Housing Bill Could Affect Insurance Sales

Section 2122 in the Senate bill concerns sales of reverse mortgages that will be insured by the Federal Housing Administration.

In 2007, regulators testified at a Senate hearing that some lenders had tied access to reverse mortgages to sales of life insurance.

In December 2007, McCaskill responded by introducing a bill that would have restricted links between sales of reverse mortgages and sales of insurance.

Perkins says the language in McCaskill’s bill was acceptable to the insurance industry.

During the drafting process of Section 2122, which is based on McCaskill’s bill, the language was more restrictive in a way that made the provision unsatisfactory to the insurance industry, Perkins says.

“Our primary concern with Section 2122 is that it will have the effect of prohibiting under all but the most limited circumstances sale of insurance products by anyone associated with the origination” of a reverse mortgage insured by the FHA, Perkins says. “This obviously would affect agents. It will also have an impact on banks, the groups which are distributing our products. We worked with a lot of Senate offices on this, and we are currently working with House Financial Services Committee staffers on this.”

In the section takes effect as written, “that would impose a burden on the senior to have to find a new financial advisor in order to purchase a product they might consider crucial to their financial security,” Perkins says.