To amend section 138 of the Truth in Lending Act to establish certain counseling and disclosure requirements with respect to reverse mortgages.

Summary: Reverse Mortgage Elder Protection Act - Amends the Truth in Lending Act to prohibit a creditor from taking an application for a reverse mortgage unless the creditor has provided the applicant with: (1) a specified written cautionary statement before the applicant receives any counseling regarding reverse mortgages; (2) a specified written checklist before meeting with a counseling agency about reverse mortgages; and (3) a referral to a housing counseling agency for reverse mortgage counseling approved by the Department of Housing and Urban Development (HUD).

Requires a counseling agency to provide the same kind of written checklist to a consumer that seeks counseling before requesting a loan application for a reverse mortgage.

Prohibits a creditor from either accepting a final application for a reverse mortgage, or from assessing any related fees, unless the creditor has received from the consumer or the consumer's authorized representative: (1) a written certification that the consumer has received counseling regarding reverse mortgages from a HUD-approved agency; and (2) a copy of the prescribed checklist signed by the agency counselor and by the consumer.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Reverse Mortgage Elder Protection 
Act''.

SEC. 2. COUNSELING AND DISCLOSURE REQUIREMENTS FOR REVERSE MORTGAGES.

    Section 138 of the Truth in Lending Act (15 U.S.C. 1648) is amended 
by adding at the end the following:
    ``(c) Required Statement Regarding Counseling.--A creditor may not 
take an application for a reverse mortgage unless the creditor has 
provided to the applicant for the reverse mortgage, before the 
applicant receives any counseling regarding reverse mortgages pursuant 
to subsection (e), the following written statement, disclosed clearly 
and conspicuously in type that is 16-point or larger: `IMPORTANT NOTICE 
TO REVERSE MORTGAGE LOAN APPLICANT: A REVERSE MORTGAGE IS A COMPLEX 
FINANCIAL TRANSACTION. IF YOU DECIDE TO OBTAIN A REVERSE MORTGAGE LOAN, 
YOU WILL SIGN BINDING LEGAL DOCUMENTS THAT WILL HAVE IMPORTANT LEGAL 
AND FINANCIAL IMPLICATIONS FOR YOU AND YOUR ESTATE. IT IS THEREFORE 
IMPORTANT TO UNDERSTAND THE TERMS OF THE REVERSE MORTGAGE AND ITS 
EFFECT. BEFORE ENTERING INTO THIS TRANSACTION, YOU ARE REQUIRED TO 
CONSULT WITH AN INDEPENDENT LOAN COUNSELOR. A LIST OF APPROVED 
COUNSELORS WILL BE PROVIDED TO YOU BY THE LENDER. SENIOR CITIZEN 
ADVOCACY GROUPS ADVISE AGAINST USING THE PROCEEDS OF A REVERSE MORTGAGE 
TO PURCHASE AN ANNUITY OR RELATED FINANCIAL PRODUCTS. IF YOU ARE 
CONSIDERING USING YOUR PROCEEDS FOR THIS PURPOSE, YOU SHOULD DISCUSS 
THE FINANCIAL IMPLICATIONS OF DOING SO WITH YOUR COUNSELOR AND FAMILY 
MEMBERS.'.
    ``(d) Counseling Checklist.--
            ``(1) Requirement for creditor to provide counseling 
        checklist before loan application.--A creditor may not take an 
        application for a reverse mortgage unless the creditor provides 
        to the applicant, before his or her meeting with a counseling 
        agency regarding reverse mortgages pursuant to subsection (e), 
        a written checklist that complies with paragraph (3).
            ``(2) Requirement for counseling agency to provide 
        checklist.--If a consumer seeks counseling regarding reverse 
        mortgages before requesting a loan application for a reverse 
        mortgage from a creditor, the counseling agency shall provide 
        the consumer with a written checklist that complies with 
        paragraph (3).
            ``(3) Contents of checklist.--A written checklist, with 
        respect to an applicant (or consumer, in the case described in 
        paragraph (2)), complies with this paragraph only if the 
        checklist meets the following requirements:
                    ``(A) The checklist is in writing in 12-point type 
                or larger.
                    ``(B) The checklist conspicuously notifies the 
                applicant (or consumer) under the reverse mortgage that 
                he or she should discuss with the counselor of the 
                counseling agency the following issues:
                            ``(i) How unexpected medical or other 
                        events that cause the applicant (or consumer) 
                        to move out of the home, either permanently or 
                        for more than one year, earlier than 
                        anticipated will impact the projected total 
                        annual loan cost of the mortgage.
                            ``(ii) The extent to which the applicant's 
                        (or consumer's) financial needs would be better 
                        met by options other than a reverse mortgage, 
                        including less costly home equity lines of 
                        credit, property tax deferral programs, or 
                        governmental aid programs.
                            ``(iii) Whether the applicant (or consumer) 
                        intends to use the proceeds of the reverse 
                        mortgage to purchase an annuity or other 
                        insurance products and the consequences of 
                        doing so.
                            ``(iv) The effect of repayment of the loan 
                        on nonborrowing residents of the home after all 
                        borrowers have died or permanently left the 
                        home.
                            ``(v) The applicant's (or consumer's) 
                        ability to finance routine or catastrophic home 
                        repairs, especially if maintenance is a factor 
                        that may determine when the mortgage becomes 
                        payable.
                            ``(vi) The impact that the reverse mortgage 
                        may have on the applicant's (or consumer's) tax 
                        obligations and eligibility for government 
                        assistance programs, and the effect that losing 
                        equity in the home will have on the applicant's 
                        (or consumer's) estate and heirs.
                            ``(vii) The ability of the applicant (or 
                        consumer) to finance alternative living 
                        accommodations, such as assisted living or 
                        long-term care nursing home registry, after the 
                        applicant's (or consumer's) equity is depleted.
    ``(e) Counseling Requirement.--A creditor may not accept a final 
and complete application for a reverse mortgage from a consumer or 
assess any fees upon a consumer unless the creditor has complied with 
the following requirements:
            ``(1) Required counseling referral.--The creditor shall--
                    ``(A) refer the consumer to a housing counseling 
                agency approved by the Secretary of Housing and Urban 
                Development for counseling that meets the standards and 
                requirements established by the Secretary for reverse 
                mortgage counseling; and
                    ``(B) provide the consumer with a list of at least 
                5 such housing counseling agencies approved by the 
                Secretary, including at least two agencies that can 
                provide counseling by telephone.
            ``(2) Required certification of counseling.--The creditor 
        shall have received from the consumer or the authorized 
        representative of the consumer--
                    ``(A) a written certification (which may be in the 
                form of an electronic facsimile copy) that the consumer 
                has received counseling regarding reverse mortgages 
                from an agency as described in paragraph (1), which 
                shall be signed by the consumer and the agency 
                counselor providing such counseling, and shall include 
                the date of the counseling and the name, address, and 
                telephone number of both the counselor and the 
                consumer; and
                    ``(B) a copy of the checklist provided to the 
                consumer pursuant to subsection (d) that is signed by 
                the agency counselor providing such counseling, if the 
                counseling was done in person, and by the consumer, and 
                a copy of such signed checklist shall be provided to 
                the consumer. The creditor shall maintain the 
                certification described in paragraph (2)(A) in an 
                accurate, reproducible, and accessible format for the 
                entire term of the reverse mortgage.''.