Bill Text: FL S1532 | 2010 | Regular Session | Comm Sub
Bill Title: Reverse Mortgage Loans [WPSC]
Spectrum: Bipartisan Bill
Status: (Failed) 2010-04-30 - Died in Messages [S1532 Detail]
Download: Florida-2010-S1532-Comm_Sub.html
Florida Senate - 2010 CS for SB 1532 By the Committee on Banking and Insurance; and Senator Fasano 597-02168-10 20101532c1 1 A bill to be entitled 2 An act relating to reverse mortgage loans; creating s. 3 494.00297, F.S.; providing definitions; specifying who 4 may originate or make a loan; specifying the 5 requirements for reverse mortgage loans; authorizing 6 certain fees and charges for loans; requiring mortgage 7 lenders to disclose certain loan information to 8 mortgagors; prohibiting lenders from requiring reverse 9 mortgage loan applicants to purchase certain financial 10 products; providing counseling and consumer education 11 requirements for reverse mortgage lenders and the 12 mortgagor; providing for construction; authorizing the 13 Financial Services Commission to adopt rules; 14 providing an effective date. 15 16 Be It Enacted by the Legislature of the State of Florida: 17 18 Section 1. Section 494.00297, Florida Statutes, is created 19 to read: 20 494.00297 Reverse mortgage loans.— 21 (1) DEFINITIONS.—For purposes of this section, the term: 22 (a) “Department” means the United States Department of 23 Housing and Urban Development. 24 (b) “Making a reverse mortgage loan” means the funding and 25 closing of a reverse mortgage loan under this section. 26 (c) “Maximum claim” means the maximum amount of proceeds 27 over the life of the reverse mortgage loan which the mortgagor 28 is entitled to receive under the loan. 29 (d) “Mortgagor” means an individual who: 30 1. Is, or whose spouse is, at least 62 years of age; 31 2. Holds title to the entire property that is the security 32 for the reverse mortgage loan, or if there are multiple 33 mortgagors, all the mortgagors collectively hold title to the 34 entire property; 35 3. Has received adequate counseling, as provided in 36 subsection (7); and 37 4. Has received full disclosure of all costs charged to the 38 mortgagor, including costs of estate planning, financial advice, 39 and other services that are related to the reverse mortgage loan 40 but are not required to obtain the loan, which disclosure 41 clearly states which charges are required to obtain the loan and 42 which are not required to obtain the loan. 43 (e) “Originating a reverse mortgage loan” means taking an 44 application for a reverse mortgage loan pursuant to this 45 section. 46 (f) “Program” means the Home Equity Conversion Mortgage 47 Program of the Federal Housing Administration. 48 (g) “Reverse mortgage loan” or “loan” means a loan 49 providing future payments which is secured by a mortgage, deed 50 of trust, or equivalent security interest in the principal 51 residence of the mortgagor, excluding loans made under the 52 program. Future payments include lump sum, periodic cash 53 advances, or lines of credit based on the equity or the value in 54 the place of residence. 55 (2) MORTGAGE LENDERS.—Only mortgage lenders and mortgage 56 brokers licensed under ss. 494.001-494.0077 may engage in 57 originating or making a reverse mortgage loan under this 58 section. 59 (3) LOAN LIMITATIONS AND PARAMETERS.—A reverse mortgage 60 loan must comply with all of the following: 61 (a) Any prepayment of the loan by the mortgagor, in whole 62 or in part, is permitted without penalty at any time during the 63 term of the loan. For purposes of this paragraph, the term, 64 “penalty” does not include any fees, payments, or other charges 65 that would otherwise have been due upon the reverse mortgage 66 loan being due and payable. 67 (b) If a reverse mortgage loan provides for periodic 68 advances to a mortgagor, the advances may not be reduced in 69 amount or number based upon adjustments in the interest rate. 70 (c) The loan balance is due and payable in full if any of 71 the following events occur: 72 1. The mortgagor dies and the property is not the principal 73 residence of at least one other mortgagor. 74 2. The mortgagor conveys all of his or her title in the 75 property and no other mortgagor retains title to the property. 76 3. The property ceases to be the principal place of 77 residence of the mortgagor or, for a period of longer than 12 78 consecutive months, a mortgagor fails to occupy the property 79 because of physical or mental illness and the property is not 80 the principal residence of at least one other mortgagor. 81 4. An obligation of the mortgagor under the mortgage is not 82 performed. 83 (d) The loan requires no payment of principal or interest 84 until the entire loan becomes due and payable. 85 (4) ORIGINATION FEES.— 86 (a) The mortgage lender may collect, in cash at the time of 87 closing or through an initial payment under the reverse mortgage 88 loan, a charge to compensate the lender for expenses incurred in 89 originating and closing the loan, which may be fully financed by 90 the loan mortgage. The origination fee is equal to 2 percent of 91 the maximum claim amount of the loan, up to a maximum claim 92 amount of $200,000, plus 1 percent of any portion of the maximum 93 claim amount which is greater than $200,000 and is subject to a 94 maximum origination fee of $6,000. 95 (b) The mortgagor may not be required to pay any additional 96 origination fee of any kind to a mortgage broker or loan 97 originator. A mortgage broker’s fee may be included as part of 98 the origination fee only if the mortgage broker is engaged 99 independently by the homeowner and if there is no financial 100 interest between the mortgage broker and the mortgage lender. 101 (5) DISCLOSURES.— 102 (a) A mortgage lender shall provide the mortgagor, at any 103 time during the reverse mortgage loan process but before the 104 loan closing, with a document disclosing in plain language a 105 summary of the core terms and conditions of the loan. The terms 106 and conditions must include, but are not limited to: 107 1. The interest rate. 108 2. Whether the rate is fixed or adjustable. 