Connecticut Senate Bill SB00163

Connecticut 2016 Regular Session

• Introduced: 2/18/16
• Refer: 2/18/16
• Report Pass: 3/8/16
• Refer: 3/18/16
• Report Pass: 3/24/16
• Refer: 4/11/16
• Report Pass: 4/13/16
• Report Pass: 4/14/16
• Refer: 4/19/16
• Report Pass: 4/21/16

Caption

An Act Providing Protections For Consumers Applying For Reverse Mortgages.

Impact

If enacted, SB00163 would modify existing state laws applicable to reverse mortgages by introducing specific counseling and certification requirements for lenders. Lenders will be obligated to provide a list of independent counseling agencies and ensure applicants have obtained counseling before accepting their applications. This legislative change aims to safeguard consumers by ensuring they are well-informed and that they have had personal interaction with counselors who are not compensated by lenders, thereby reducing the risk of conflict of interest that could lead to exploitation.

Summary

SB00163, titled 'An Act Providing Protections for Consumers Applying for Reverse Mortgages,' focuses on establishing mandatory protections for consumers engaged in the process of applying for reverse mortgage loans. The bill stipulates that entities such as banks and credit unions in Connecticut cannot accept applications for reverse mortgages without first ensuring that prospective applicants receive appropriate counseling from HUD-approved agencies. This requirement is intended to protect consumers, especially elderly homeowners, from potentially deceptive practices and enhance their understanding of the reverse mortgage process.

Sentiment

Overall, the sentiment toward SB00163 appears to be supportive, particularly among consumer advocacy groups who view the regulations as essential for protecting vulnerable populations. Lawmakers advocating for these protections expressed concern over the potential for exploitation in reverse mortgage transactions and how inadequate knowledge could lead to financial hardships for applicants. However, there may be some contention from financial institutions regarding the additional administrative burdens imposed by the counseling requirements, which they argue could slow down the mortgage application process.

Contention

The central point of contention revolves around balancing consumer protection with the operational capabilities of financial institutions. Supporters of the bill argue that without these consumer protections, elderly homeowners risk mismanaging their financial assets. Critics, particularly from the banking sector, might contend that the added regulatory layers could deter eligible consumers from pursuing reverse mortgages due to perceived complexities and delays in the application process. The discussions highlight a critical intersection between consumer rights advocacy and the financial industry's concerns about servicing efficiency in a competitive market.