What's happening
This bill strengthens consumer protections for seniors seeking reverse mortgages by requiring enhanced disclosures, counseling, and waiting periods before loan approval.
Why it matters
Mandates clearer information and education. The bill requires lenders to provide a plain-language notice and a detailed worksheet guide—prepared by state regulators—explaining how reverse mortgages work, their risks (including impacts on heirs and estates), alternatives, default consequences, and effects on eligibility for government assistance. This aims to reduce confusion and prevent seniors from unknowingly jeopardizing their financial security.
Strengthens counseling requirements. Before a reverse mortgage loan application can proceed, applicants must either receive independent counseling (from a HUD-certified counselor, attorney, or similar service) or formally waive it in writing. This requirement is designed to ensure that seniors make informed decisions and are aware of potential pitfalls.
Imposes a mandatory waiting period. Lenders are prohibited from completing an application or charging any fees until at least seven days after the applicant has received counseling (or waived it). This "cooling-off" period protects seniors from being rushed into complex financial agreements and provides time for reflection and family consultation.
Centralizes and standardizes oversight. The Department of Financial Services (DFS), possibly in consultation with the Office for the Aging, will now prepare all required disclosures and guides, replacing a patchwork system of local agencies. This ensures more consistent consumer protections and up-to-date materials statewide.
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Protect Seniors from Reverse Scams
Plain English, a few words. Used as the page title.
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History
- Referred to judiciary
- Referred to judiciary
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Protect Seniors in Reverse Mortgages
In Senate Committee · Aging · Sponsor Susan Serino
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6883
2019-2020 Regular Sessions
IN ASSEMBLY
March 25, 2019
Introduced by M. of A. BRONSON -- read once and referred to the Committee on Judiciary
AN ACT to amend the real property law, in relation to conditions on lenders who extend reverse mortgages to persons over sixty and seventy years old
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraphs (g), (h) and (i) of subdivision 2 of section 280 of the real property law, as added by chapter 613 of the laws of 1993, paragraph (i) as further amended by section 104 of part A of chapter 62 of the laws of 2011, are amended to read as follows:
(g) an authorized lender must deliver to the applicant, upon application[, if available,] a plain language statement prepared by the [local or county] department of financial services who may consult with the New York state office for the aging, where appropriate, on the advisability and availability of independent counseling and information services. In addition to the plain language notice, no reverse mortgage loan application shall be taken by a lender unless the lender provides the prospective borrower, prior to his or her meeting with a counseling agency on reverse mortgages, with a reverse mortgage worksheet guide to be prepared by the department of financial services who may consult with the New York state office for the aging where appropriate. Further, no reverse mortgage commitment shall be issued by an authorized lender until the applicant presents, in writing, a statement that the terms of the reverse mortgage loan have been explained by an attorney, a housing and urban development certified counselor or any other counseling service as indicated on the statement supplied by the [county or local office for the aging] department of financial services or a signed affidavit indicating that the applicant, although made aware of the importance of counseling and its local availability through the provision of such information by the authorized lender, chooses not to utilize any of
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06745-01-9
A. 6883 2
the aforementioned available services. The loan application shall not be approved until the signed reverse mortgage worksheet guide is provided to the lender. A copy of the reverse mortgage worksheet guide shall be provided to the borrower that shall have information including, but not limited to: how reverse mortgages can affect the borrower and their heirs and estate; the consequences of defaulting on a reverse mortgage; alternatives to a reverse mortgage; and the impact on the borrower's eligibility for government assistance programs. The form of such statement and affidavit shall be developed by the department of financial services, who may consult with the New York state office for the aging where appropriate; and
(h) a lender shall not accept a final and complete application for reverse mortgage loan from a prospective applicant or assess any fees upon a prospective applicant until a lapse of seven days from the date of counseling, as evidenced by the counseling certification, and without first receiving certification from the applicant or the applicant's authorized representative that the applicant has received counseling from an agency as described in paragraph (g) of this subdivision or seven days from receipt of a signed affidavit expressly waiving such counseling; and
(i) any such reverse mortgage shall expressly and conspicuously bear a legend identifying it as such; and
[(i)] (j) subject to such rules or regulations as the superintendent of financial services may adopt, a reverse mortgage loan shall be made at either a fixed or variable rate of interest.
§ 2. Paragraphs (j), (k), (l) and (m) of subdivision 2 of section 280-a of the real property law, as added by chapter 613 of the laws of 1993, paragraph (l) as further amended by section 104 of part A of chapter 62 of the laws of 2011, are amended to read as follows:
(j) an authorized lender must deliver to the applicant upon application[, if available,] a plain language statement prepared by the [local or county] department of financial services, who may consult with the New York state office for the aging, where appropriate, on the advisability and availability of independent counseling and information services. In addition to the plain language notice, no reverse mortgage loan application shall be taken by a lender unless the lender provides the prospective borrower, prior to his or her meeting with a counseling agency on reverse mortgages, with a reverse mortgage worksheet guide to be prepared by the department of financial services, who may consult with the New York state office for the aging where appropriate. Further, no reverse mortgage commitment shall be issued by the authorized lender until the applicant presents, in writing, a statement that the terms of the reverse mortgage loan have been explained to them by an attorney, a housing and urban development certified counselor or any other counseling service as indicated on the statement supplied by the [county or local office for the aging] department of financial services or a signed affidavit indicating that the applicant, although made aware of the importance of counseling and its local availability through the provision of such information by the authorized lender, chooses not to utilize any of the aforementioned available services. The loan application shall not be approved until the signed reverse mortgage worksheet guide is provided to the lender. A copy of the reverse mortgage worksheet guide shall be provided to the borrower that shall have information including, but not limited to: how reverse mortgages can affect the borrower and their heirs and estate, the consequences of defaulting on a reverse mortgage, alternatives to a reverse mortgage, and impacts
A. 6883 3
on the borrower's eligibility for governmental assistance programs. The form of such statement and affidavit shall be developed by the department of financial services, who may consult with the New York state office for the aging where appropriate; and
(k) a lender shall not accept a final and complete application for a reverse mortgage loan from a prospective applicant or assess any fees upon a prospective applicant until a lapse of seven days from the date of counseling, as evidenced by the counseling certification, and without first receiving certification from the applicant or the applicant's authorized representative that the applicant has received counseling from an agency as described in paragraph (j) of this subdivision or seven days from receipt of a signed affidavit expressly waiving such counseling; and
(l) a reverse mortgage pursuant to this section shall expressly and conspicuously bear a legend identifying it as such; and
[(l)] (m) subject to such rules or regulations as the superintendent of financial services may adopt, a reverse mortgage loan shall be made at either a fixed or variable rate of interest; and
[(m)] (n) in the event that an authorized lender or holder of the reverse mortgage loan intends to initiate foreclosure proceedings the mortgagor shall have the right to designate a third party who shall be notified. In the event that the mortgagor has not designated a third party to receive such notice of foreclosure, then the authorized lender or the holder of said reverse mortgage loan shall notify the local or county office for the aging of its intent to commence foreclosure proceedings. Such entity shall take appropriate action to protect the interests of the mortgagor.
§ 3. This act shall take effect on the one hundred twentieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
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