CS/HB 845

1
A bill to be entitled
2An act relating to reverse mortgage loans; creating s.
3494.00297, F.S.; providing definitions; limiting
4originating or making reverse mortgage loans to licensed
5mortgage lenders and mortgage brokers; specifying
6requirements for reverse mortgage loans; specifying loan
7limitations and parameters; authorizing mortgage lenders
8to impose and collect an origination fee for reverse
9mortgage loans; specifying origination fee limitations;
10prohibiting additional origination fees; providing for
11certain fees to be included in the origination fee;
12requiring mortgage lenders to provide borrowers certain
13loan information; providing additional lender
14requirements; prohibiting lenders from requiring reverse
15mortgage loan applicants to purchase certain financial
16products; specifying prohibited reverse mortgage lender or
17broker activities; providing counseling and consumer
18education requirements for reverse mortgage lenders;
19specifying a criterion for a property to be owner-
20occupied; prohibiting invalidation of arrangements,
21transfers, or liens under certain circumstances;
22preserving application of other existing civil remedies
23provided by law; authorizing the Financial Services
24Commission to adopt rules; providing an effective date.
25
26Be It Enacted by the Legislature of the State of Florida:
27
28     Section 1.  Section 494.00297, Florida Statutes, is created
29to 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
33Housing and Urban Development.
34     (b)  "Making a reverse mortgage loan" means funding and
35closing a reverse mortgage loan pursuant to this section.
36     (c)  "Maximum claim" means the maximum amount of proceeds
37over the life of the reverse mortgage loan the mortgagor is
38entitled 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
42for the reverse mortgage loan, or if there are multiple
43mortgagors, all the mortgagors collectively hold title to the
44entire property.
45     3.  Has received adequate counseling, as provided in
46subsection (7).
47     4.  Has received full disclosure of all costs charged to
48the mortgagor, including costs of estate planning, financial
49advice, and other services that are related to the reverse
50mortgage loan but are not required to obtain the loan, which
51disclosure clearly states which charges are required to obtain
52the loan and which are not required to obtain the loan.
53     (e)  "Originating a reverse mortgage loan" means taking an
54application for a reverse mortgage loan pursuant to this
55section.
56     (f)  "Program" means the Home Equity Conversion Mortgage
57Program of the Federal Housing Administration.
58     (g)  "Reverse mortgage loan" or "loan" means a loan that
59provides future payments and is secured by a mortgage, deed of
60trust, or equivalent security interest in the principal
61residence of the mortgagor, excluding loans made under the
62program. Future payments include lump sum, periodic cash
63advances, or lines of credit based on the equity or the value in
64the place of residence.
65     (2)  MORTGAGE LENDERS.-Only mortgage lenders and mortgage
66brokers licensed under ss. 494.001-494.0077 may engage in
67originating or making a reverse mortgage loan under this
68section.
69     (3)  LOAN LIMITATIONS AND PARAMETERS.-A reverse mortgage
70loan must comply with all of the following:
71     (a)  Any prepayment of the loan by the mortgagor, in whole
72or in part, is permitted without penalty at any time during the
73term of the loan. For purposes of this section, the term
74"penalty" does not include any fees, payments, or other charges
75that would have otherwise been due upon the reverse mortgage
76loan being due and payable.
77     (b)  If a reverse mortgage loan provides for periodic
78advances to a mortgagor, the advances may not be reduced in
79amount or number based upon any adjustment in the interest rate.
80     (c)  The loan balance is due and payable in full if any of
81the following events occur:
82     1.  The mortgagor dies and the property is not the
83principal residence of at least one other mortgagor;
84     2.  The mortgagor conveys all of his or her title in the
85property and no other mortgagor retains title to the property;
86     3.  The property ceases to be the principal place of
87residence of the mortgagor or, for a period of longer than 12
88consecutive months, a mortgagor fails to occupy the property
89because of physical or mental illness and the property is not
90the principal residence of at least one other mortgagor; or
91     4.  An obligation of the mortgagor under the mortgage is
92not performed.
93     (d)  The loan may not require payment of any principal or
94interest until the entire loan becomes due and payable.
95     (4)  ORIGINATION FEES.-
96     (a)  The mortgage lender may impose and collect, in cash at
97the time of closing or through an initial payment under the
98reverse mortgage loan, an origination fee to compensate the
99lender for expenses incurred in originating and closing the
100loan, which may be fully financed by the loan mortgage. The
101origination fee is equal to 2 percent of the maximum claim
102amount of the loan, up to a maximum claim amount of $200,000,
103plus 1 percent of any portion of the maximum claim amount which
104is greater than $200,000 and is subject to a maximum origination
105fee of $6,000.
106     (b)  The mortgagor may not be required to pay any
107additional origination fee of any kind to a mortgage broker or
108loan originator. A mortgage broker's fee may be included as part
109of the origination fee only if the mortgage broker is engaged
110independently by the homeowner and if there is no financial
111interest between the mortgage broker and the mortgage lender.
112     (5)  DISCLOSURES.-
113     (a)  A mortgage lender shall provide the mortgagor, at any
114time during the reverse mortgage loan process but before the
115loan closing, with a document disclosing in plain language a
116summary of the core terms and conditions of the loan. The terms
117and 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
121change and the maximum amount the rate can change in any period.
