February 25, 2015
State Representative Mary Mushinsky addressed the legislature’s Banks Committee to support the recommendations of the Task Force on Reverse Mortgages, H.B. 5651, which has been raised as a committee bill.
In her testimony, Rep. Mushinsky, co-chair of the Task Force, said, “This is my third year trying to pass a bill to protect CT seniors from being harmed by reverse mortgages to avoid the horror stories of other states. The most difficult scenario: the surviving spouse is evicted from their own home after not comprehending the risks that the older (now deceased) spouse agreed to when he signed the reverse mortgage. The trigger for eviction is often the surviving spouse failing to pay the property taxes on time.”
According to Mushinsky’s testimony, federal regulations tightened protections for the surviving spouse in August 2014, as the Task Force began deliberations. Most of the Task Force believed it was still necessary to require person-to-person counseling, add clarity to reverse mortgage language, and add the right to change one’s mind during a 7 day cooling off period, either after the counseling or after the application begins.
Rep. Mushinsky noted, “The Task Force was not unanimous on the 7-day waiting period; the industry representative opposed it. Other recommendations were unanimous.”
Various recommendations include the use of unfair trade practices act to protect the consumer and language changes.
“The industry believes the 7 day wait period is unnecessary as the average application takes 3 months,” Mushinsky said. “However, the main concept the Task Force wants the committee to support is that we need to protect seniors who are enticed by friendly TV spokesmen such as Henry Winkler and Fred Thompson with full disclosure of risks and counseling for both spouses. The potential risk is substantial: there is potentially the loss of the home in old age, if, for example, a spouse misses a tax deadline.”