CS/HB 845

1	A bill to be entitled
2	An act relating to reverse mortgage loans; creating s.
3	494.00297, F.S.; providing definitions; limiting
4	originating or making reverse mortgage loans to licensed
5	mortgage lenders and mortgage brokers; specifying
6	requirements for reverse mortgage loans; specifying loan
7	limitations and parameters; authorizing mortgage lenders
8	to impose and collect an origination fee for reverse
9	mortgage loans; specifying origination fee limitations;
10	prohibiting additional origination fees; providing for
11	certain fees to be included in the origination fee;
12	requiring mortgage lenders to provide borrowers certain
13	loan information; providing additional lender
14	requirements; prohibiting lenders from requiring reverse
15	mortgage loan applicants to purchase certain financial
16	products; specifying prohibited reverse mortgage lender or
17	broker activities; providing counseling and consumer
18	education requirements for reverse mortgage lenders;
19	specifying a criterion for a property to be owner-
20	occupied; prohibiting invalidation of arrangements,
21	transfers, or liens under certain circumstances;
22	preserving application of other existing civil remedies
23	provided by law; authorizing the Financial Services
24	Commission to adopt rules; providing an effective date.
25
26	Be It Enacted by the Legislature of the State of Florida:
27
28	Section 1.  Section 494.00297, Florida Statutes, is created
29	to read:
30	494.00297  Reverse mortgage loans.-
31	(1)  DEFINITIONS.-For purposes of this section, the term:
32	(a)  "Department" means the United States Department of
33	Housing and Urban Development.
34	(b)  "Making a reverse mortgage loan" means funding and
35	closing a reverse mortgage loan pursuant to this section.
36	(c)  "Maximum claim" means the maximum amount of proceeds
37	over the life of the reverse mortgage loan the mortgagor is
38	entitled to receive under the loan.
39	(d)  "Mortgagor" means an individual who:
40	1.  Is, or whose spouse is, at least 62 years of age.
41	2.  Holds title to the entire property that is the security
42	for the reverse mortgage loan, or if there are multiple
43	mortgagors, all the mortgagors collectively hold title to the
44	entire property.
45	3.  Has received adequate counseling, as provided in
46	subsection (7).
47	4.  Has received full disclosure of all costs charged to
48	the mortgagor, including costs of estate planning, financial
49	advice, and other services that are related to the reverse
50	mortgage loan but are not required to obtain the loan, which
51	disclosure clearly states which charges are required to obtain
52	the loan and which are not required to obtain the loan.
53	(e)  "Originating a reverse mortgage loan" means taking an
54	application for a reverse mortgage loan pursuant to this
55	section.
56	(f)  "Program" means the Home Equity Conversion Mortgage
57	Program of the Federal Housing Administration.
58	(g)  "Reverse mortgage loan" or "loan" means a loan that
59	provides future payments and is secured by a mortgage, deed of
60	trust, or equivalent security interest in the principal
61	residence of the mortgagor, excluding loans made under the
62	program. Future payments include lump sum, periodic cash
63	advances, or lines of credit based on the equity or the value in
64	the place of residence.
65	(2)  MORTGAGE LENDERS.-Only mortgage lenders and mortgage
66	brokers licensed under ss. 494.001-494.0077 may engage in
67	originating or making a reverse mortgage loan under this
68	section.
69	(3)  LOAN LIMITATIONS AND PARAMETERS.-A reverse mortgage
70	loan must comply with all of the following:
71	(a)  Any prepayment of the loan by the mortgagor, in whole
72	or in part, is permitted without penalty at any time during the
73	term of the loan. For purposes of this section, the term
74	"penalty" does not include any fees, payments, or other charges
75	that would have otherwise been due upon the reverse mortgage
76	loan being due and payable.
77	(b)  If a reverse mortgage loan provides for periodic
78	advances to a mortgagor, the advances may not be reduced in
79	amount or number based upon any adjustment in the interest rate.
80	(c)  The loan balance is due and payable in full if any of
81	the following events occur:
82	1.  The mortgagor dies and the property is not the
83	principal residence of at least one other mortgagor;
84	2.  The mortgagor conveys all of his or her title in the
85	property and no other mortgagor retains title to the property;
86	3.  The property ceases to be the principal place of
87	residence of the mortgagor or, for a period of longer than 12
88	consecutive months, a mortgagor fails to occupy the property
89	because of physical or mental illness and the property is not
90	the principal residence of at least one other mortgagor; or
91	4.  An obligation of the mortgagor under the mortgage is
92	not performed.
93	(d)  The loan may not require payment of any principal or
94	interest until the entire loan becomes due and payable.
95	(4)  ORIGINATION FEES.-
96	(a)  The mortgage lender may impose and collect, in cash at
97	the time of closing or through an initial payment under the
98	reverse mortgage loan, an origination fee to compensate the
99	lender for expenses incurred in originating and closing the
100	loan, which may be fully financed by the loan mortgage. The
101	origination fee is equal to 2 percent of the maximum claim
102	amount of the loan, up to a maximum claim amount of $200,000,
103	plus 1 percent of any portion of the maximum claim amount which
104	is greater than $200,000 and is subject to a maximum origination
105	fee of $6,000.
106	(b)  The mortgagor may not be required to pay any
107	additional origination fee of any kind to a mortgage broker or
108	loan originator. A mortgage broker's fee may be included as part
109	of the origination fee only if the mortgage broker is engaged
110	independently by the homeowner and if there is no financial
111	interest between the mortgage broker and the mortgage lender.
112	(5)  DISCLOSURES.-
113	(a)  A mortgage lender shall provide the mortgagor, at any
114	time during the reverse mortgage loan process but before the
115	loan closing, with a document disclosing in plain language a
116	summary of the core terms and conditions of the loan. The terms
117	and conditions must include, but are not limited to:
118	1.  The interest rate.
