October 22, 2020
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       Florida Senate - 2010                             CS for SB 1532
       
       
       
       By the Committee on Banking and Insurance; and Senator Fasano
       
       
       
       
       597-02168-10                                          20101532c1
    1                        A bill to be entitled                      
    2         An act relating to reverse mortgage loans; creating s.
    3         494.00297, F.S.; providing definitions; specifying who
    4         may originate or make a loan; specifying the
    5         requirements for reverse mortgage loans; authorizing
    6         certain fees and charges for loans; requiring mortgage
    7         lenders to disclose certain loan information to
    8         mortgagors; prohibiting lenders from requiring reverse
    9         mortgage loan applicants to purchase certain financial
   10         products; providing counseling and consumer education
   11         requirements for reverse mortgage lenders and the
   12         mortgagor; providing for construction; authorizing the
   13         Financial Services Commission to adopt rules;
   14         providing an effective date.
   15  
   16  Be It Enacted by the Legislature of the State of Florida:
   17  
   18         Section 1. Section 494.00297, Florida Statutes, is created
   19  to read:
   20         494.00297Reverse mortgage loans.—
   21         (1) DEFINITIONS.—For purposes of this section, the term:
   22         (a)“Department” means the United States Department of
   23  Housing and Urban Development.
   24         (b) “Making a reverse mortgage loan” means the funding and
   25  closing of a reverse mortgage loan under this section.
   26         (c) “Maximum claim” means the maximum amount of proceeds
   27  over the life of the reverse mortgage loan which the mortgagor
   28  is entitled to receive under the loan.
   29         (d) “Mortgagor” means an individual who:
   30         1. Is, or whose spouse is, at least 62 years of age;
   31         2. Holds title to the entire property that is the security
   32  for the reverse mortgage loan, or if there are multiple
   33  mortgagors, all the mortgagors collectively hold title to the
   34  entire property;
   35         3. Has received adequate counseling, as provided in
   36  subsection (7); and
   37         4. Has received full disclosure of all costs charged to the
   38  mortgagor, including costs of estate planning, financial advice,
   39  and other services that are related to the reverse mortgage loan
   40  but are not required to obtain the loan, which disclosure
   41  clearly states which charges are required to obtain the loan and
   42  which are not required to obtain the loan.
   43         (e) “Originating a reverse mortgage loan” means taking an
   44  application for a reverse mortgage loan pursuant to this
   45  section.
   46         (f) “Program” means the Home Equity Conversion Mortgage
   47  Program of the Federal Housing Administration.
   48         (g) “Reverse mortgage loan” or “loan” means a loan
   49  providing future payments which is secured by a mortgage, deed
   50  of trust, or equivalent security interest in the principal
   51  residence of the mortgagor, excluding loans made under the
   52  program. Future payments include lump sum, periodic cash
   53  advances, or lines of credit based on the equity or the value in
   54  the place of residence.
   55         (2) MORTGAGE LENDERS.—Only mortgage lenders and mortgage
   56  brokers licensed under ss. 494.001-494.0077 may engage in
   57  originating or making a reverse mortgage loan under this
   58  section.
   59         (3) LOAN LIMITATIONS AND PARAMETERS.—A reverse mortgage
   60  loan must comply with all of the following:
   61         (a) Any prepayment of the loan by the mortgagor, in whole
   62  or in part, is permitted without penalty at any time during the
   63  term of the loan. For purposes of this paragraph, the term,
   64  “penalty” does not include any fees, payments, or other charges
   65  that would otherwise have been due upon the reverse mortgage
   66  loan being due and payable.
   67         (b) If a reverse mortgage loan provides for periodic
   68  advances to a mortgagor, the advances may not be reduced in
   69  amount or number based upon adjustments in the interest rate.
   70         (c) The loan balance is due and payable in full if any of
   71  the following events occur:
   72         1. The mortgagor dies and the property is not the principal
   73  residence of at least one other mortgagor.
   74         2. The mortgagor conveys all of his or her title in the
   75  property and no other mortgagor retains title to the property.
   76         3.The property ceases to be the principal place of
   77  residence of the mortgagor or, for a period of longer than 12
   78  consecutive months, a mortgagor fails to occupy the property
   79  because of physical or mental illness and the property is not
   80  the principal residence of at least one other mortgagor.
   81         4. An obligation of the mortgagor under the mortgage is not
   82  performed.
   83         (d) The loan requires no payment of principal or interest
   84  until the entire loan becomes due and payable.
   85         (4) ORIGINATION FEES.—
   86         (a) The mortgage lender may collect, in cash at the time of
   87  closing or through an initial payment under the reverse mortgage
   88  loan, a charge to compensate the lender for expenses incurred in
   89  originating and closing the loan, which may be fully financed by
   90  the loan mortgage. The origination fee is equal to 2 percent of
   91  the maximum claim amount of the loan, up to a maximum claim
   92  amount of $200,000, plus 1 percent of any portion of the maximum
   93  claim amount which is greater than $200,000 and is subject to a
   94  maximum origination fee of $6,000.
   95         (b)The mortgagor may not be required to pay any additional
   96  origination fee of any kind to a mortgage broker or loan
   97  originator. A mortgage broker’s fee may be included as part of
   98  the origination fee only if the mortgage broker is engaged
   99  independently by the homeowner and if there is no financial
  100  interest between the mortgage broker and the mortgage lender.
  101         (5) DISCLOSURES.—
  102         (a) A mortgage lender shall provide the mortgagor, at any
  103  time during the reverse mortgage loan process but before the
  104  loan closing, with a document disclosing in plain language a
  105  summary of the core terms and conditions of the loan. The terms
  106  and conditions must include, but are not limited to:
