SENIOR ASSEMBLY PROPOSAL NO. 32

INTRODUCED BY SENIOR ASSEMBLY MEMBER KROHN

(COAUTHOR: SENIOR SENATOR MILLER)

LEGISLATIVE COUNSEL'S DIGEST

AP 32: REVERSE MORTGAGE TRANSPARENCY ACT.

UNDER EXISTING LAW, THE UNITED STATES FEDERAL HOUSING ADMINISTRATION ADMINISTERS THE HOME EQUITY CONVERSION MORTGAGE PROGRAM WHICH ALLOWS BORROWERS WHO ARE 62 YEARS OF AGE AND OLDER TO CONVERT THE EQUITY IN THEIR HOMES INTO A MONTHLY STREAM OF INCOME OR LINE OF CREDIT.

THIS MEASURE WOULD MEMORIALIZE THE LEGISLATURE AND THE GOVERNOR TO ENACT LEGISLATION THAT WOULD REQUIRE ALL REVERSE MORTGAGE COUNSELING TO BE CONDUCTED FACE-TO-FACE WITH THE BORROWER.

VOTE:   MAJORITY.

AP 32:   RELATING TO REVERSE MORTGAGES

WHEREAS, NINETY PERCENT OF UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) APPROVED REVERSE MORTGAGE BORROWERS RECEIVE COUNSELING OVER THE TELEPHONE; AND

WHEREAS, TELEPHONE COUNSELING IS SERIOUSLY INADEQUATE, AS IT DOES NOT ACCOUNT FOR ACCURATELY COMMUNICATING THE COMPLEXITIES OF THE REVERSE MORTGAGE LOANS, ANY POSSIBLE HEARING OR COGNITIVE IMPAIRMENTS OF THE BORROWER, AND THE DIFFICULTY OF DETERMINING WHO EXACTLY IS ON THE TELEPHONE; AND

WHEREAS, WHEN REVERSE MORTGAGES INVOLVE MARRIED COUPLES, OR TWO OR MORE INDIVIDUALS WHO ARE ON THE PROPERTY TITLE, IT IS NOT POSSIBLE FOR AN OVER-THE-TELEPHONE COUNSELOR TO EFFECTIVELY COMMUNICATE WITH ALL PARTIES THROUGHOUT A TELEPHONE COUNSELING SESSION; AND

WHEREAS, MANY SENIOR BORROWERS DO NOT UNDERSTAND THAT THEY ARE ULTIMATELY RESPONSIBLE FOR UNDERSTANDING THE CONSEQUENCES OF A REVERSE MORTGAGE ON THEIR PERSONAL SITUATION, FINANCIAL CIRCUMSTANCES, HEALTH, AND LONG- AND SHORT-TERM NEEDS; AND

WHEREAS, SENIORS WHO HAVE BEEN SOLD UNSUITABLE REVERSE MORTGAGES, WITHOUT UNDERSTANDING THE CONSEQUENCES, HAVE A GREATER RISK OF HOMELESSNESS AND LOSS OF PROPERTY, EQUITY, QUALITY OF LIFE, AND ACCESS TO SOCIAL SERVICE PROGRAMS WHEN THOSE THINGS ARE MOST NEEDED; AND

WHEREAS, THE STATE OF NORTH CAROLINA HAS ESTABLISHED A PRECEDENT BY REQUIRING ALL REVERSE MORTGAGE COUNSELING TO BE CONDUCTED FACE-TO-FACE WITH THE BORROWER; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2011 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT ALL REVERSE MORTGAGE COUNSELING BE CONDUCTED FACE-TO-FACE WITH THE BORROWER; AND BE IT FURTHER

RESOLVED, THAT THE COST OF THE REQUIRED FACE-TO-FACE COUNSELING BE INCLUDED IN THE REVERSE MORTGAGE COSTS OF THE BORROWER; AND BE IT FURTHER

RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZES THE LEGISLATURE AND THE GOVERNOR OF THE STATE OF CALIFORNIA TO ENACT APPROPRIATE LEGISLATION THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER

RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE PRESIDENT PRO TEMPORE OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE GOVERNOR OF THE STATE OF CALIFORNIA.

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RN 11 17896