122     4.  The public index to which any changes in the interest
123rate will be tied.
124     5.  The term of the loan.
125     6.  The schedule of payments paid out during the term of
126the loan.
127     7.  The conditions under which repayment is triggered.
128     (b)  The commission may adopt rules requiring mortgage
129lenders to make specific disclosures to mortgagors regarding a
130reverse mortgage loan. In adopting such rules, the commission
131shall consider general industry standards as provided in the
132federal Real Estate Settlement Procedures Act, as amended, 12
133U.S.C. ss. 2601 et seq., the federal Truth in Lending Act, as
134amended, 15 U.S.C. ss. 1601 et seq., the federal Housing and
135Economic Recovery Act of 2008, Pub. L. No. 110-289, the federal
136Housing and Community Development Act of 1987, 12 U.S.C. s.
1371715z-20, and any regulations adopted under such acts.
138     (6)  CROSS-SELLING.-
139     (a)  A mortgage lender or any other party may not require
140an applicant for a reverse mortgage loan to purchase insurance,
141an annuity, or similar financial product, excluding title
142insurance or hazard, flood, or other peril insurance, as a
143condition of obtaining a reverse mortgage loan.
144     (b)  A mortgage lender or a mortgage broker arranging a
145reverse mortgage loan may not participate in, be associated
146with, or employ any party that participates in or is associated
147with any other financial or insurance activity unless the
148mortgage lender or mortgage broker demonstrates to the office
149that the mortgage lender or other party maintains, or will
150maintain, firewalls and other safeguards designed to ensure
151that:
152     1.  Individuals participating in the origination of the
153reverse mortgage loan have no involvement with, or incentive to
154provide the mortgagor with, any other financial or insurance
155product; and
156     2.  The mortgagor will not be required, directly or
157indirectly, as a condition of obtaining a reverse mortgage, to
158purchase any other financial or insurance product.
159     (7)  COUNSELING AND CONSUMER EDUCATION.-
160     (a)  Before making a reverse mortgage loan, a mortgagor
161must receive counseling as provided in this subsection.
162     (b)  The mortgage lender shall provide the mortgagor with a
163list of at least five counseling agencies approved by the
164department, including at least two agencies that can provide
165counseling by telephone. The counseling agency must be an
166independent third party that is not, directly or indirectly,
167associated 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;
170or
171     3.  Funding the sale of annuities, investments, long-term
172care insurance, or any other type of financial or insurance
173product.
174     (c)  Counseling may be face to face or by telephone. The
175information covered in the counseling session shall include:
176     1.  Options other than a reverse mortgage loan that are
177available to the homeowner, including other housing, social
178service, health, and financial options.
179     2.  Other reverse mortgage loan options that are or may
180become available to the homeowner, including, but not limited
181to, sale-leaseback financing, deferred payment loans, and
182property tax deferrals.
183     3.  The financial implications of entering into a reverse
184mortgage loan.
185     4.  A disclosure that a reverse mortgage loan may have tax
186consequences, affect eligibility for assistance under federal
187and state programs, and have an impact on the estate and heirs
188of the mortgagor.
189     5.  Any other information the commission may require by
190rule.
191     (d)  For mortgagors represented by an individual who is a
192court-appointed guardian or possesses a durable power of
193attorney for the borrower, such individual must complete the
194counseling requirements.
195     (e)  Upon the request of the mortgagor, other parties shall
196be permitted to attend the counseling with the mortgagor. This
197paragraph does not create an obligation or duty on the part of
198the mortgage lender to inform, notify, or advise any other party
199of the opportunity to attend the counseling.
200     (f)  The mortgagor may be assessed a fee for the
201counseling. The fee may be financed under the loan amount as
202limited by the department.
203     (g)  A mortgage lender may not accept a final and complete
204application for a reverse mortgage loan from a prospective
205mortgagor or assess and collect any fees from a prospective
206mortgagor without first receiving a certification from the
207mortgagor or the mortgagor's authorized representative that the
208mortgagor has received counseling from an approved agency.
209     1.  The certification shall be signed by the mortgagor and
210the agency counselor and shall include the dates of the
211counseling and the names, addresses, and telephone numbers of
212the counselor and the mortgagor. An electronic facsimile copy of
213the counseling certification satisfies the requirements of this
214subparagraph.
215     2.  The mortgage lender shall maintain the certification in
216an accurate, reproducible, and accessible format for the term of
217the reverse mortgage loan.
218     (8)  OTHER PROVISIONS.-
219     (a)  For purposes of this section, a property the legal
220title to which is held in the name of a trust is deemed to be
221owner-occupied if the occupant of the property is a beneficiary
222of the trust.
223     (b)  An arrangement, transfer, or lien subject to this
224section may not be invalidated solely because of the failure of
225a mortgage lender to comply with any provision of this section.
226However, this section does not preclude the application of any
227other existing civil remedies provided by law.
228     (9)  RULES.-The commission may adopt rules necessary to
229administer this section.
230     Section 2.  This act shall take effect January 1, 2011.


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