Bill Would Bar Reverse Mortgage Banks From Insurance Sales

It would require banks and mortgage companies that originate reverse mortgages to hire third-party agents to sell insurance products to the seniors who refinance with reverse mortgages they originate.

The provision deals with sale of reverse mortgages that will be insured by the Federal Housing Administration.

It was added at the request of Sen. Claire McCaskill, D-Miss., who introduced a similar bill last December in response to a hearing where regulators complained problems faced by seniors who have reverse mortgages they allege were tied to sales of life insurance.

After the bill passed the House, the ACLI released a statement acknowledging that it “would effectively prohibit under all but the most limited circumstances” the sale of insurance products by anyone associated with the origination of a reverse mortgage.

“While we support strong laws and regulations that protect seniors from being mislead in connection with reverse mortgages, we should not make it difficult for them to get the products that they may want and need,” the ACLI statement said. “We’ll be working with HUD as it develops regulations [to implement the provision].”

“The senate provision is overkill, in our opinion,” said Kevin McKechnie, a lobbyist for the American Bankers Insurance Association, because it “imposes 2 different firewall regimes.”