.
- Require a lender to disclose to the prospective borrower in writing any other payment arrangements or business affiliations between the lender and a counseling agency.
- Require the lender to provide the prospective borrower with a list of all nonprofit counseling agencies in the state that have been approved by the United States Department of Housing and Urban Development for counseling.
- Grant borrowers the right to cancel a reverse mortgage within 30 days for any reason and would require a lender to provide a notice to this effect.
- Establish a new fiduciary duty between reverse mortgage sales people and consumers.
If you read through the text of AB 329, it’s clear that Feuer has a problem with the word “refer”. Instead of the word refer, he would like it to say “provide”. You can read the text of AB 329 here.
Feuer isn’t the first politician to introduce a bill to provide protections for reverse mortgage borrowers without understanding the product, Minnesota’s Attorney General did the same thing earlier this month.