119	2.  Whether the rate is fixed or adjustable.
120	3.  If the rate is adjustable, the frequency of the rate
121	change and the maximum amount the rate can change in any period.
122	4.  The public index to which any changes in the interest
123	rate will be tied.
124	5.  The term of the loan.
125	6.  The schedule of payments paid out during the term of
126	the loan.
127	7.  The conditions under which repayment is triggered.
128	(b)  The commission may adopt rules requiring mortgage
129	lenders to make specific disclosures to mortgagors regarding a
130	reverse mortgage loan. In adopting such rules, the commission
131	shall consider general industry standards as provided in the
132	federal Real Estate Settlement Procedures Act, as amended, 12
133	U.S.C. ss. 2601 et seq., the federal Truth in Lending Act, as
134	amended, 15 U.S.C. ss. 1601 et seq., the federal Housing and
135	Economic Recovery Act of 2008, Pub. L. No. 110-289, the federal
136	Housing and Community Development Act of 1987, 12 U.S.C. s.
137	1715z-20, and any regulations adopted under such acts.
138	(6)  CROSS-SELLING.-
139	(a)  A mortgage lender or any other party may not require
140	an applicant for a reverse mortgage loan to purchase insurance,
141	an annuity, or similar financial product, excluding title
142	insurance or hazard, flood, or other peril insurance, as a
143	condition of obtaining a reverse mortgage loan.
144	(b)  A mortgage lender or a mortgage broker arranging a
145	reverse mortgage loan may not participate in, be associated
146	with, or employ any party that participates in or is associated
147	with any other financial or insurance activity unless the
148	mortgage lender or mortgage broker demonstrates to the office
149	that the mortgage lender or other party maintains, or will
150	maintain, firewalls and other safeguards designed to ensure
151	that:
152	1.  Individuals participating in the origination of the
153	reverse mortgage loan have no involvement with, or incentive to
154	provide the mortgagor with, any other financial or insurance
155	product; and
156	2.  The mortgagor will not be required, directly or
157	indirectly, as a condition of obtaining a reverse mortgage, to
158	purchase any other financial or insurance product.
159	(7)  COUNSELING AND CONSUMER EDUCATION.-
160	(a)  Before making a reverse mortgage loan, a mortgagor
161	must receive counseling as provided in this subsection.
162	(b)  The mortgage lender shall provide the mortgagor with a
163	list of at least five counseling agencies approved by the
164	department, including at least two agencies that can provide
165	counseling by telephone. The counseling agency must be an
166	independent third party that is not, directly or indirectly,
167	associated with or compensated by a party involved in:
168	1.  Originating or servicing the reverse mortgage loan;
169	2.  Funding the loan underlying the reverse mortgage loan;
170	or
171	3.  Funding the sale of annuities, investments, long-term
172	care insurance, or any other type of financial or insurance
173	product.
174	(c)  Counseling may be face to face or by telephone. The
175	information covered in the counseling session shall include:
176	1.  Options other than a reverse mortgage loan that are
177	available to the homeowner, including other housing, social
178	service, health, and financial options.
179	2.  Other reverse mortgage loan options that are or may
180	become available to the homeowner, including, but not limited
181	to, sale-leaseback financing, deferred payment loans, and
182	property tax deferrals.
183	3.  The financial implications of entering into a reverse
184	mortgage loan.
185	4.  A disclosure that a reverse mortgage loan may have tax
186	consequences, affect eligibility for assistance under federal
187	and state programs, and have an impact on the estate and heirs
188	of the mortgagor.
189	5.  Any other information the commission may require by
190	rule.
191	(d)  For mortgagors represented by an individual who is a
192	court-appointed guardian or possesses a durable power of
193	attorney for the borrower, such individual must complete the
194	counseling requirements.
195	(e)  Upon the request of the mortgagor, other parties shall
196	be permitted to attend the counseling with the mortgagor. This
197	paragraph does not create an obligation or duty on the part of
198	the mortgage lender to inform, notify, or advise any other party
199	of the opportunity to attend the counseling.
200	(f)  The mortgagor may be assessed a fee for the
201	counseling. The fee may be financed under the loan amount as
202	limited by the department.
203	(g)  A mortgage lender may not accept a final and complete
204	application for a reverse mortgage loan from a prospective
205	mortgagor or assess and collect any fees from a prospective
206	mortgagor without first receiving a certification from the
207	mortgagor or the mortgagor's authorized representative that the
208	mortgagor has received counseling from an approved agency.
209	1.  The certification shall be signed by the mortgagor and
210	the agency counselor and shall include the dates of the
211	counseling and the names, addresses, and telephone numbers of
212	the counselor and the mortgagor. An electronic facsimile copy of
213	the counseling certification satisfies the requirements of this
214	subparagraph.
215	2.  The mortgage lender shall maintain the certification in
216	an accurate, reproducible, and accessible format for the term of
217	the reverse mortgage loan.
218	(8)  OTHER PROVISIONS.-
219	(a)  For purposes of this section, a property the legal
220	title to which is held in the name of a trust is deemed to be
221	owner-occupied if the occupant of the property is a beneficiary
222	of the trust.
223	(b)  An arrangement, transfer, or lien subject to this
224	section may not be invalidated solely because of the failure of
225	a mortgage lender to comply with any provision of this section.
226	However, this section does not preclude the application of any
227	other existing civil remedies provided by law.
228	(9)  RULES.-The commission may adopt rules necessary to
229	administer this section.
230	Section 2.  This act shall take effect January 1, 2011.

CODING: Words stricken are deletions; words underlined are additions.