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California Senate Bill 1609
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PURPOSE
This
legislation impacts on offering services in foreign languages,
restrictions on offering annuities, and counseling requirements.
Effective with all loans in the state of California
originated
on or after January 1, 2007
all lenders must have
complied with California Senate Bill 1609.
Language
Translation Requirement
Senate Bill 1609 requires that if negotiations take
place orally or in writing for a reverse mortgage in Spanish, Chinese, Tagalog,
Vietnamese or Korean that translated loan documents be provided OR that the
customer provide his or her own interpreter.
- The interpreter to be available at the loan application, the closing of the reverse
mortgage loan and at any other time when important terms of the contract
are being negotiated on behalf of the borrower(s)
- Any cost for an
interpreter’s service will be at the expense of the borrower(s)
Annuities
Senate Bill 1609 prohibits a lender or
broker from:
- Requiring an applicant for a reverse mortgage to purchase an
annuity as a condition of obtaining the loan.
- Offering an annuity to the borrower(s) prior to the closing of the
reverse mortgage or the expiration of the right of the borrower(s) to
rescind the reverse mortgage agreement.
- Referring the borrower(s) to anyone for the purchase of an annuity
prior to the closing of the reverse mortgage or the expiration of the
right of the borrower(s) to rescind the reverse mortgage agreement.
The “Information Regarding Intent to Purchase An
Annuity” that is currently in the application package will be modified to
comply with the above.
Counseling
As required by Senate Bill 1609, prior to accepting
a final and complete application or the assessment of any fees for all reverse mortgage loan programs, the
prospective applicant must receive counseling from a HUD approved counseling
agency. A
lender may discuss the program with a potential mortgagor and/or take the
initial application prior to counseling but in no event can the borrower(s) be
assessed any fees for the processing or payment of any fees to third party
vendors prior to the borrower(s) being counseled. Furthermore, the borrower(s) may not be
assessed any fees for the processing or payment of third party vendors if they
decide not to consummate the transaction after counseling has been provided.
Additionally the Bill requires the lender to
provide a list of at least five HUD approved housing counseling agencies to the
borrower(s) which includes at least two agencies that can provide telephone
counseling for all reverse mortgage
loan programs. A certification meeting
the selected program guidelines will continue to be required which evidences the
date the borrower(s) received counseling and be signed by the borrower(s) and
counselor.
Required
Disclosure
Senate Bill 1609 has changed the language required
in the “Important Notice to Reverse Mortgage Loan Applicant” which is required
to be given at the time of application.
REFERENCES
California
Senate Bill 1609