109 3. If the rate is adjustable, the frequency of the rate 110 change and the maximum amount the rate can change in any period. 111 4. The public index to which any changes in the interest 112 rate are tied. 113 5. The term of the loan. 114 6. The schedule of payments paid out during the term of the 115 loan. 116 7. The conditions under which repayment is required. 117 (b) The commission may adopt rules requiring mortgage 118 lenders to make specific disclosures to mortgagors regarding a 119 reverse mortgage loan. In adopting such rules, the commission 120 shall consider general industry standards as provided in the 121 federal Real Estate Settlement Procedures Act, as amended, 12 122 U.S.C. ss. 2601 et eq., the federal Truth in Lending Act, as 123 amended, 15 U.S.C. ss. 1601 et seq., the federal Housing and 124 Economic Recovery Act of 2008, Pub. L. No. 110-289, the federal 125 Housing and Community Development Act of 1987, 12 U.S.C. 1715z 126 20, and any regulations adopted under such acts. 127 (6) CROSS-SELLING.— 128 (a) A mortgage lender or any other party may not require an 129 applicant for a reverse mortgage loan to purchase insurance, an 130 annuity, or similar financial product, excluding title insurance 131 or hazard, flood, or other peril insurance, as a condition of 132 obtaining a reverse mortgage loan. 133 (b) A mortgage lender or a mortgage broker arranging a 134 reverse mortgage loan may not participate in, be associated 135 with, or employ any party that participates in or is associated 136 with any other financial or insurance activity unless the 137 mortgage lender or mortgage broker demonstrates to the office 138 that the mortgage lender or other party maintains, or will 139 maintain, firewalls and other safeguards designed to ensure 140 that: 141 1. Individuals participating in the origination of the 142 reverse mortgage loan have no involvement with, or incentive to 143 provide the mortgagor with, any other financial or insurance 144 product; and 145 2. The mortgagor will not be required, directly or 146 indirectly, as a condition of obtaining a reverse mortgage, to 147 purchase any other financial or insurance product. 148 (7) COUNSELING AND CONSUMER EDUCATION.—Before making a 149 reverse mortgage loan, a mortgagor must receive counseling as 150 provided in this subsection. 151 (a) The mortgage lenders shall provide the mortgagor with a 152 list of at least five counseling agencies approved by the 153 department, including at least two agencies that can provide 154 counseling by telephone. The counseling agency must be an 155 independent third party that is not, directly or indirectly, 156 associated with or compensated by a party involved in: 157 1. Originating or servicing the reverse mortgage loan; 158 2. Funding the loan underlying the reverse mortgage loan; 159 or 160 3. Funding the sale of annuities, investments, long-term 161 care insurance, or any other type of financial or insurance 162 product. 163 (b) Counseling may be face-to-face or by telephone. The 164 information covered in the counseling session must include: 165 1. Options other than a reverse mortgage loan which are 166 available to the mortgagor, including other housing, social 167 service, health, and financial options. 168 2. Other reverse mortgage loan options that are or may 169 become available to the mortgagor, including, but not limited 170 to, sale-leaseback financing, deferred payment loans, and 171 property tax deferrals. 172 3. The financial implications of entering into a reverse 173 mortgage loan. 174 4. A disclosure that a reverse mortgage loan may have tax 175 consequences, affect eligibility for assistance under federal 176 and state programs, and have an impact on the estate and heirs 177 of the mortgagor. 178 5. Any other information that the commission may require by 179 rule. 180 (c) For mortgagors represented by an individual who is a 181 court-appointed guardian or possesses a durable power of 182 attorney for the mortgagor, such representative must complete 183 the counseling requirements. 184 (d) Upon the request of the mortgagor, other parties shall 185 be permitted to attend the counseling with the mortgagor. This 186 paragraph does not create an obligation or duty on the part of 187 the mortgage lender to inform, notify, or advise any other party 188 of the opportunity to attend the counseling. 189 (e) The mortgagor may be assessed a fee for the counseling. 190 The fee may be financed under the loan amount as limited by the 191 department. 192 (f) A mortgage lender may not accept a final and complete 193 application for a reverse mortgage loan from a prospective 194 mortgagor or assess and collect any fees from a prospective 195 mortgagor without first receiving a certification from the 196 mortgagor or the mortgagor’s authorized representative that the 197 mortgagor has received counseling from an approved agency. 198 1. The certification must be signed by the mortgagor and 199 the agency counselor and include the dates of the counseling and 200 the names, addresses, and telephone numbers of the counselor and 201 the mortgagor. An electronic facsimile copy of the counseling 202 certification satisfies the requirements of this paragraph. 203 2. The mortgage lender shall maintain the certification in 204 an accurate, reproducible, and accessible format for the term of 205 the reverse mortgage loan. 206 (8) OTHER PROVISIONS.— 207 (a) For purposes of this section, a property is deemed to 208 be owner-occupied notwithstanding that legal title to the 209 property is held in the name of a trust if the occupant of the 210 property is a beneficiary of the trust. 211 (b) An arrangement, transfer, or lien subject to this 212 section may not be invalidated solely because of the failure of 213 a mortgage lender to comply with any provision of this section. 214 However, this section does preclude the application of any other 215 existing civil remedies provided by law. 216 (9) RULES.—The commission may adopt rules to administer 217 this section. 218 Section 2. This act shall take effect January 1, 2011.
