The Massachusetts Division of Banking (DOB) on Tuesday issued a letter reminding participants in the reverse mortgage industry operating in the state that relief allowing for telephone or video mortgage conversion advice (HECM) would end as scheduled on December 15, 2021. Any loan originating in Massachusetts on or after this date will require in-person counseling. This is according to a notice published by the state DOB and obtained by RMD.
As the intensity of the pandemic has waned over the past year with the greater availability of vaccines and the development of other treatments, cases across the country are accelerating again due to the more virulent nature of the disease. the recently discovered “Omicron” variant, and cases have notably accelerated in Massachusetts over the past 30 days.
Considering that COVID-19 particularly affects the elderly and combined with the presence of a more infectious variant, organizations such as the Massachusetts Mortgage Bankers Association (MMBA) and the National Reverse Mortgage Lenders Association (NRMLA) have attempted to communicate the need to extend the deadline to the state legislature. The last time such a requirement interacted with the need for pandemic-induced physical distancing, reverse mortgage business was put on hold in the state.
A request for comment from Massachusetts DOB was not returned at time of posting.
According to reverse mortgage professionals active in the state, the DOB’s announcement caught many off guard, as longer-term solutions designed to allow continued phone or video counseling were considered for a while. months, before the last extension of the deadline. which was returned in June.
In a comment letter submitted by the MMBA to the state legislature last week and reviewed by RMD, the organization highlighted several advice gaps that could be addressed by extending the December 15 deadline or establishing a more permanent solution. State-licensed counselors who can deliver the sessions are a minimum resource, with only five full-time counselors and one part-time counselor capable of providing such services in the state. These figures concerning the number of advisers available are unchanged from the figures communicated to RMD six months ago.
In June of this year, Massachusetts Gov. Charlie Baker extended the pre-existing time limit for phone and video counseling by six months. While a bill to permanently meet the in-person counseling requirement was tabled as early as March of this year, the bill appears to be stalled without further deliberation on the basis of public information made available by the Massachusetts State Legislature.
MMBA and state reverse mortgage professionals described a continuing lack of available counselors approved by the Massachusetts Executive Office of Elder Affairs and the US Department of Housing and Urban Development (HUD). This dearth of available advisers remains the most immediate concern for the reverse mortgage industry related to the state’s expiring relief.
During the state of emergency induced by COVID-19, more than 400 counseling sessions were held by video or phone according to the MMBA, a step taken to reduce the likelihood of older residents of Massachusetts being exposed to COVID -19 or at its most aggressive. variants. Massachusetts remains the only state in the country that requires reverse mortgage counseling sessions to be completed in person.
Impact on the state of the expiration of the time limit
According to a Massachusetts reverse mortgage advisor, the fact that no action has been taken to provide a more permanent solution to these problems is baffling.
“I am shocked that no action has been taken on this legislation,” said Jennifer Cosentini, director of housing at Cambridge Credit Counseling Corp. based in Agawam, Mass. regarding the stalled bill. “Why is the state of Massachusetts prepared to put our counselors and our elders at risk? “
A new hiatus in the reverse mortgage industry in the state could be worse than the hiatus seen in March 2020 according to George Downey, founder of Harbor Mortgage Solutions in Braintree, Mass. One of the reasons is that the cases of infection in the state have increased dramatically. over the past 30 days, with 3,988 new infections on November 12. By December 13, that number had climbed to 11,672, according to data from the New York Times.
âWe have had a huge increase in COVID cases, and the elderly being a vulnerable cohort have been urged to avoid rallies and face-to-face meetings,â Downey told RMD in an interview. “[Counselors] no longer have people in their offices. Just in terms of logistics, we only have five people who can serve the entire population of the state. With this and the burden it places on seniors with mobility challenges, they have to travel extraordinary distances. Residents of Martha’s Vineyard or Nantucket Island must board a boat or plane.
Late Tuesday, a potential gap in the DOB advisory issued to industry participants was highlighted regarding the effective date of December 15. The notice specifies that the ârequestâ date cannot be specified beyond December 15. However, in some cases, it is possible that a request arrives before or after the scheduled counseling session. It is not clear whether, for example, a December 15 application date will allow counseling that is scheduled after that date.
What the reverse mortgage industry can do
When asked what the reverse mortgage industry as a whole should keep in mind about the challenges faced by reverse mortgage professionals in Massachusetts, Downey stressed the need to engage with them. State-level lawmakers to ensure that they receive accurate information on the standards of the modern reverse mortgage product.
âThis problem started in 2009 and came from a well-meaning but misguided senior lawyer who promoted legislation to make in-person counseling mandatory,â Downey explained. “It’s not what these people know, it’s what they don’t know, and as well-meaning individual as this individual was, he had no idea of ââthe inner workings of a reverse mortgage at all.”
Likewise, lawmakers are unaware of the specific dynamics of a reverse mortgage and often receive inaccurate information from voters that only compounds many of the negative – and more importantly, incorrect – perceptions about the product category, says Downey.
“A suggestion in various states would be that local suppliers reach out to their legislators to explain and educate them on what the product is and is not, so that they become less vulnerable to well-meaning people who are proposing legislation,” Downey noted. âOnce the law is promulgated, it is very difficult to change it. For 12 years we have been fighting this problem, and those responsible for this industry must meet with legislators and agencies in their state and educate them on what this program is.
History of Reverse Mortgage Advice Relief, Pandemic Impact on Seniors
In March 2020, during the first days of the COVID-19 pandemic, reverse mortgage lending operations in Massachusetts were effectively closed due to the imposition of virus mitigation measures and physical distancing requirements. imposed by federal and state health authorities, in concert with a state of emergency declared by Governor Baker.
In April 2020, the Massachusetts House of Representatives and the State Senate passed a bill providing for a statewide moratorium on foreclosures and evictions during the COVID-19 coronavirus emergency, which also included a provision allowing telephone or video advice for reverse mortgage transactions during the duration of the emergency. This state of emergency was lifted on June 15, 2021, but the deadline for advice by phone or video has been extended to December 15.
In an interview in June, Cosentini told RMD that the impact on seniors seeking reverse mortgage advice was readily apparent based on his conversations with his clients.
âOur Massachusetts clients were absolutely delighted that they didn’t have to come to the office,â Cosentini said in June. âWhen we compiled this data to determine how far these seniors would have to travel to see us, it was hundreds of kilometers in many cases. So they were so happy that they didn’t have to. A lot of them were clients that we had counseled in the past, and now they were refinancing and thought they should come see us in person. They were so happy that they didn’t have to do that this time.
According to a recent report published by the New York Times, the United States is on the verge of reaching a total death toll of 800,000 from COVID-19. Almost 600,000 of these total deaths occurred in people aged 65 and over.
“As the coronavirus pandemic nears the end of a second year, the United States is on the verge of surpassing 800,000 deaths from the virus, and no group has suffered more than older Americans,” start the report. âWe have always known that the elderly are more vulnerable, but the scale of the loss is only fully visible now. “
Editor’s Note: An additional detail regarding the DOB advisory and how it might interact with any advice taking place before or after December 15th has been added to the story.