Maryland Enacts Reverse Mortgage Loan Legislation
On May 20, Maryland Governor Martin O’Malley signed into law S.B. 878, a bill setting forth requirements applicable to reverse mortgage loan lenders and arrangers of financing. Among other things, the bill:
- Requires reverse mortgage loan lenders and arrangers of financing to comply with certain federal laws and regulations governing federally-insured home equity conversion mortgage loans;
- Prohibits reverse mortgage loan lenders and arrangers of financing from conditioning the origination of a reverse mortgage loan upon a borrower’s purchase of an annuity, long-term care policy, or other related financial or insurance product. However, a reverse mortgage loan borrower may be required to purchase title, hazard, and/or flood insurance, as well as any other financial or insurance product that is required for reverse mortgage loans insured under federal law; and
- Requires reverse mortgage loan lenders and arrangers of financing, upon receipt of a reverse mortgage loan application from a prospective borrower, to provide a borrower with a written checklist of reverse mortgage loan-related issues that a borrower should discuss with a counseling agency.
The bill applies to reverse mortgage loans applied for on or after October 1, 2010.