Mortgage measure passes House committee
Arizona consumers could get their first state-level protections when they get a reverse mortgage.
Without dissent, the House Banking and Insurance Committee has agreed to set up some new regulations on those who offer the mortgages, most often sold to aging homeowners who are seeking to pull some equity out of their properties.
The measure most notably includes some mandatory disclosures and counseling.
That committee approval is significant: A similar measure last year, additionally sponsored by Rep. Bill Konopnicki, R-Safford, stalled when some of his Republican colleagues balked at what they saw was an effort by the government to protect society from themselves.
Several lawmakers expressed similar sentiments that session. But they have agreed to go along, at least in part considering the measure, HB 2513, is not opposed by the Arizona Bankers organization.
Generally speaking, a reverse mortgage is very similar to a home equity line of credit. The main difference, however, is that most reverse mortgages do not require repayment until the homeowner moves out.
“that is a bill that is timely and urgent,” Konopnicki said. “As we see public lose equity in 401(k)s and IRAs, humans are going to be looking for a way to retire and expand their opportunities.”
There already are federal regulations governing reverse mortgages, which Robert Zumoff, an assistant state attorney general said form up 90 percent of the market.
But Zumoff said “proprietary” lending is not covered by federal law. And he said that sector of the industry is expected to grow rapidly.
Konopnicki said the legislation is designed less to be regulatory than it is to supply info “so humans know when they compose the decision to do a reverse mortgage they know precisely what it is. What am I getting, how enlarged will it last, what are my obligations, what are the obligations of the funder.”
For example, the legislation says reverse mortgages can be either on a fixed or variable interest rate or even based on sharing any appreciated value of the property.
But there would have to be written disclosure of all the terms.
And reverse mortgages can be paid off at any instance without prepayment penalty.
What is causing some concern is a requirement that an “independent third party” supply counseling. Rep. Carl Seel, R-Phoenix, questioned whether that would supply an unnecessary hurdle - and whether there are ample folks who would qualify in Arizona to serve.
But Ruben Alonzo, a lobbyist for the Attorney General’s Office said that’s already due under federal law for federally insured mortgages.
And Konopnicki said the requirement underscores the goal of disclosure, making certain that borrowers understand the terms of the loan “so that when you sign, that you would know precisely what it is.”
Wendy Briggs, lobbyist for the Arizona Bankers organization, said there is a possibility that the requirements in the bill, particularly for counseling, could be an additional burden.
Briggs said, though, bankers are willing to live with that requirement whether it is similar to what is in federal law. And she said her organization will work with Konopnicki to fix any problems with the bill.
Seel ultimately agreed to support the bill.
But he said he want assurances there would be no “undue burdens on private industry which by definition would impair their ability to serve the public.”
Rep. Nancy McLain, R-Bullhead City, who chairs the committee, said she will go along, too.
But McLain said she questions whether that legislation is going too far to protect folks from their own decisions.
Found here.
a
Mortgage measure passes House committee
$$(’div.d549′).each( function(e) { e.visualEffect(’slide_up’,{duration:0.5}) });
Original post by admin