New York Gov. Andrew Cuomo has announced a series of new laws that would add financial protections for the state’s senior citizens, including new rules for reverse mortgages, reports HousingWire staffer Ben Lane.
Reverse mortgages, which are similar to a traditional mortgage but differ in that borrowers do not have to repay the loan as long as they remain in their home, are only available to borrowers 62 or older and either have already paid off their forward mortgage or be able to pay it off with proceeds from the reverse mortgage.
However, some New York senior citizens face foreclosure from their home due to the complexity of reverse mortgages, Cuomo’s office notes. “Misled and misinformed by advertisements, seniors often choose reverse mortgages for an additional income without fully understanding that payments are still required for all taxes, insurance, and home maintenance,” Cuomo’s office said. “As a result of these deceptive practices, many senior citizens face foreclosure because of a missed tax or insurance payment.”
Currently, homeowners in the state with a reverse mortgage aren’t granted the same consumer protections as forward mortgage borrowers, like the right to a settlement conference when facing a foreclosure.
According to Cuomo’s office, in order to “safeguard seniors from the risks of reverse mortgages and provide equal protections to all homeowners,” Cuomo proposes the following actions:
- Close Consumer Protection Loopholes: The Governor proposes amending the Real Property Actions and Proceedings Law and Civil Practice Laws and Rules to include reverse mortgages. This will require that the same consumer protections be provided to all homeowners, regardless of the lending product they utilize.
- Launch Review of Regulations: The Governor will direct the Department of Financial Services to revisit and revise any rules and regulations pertaining to reverse mortgages. This will help to prevent future foreclosures and further protect New York homeowners.