New York Gov. Andrew Cuomo signed a reverse mortgage bill into law aimed to change how professionals do business in the Empire State, according to Reverse Mortgage Daily.
Assembly Bill A5626 was first passed by the New York State Assembly in May, but takes aim at what it calls “deceptive practices,” requiring mortgage lenders to provide supplemental consumer protection materials while imposing additional restrictions on lenders related to their payment of insurance premiums on property taxes.
“Reverse mortgages are complicated and expensive financial products. Many seniors do not understand how they work or what their true long-term costs are,” the memo says. “Exacerbating this problem are unscrupulous lenders who market reverse mortgages as public services or government-sponsored products. Inadequate regulation of this industry resulted in a sharp uptick in defaults in 2016, as more seniors fell into foreclosure on these products, losing not only their homes, but also their most significant financial assets.”
Reverse Mortgage Daily says the bill also requires both lenders and borrowers to be represented by an attorney at the time of closing. At least one attorney must be present to conduct the closing itself.
Prior to the creation of A5626, Cuomo outlined in his 2017 State of the State address the New York lawmakers that addressing the financial exploitation of seniors would be a top priority for his administration, making a series of proposals that included tighter regulation of reverse mortgages within New York.
Reverse Mortgage Daily says October 2019 was the strongest month for HECM endorsement since May 2018 due to a favorable interest rate environment, according to data compiled by New View Advisors.
“Other than in February 2019, when the market recovered from the year-end slowdown and reached over 4,000 endorsements, October’s endorsement count is the strongest since May 2018,” New View writes in its commentary. “Part of the increase in volume can be attributed to lower interest rates. Now that interest rate declines have stalled, it remains to be seen if higher endorsement volume will continue.”
New View’s “Who buys What From Whom” report in October 2019 was also released, showing 63% of total origination and securitization volume was sold from originators to issuers of HECM-backed securities over the past year.