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The Pennsylvania House of Representatives on Monday passed legislation to protect homeowners from unknowingly losing their home and generational wealth by requiring in-person financial counseling for anyone considering a reverse mortgage.
H.B. 1466, also known as the “Cephas bill” after its sponsor, state Rep. Morgan Cephas (D-Philadelphia), would mandate in-person financial counseling before a borrower could obtain a reverse mortgage. The goal, according to Cephas, is to help fixed-income homeowners — especially seniors — understand the long-term risks of these agreements.
“Pennsylvanians are facing economic struggles across all ages and regions, but our seniors and those on a fixed income are hit the hardest,” Cephas said. “Seniors, in particular, often fall prey to the promise of short-term gain without realizing what they might lose down the road.
“This would create a sensible pause in the process to ensure that homeowners comprehend what they’re agreeing to, have it explained by a financial counselor who can put it in plain and understandable language, and be made aware of their alternative options. This is one more plank in our effort to responsibly protect generational wealth and safeguard homeowners from unsuspectingly losing their life’s investment in their property.”
The bill passed the House with bipartisan support and now heads to the Pennsylvania State Senate for consideration.
Steve Irwin, the president of the National Reverse Mortgage Lenders Association (NRMLA) expressed concerns that certain provisions in the legislation would confuse homeowners.
“While NRMLA supports consumer protections, we are very concerned that certain provisions in the legislation recently passed by the PA House of Representatives are not clear and may create confusion in the marketplace,” he said in a statement shared with HousingWire‘s Reverse Mortgage Daily (RMD).
“For example, the bill requires that the person who processes a reverse mortgage application must provide counseling to the person who submitted the application. The legislation also requires that counseling is to be conducted by a counseling agency in Pennsylvania.”
Irwin went on to say that “counseling should be provided by an approved counselor, and not the person who processes the application.” He added that NRMLA believes there are “severe capacity constraints regarding the number of counselors in Pennsylvania, and that if the consumer opts for telephonic or video counseling, then that consumer should be able to avail themselves to any of the national counseling intermediaries, regardless of where that counselor is domiciled.”
NRMLA will continue to communicate with the sponsors of the legislation and advocate for revisions, Irwin said.