  107         1. The interest rate.
  108         2. Whether the rate is fixed or adjustable.
  109         3. If the rate is adjustable, the frequency of the rate
  110  change and the maximum amount the rate can change in any period.
  111         4. The public index to which any changes in the interest
  112  rate are tied.
  113         5. The term of the loan.
  114         6.The schedule of payments paid out during the term of the
  115  loan.
  116         7. The conditions under which repayment is required.
  117         (b)The commission may adopt rules requiring mortgage
  118  lenders to make specific disclosures to mortgagors regarding a
  119  reverse mortgage loan. In adopting such rules, the commission
  120  shall consider general industry standards as provided in the
  121  federal Real Estate Settlement Procedures Act, as amended, 12
  122  U.S.C. ss. 2601 et eq., the federal Truth in Lending Act, as
  123  amended, 15 U.S.C. ss. 1601 et seq., the federal Housing and
  124  Economic Recovery Act of 2008, Pub. L. No. 110-289, the federal
  125  Housing and Community Development Act of 1987, 12 U.S.C. 1715z
  126  20, and any regulations adopted under such acts.
  127         (6) CROSS-SELLING.—
  128         (a) A mortgage lender or any other party may not require an
  129  applicant for a reverse mortgage loan to purchase insurance, an
  130  annuity, or similar financial product, excluding title insurance
  131  or hazard, flood, or other peril insurance, as a condition of
  132  obtaining a reverse mortgage loan.
  133         (b) A mortgage lender or a mortgage broker arranging a
  134  reverse mortgage loan may not participate in, be associated
  135  with, or employ any party that participates in or is associated
  136  with any other financial or insurance activity unless the
  137  mortgage lender or mortgage broker demonstrates to the office
  138  that the mortgage lender or other party maintains, or will
  139  maintain, firewalls and other safeguards designed to ensure
  140  that:
  141         1. Individuals participating in the origination of the
  142  reverse mortgage loan have no involvement with, or incentive to
  143  provide the mortgagor with, any other financial or insurance
  144  product; and
  145         2. The mortgagor will not be required, directly or
  146  indirectly, as a condition of obtaining a reverse mortgage, to
  147  purchase any other financial or insurance product.
  148         (7) COUNSELING AND CONSUMER EDUCATION.—Before making a
  149  reverse mortgage loan, a mortgagor must receive counseling as
  150  provided in this subsection.
  151         (a) The mortgage lenders shall provide the mortgagor with a
  152  list of at least five counseling agencies approved by the
  153  department, including at least two agencies that can provide
  154  counseling by telephone. The counseling agency must be an
  155  independent third party that is not, directly or indirectly,
  156  associated with or compensated by a party involved in:
  157         1. Originating or servicing the reverse mortgage loan;
  158         2. Funding the loan underlying the reverse mortgage loan;
  159  or
  160         3. Funding the sale of annuities, investments, long-term
  161  care insurance, or any other type of financial or insurance
  162  product.
  163         (b) Counseling may be face-to-face or by telephone. The
  164  information covered in the counseling session must include:
  165         1. Options other than a reverse mortgage loan which are
  166  available to the mortgagor, including other housing, social
  167  service, health, and financial options.
  168         2. Other reverse mortgage loan options that are or may
  169  become available to the mortgagor, including, but not limited
  170  to, sale-leaseback financing, deferred payment loans, and
  171  property tax deferrals.
  172         3. The financial implications of entering into a reverse
  173  mortgage loan.
  174         4. A disclosure that a reverse mortgage loan may have tax
  175  consequences, affect eligibility for assistance under federal
  176  and state programs, and have an impact on the estate and heirs
  177  of the mortgagor.
  178         5. Any other information that the commission may require by
  179  rule.
  180         (c) For mortgagors represented by an individual who is a
  181  court-appointed guardian or possesses a durable power of
  182  attorney for the mortgagor, such representative must complete
  183  the counseling requirements.
  184         (d) Upon the request of the mortgagor, other parties shall
  185  be permitted to attend the counseling with the mortgagor. This
  186  paragraph does not create an obligation or duty on the part of
  187  the mortgage lender to inform, notify, or advise any other party
  188  of the opportunity to attend the counseling.
  189         (e) The mortgagor may be assessed a fee for the counseling.
  190  The fee may be financed under the loan amount as limited by the
  191  department.
  192         (f) A mortgage lender may not accept a final and complete
  193  application for a reverse mortgage loan from a prospective
  194  mortgagor or assess and collect any fees from a prospective
  195  mortgagor without first receiving a certification from the
  196  mortgagor or the mortgagor’s authorized representative that the
  197  mortgagor has received counseling from an approved agency.
  198         1. The certification must be signed by the mortgagor and
  199  the agency counselor and include the dates of the counseling and
  200  the names, addresses, and telephone numbers of the counselor and
  201  the mortgagor. An electronic facsimile copy of the counseling
  202  certification satisfies the requirements of this paragraph.
  203         2. The mortgage lender shall maintain the certification in
  204  an accurate, reproducible, and accessible format for the term of
  205  the reverse mortgage loan.
  206         (8) OTHER PROVISIONS.—
  207         (a) For purposes of this section, a property is deemed to
  208  be owner-occupied notwithstanding that legal title to the
  209  property is held in the name of a trust if the occupant of the
  210  property is a beneficiary of the trust.
  211         (b) An arrangement, transfer, or lien subject to this
  212  section may not be invalidated solely because of the failure of
  213  a mortgage lender to comply with any provision of this section.
  214  However, this section does preclude the application of any other
  215  existing civil remedies provided by law.
  216         (9) RULES.—The commission may adopt rules to administer
  217  this section.
  218         Section 2. This act shall take effect January 1, 2011.

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