NRMLA President Steve Irwin, who signed the letter, said that while the trade association “fully supports seniors getting pre-loan counseling,” it opposes the bill as it is currently written for several reasons.
The group believes that the proposed requirements to localize reverse mortgage counseling centers, and to automate their services, will create an “unnecessary negative impact on the ability of seniors to obtain reverse mortgages in New Jersey.”
HousingWireReverse Mortgage Daily reached out to Turner’s office for more information on the bill but did not immediately receive a response.
The NRMLA also opposes the bill’s plan to create a seven-day grace period after a Home Equity Conversion Mortgage (HECM) closes. Irwin wrote that the rule would create an “unnecessary and burdensome extension beyond the 3-day grace period already mandated for foreclosure reversals under federal law.”
He went on to say that the HECM is “the most common reverse mortgage program” in the US and New Jersey, and HUD regulations already limit how lenders accept and process applications before the borrower completes the mandatory counseling requirement. Companies must provide prospective HECM borrowers with a list of HUD-approved counseling agencies.
The individual counseling requirements included in the bill would also conflict with federal laws.
“In accordance with FHA requirements, national HUD-accredited counselors and HUD-accredited agencies that provide telephone reverse housing counseling services must always be listed,” the letter explains.
NRMLA said it appears that only two counseling centers in New Jersey are HUD-accredited providers today. This violates HUD regulations that require at least five agencies within the “local area and/or state of the prospective applicant.”
Additionally, the trade group said that adults should be allowed to choose whether to counsel in person or over the phone. The bill would “deny consumer choice and rights” and could harm those with a special need, such as a disability or language barrier.
“We strongly believe that SB 264, as currently written, will have the unintended consequences of reducing the availability of mortgage foreclosure counseling while at the same time placing undue hardship on New Jersey seniors seeking loans,” Irwin wrote. “This may result in seniors being denied access to credit and an important economic ‘lifeline’ in their time of need.”
The NRMLA recently ruled on another New Jersey law involving mortgage laws. It said the current bill, Senate Bill 4970, would restructure mortgages by requiring all second mortgages to be repaid in “substantially equal” installments at equal intervals. Reverse mortgages allow seniors to turn their mortgage into cash without monthly payments.
