I 

111TH CONGRESS 

2D SESSION H. R. 4419 

To amend section 138 of the Truth in Lending Act to establish certain 

counseling and disclosure requirements with respect to reverse mortgages. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 12, 2010 

Mr. SESTAK introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend section 138 of the Truth in Lending Act to 

establish certain counseling and disclosure requirements 

with respect to reverse mortgages. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Reverse Mortgage 

5 Elder Protection Act’’. 

6 SEC. 2. COUNSELING AND DISCLOSURE REQUIREMENTS 

7 FOR REVERSE MORTGAGES. 

8 Section 138 of the Truth in Lending Act (15 U.S.C. 

9 1648) is amended by adding at the end the following: 


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1 ‘‘(c) REQUIRED STATEMENT REGARDING COUN2 SELING.—A creditor may not take an application for a re3 verse mortgage unless the creditor has provided to the ap4 plicant for the reverse mortgage, before the applicant re5 ceives any counseling regarding reverse mortgages pursu6 ant to subsection (e), the following written statement, dis7 closed clearly and conspicuously in type that is 16-point 

8 or larger: ‘IMPORTANT NOTICE TO REVERSE 

9 MORTGAGE LOAN APPLICANT: A REVERSE 

10 MORTGAGE IS A COMPLEX FINANCIAL TRANS11 ACTION. IF YOU DECIDE TO OBTAIN A REVERSE 

12 MORTGAGE LOAN, YOU WILL SIGN BINDING 

13 LEGAL DOCUMENTS THAT WILL HAVE IMPOR14 TANT LEGAL AND FINANCIAL IMPLICATIONS 

15 FOR YOU AND YOUR ESTATE. IT IS THEREFORE 

16 IMPORTANT TO UNDERSTAND THE TERMS OF 

17 THE REVERSE MORTGAGE AND ITS EFFECT. BE18 FORE ENTERING INTO THIS TRANSACTION, YOU 

19 ARE REQUIRED TO CONSULT WITH AN INDE20 PENDENT LOAN COUNSELOR. A LIST OF AP21 PROVED COUNSELORS WILL BE PROVIDED TO 

22 YOU BY THE LENDER. SENIOR CITIZEN ADVO23 CACY GROUPS ADVISE AGAINST USING THE 

24 PROCEEDS OF A REVERSE MORTGAGE TO PUR25 CHASE AN ANNUITY OR RELATED FINANCIAL 


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1 PRODUCTS. IF YOU ARE CONSIDERING USING 

2 YOUR PROCEEDS FOR THIS PURPOSE, YOU 

3 SHOULD DISCUSS THE FINANCIAL IMPLICA4 TIONS OF DOING SO WITH YOUR COUNSELOR 

5 AND FAMILY MEMBERS.’. 

6 ‘‘(d) COUNSELING CHECKLIST.— 

7 ‘‘(1) REQUIREMENT FOR CREDITOR TO PRO8 VIDE COUNSELING CHECKLIST BEFORE LOAN APPLI9 CATION.—A creditor may not take an application for 

10 a reverse mortgage unless the creditor provides to 

11 the applicant, before his or her meeting with a coun12 seling agency regarding reverse mortgages pursuant 

13 to subsection (e), a written checklist that complies 

14 with paragraph (3). 

15 ‘‘(2) REQUIREMENT FOR COUNSELING AGENCY

16 TO PROVIDE CHECKLIST.—If a consumer seeks 

17 counseling regarding reverse mortgages before re18 questing a loan application for a reverse mortgage 

19 from a creditor, the counseling agency shall provide 

20 the consumer with a written checklist that complies 

21 with paragraph (3). 

22 ‘‘(3) CONTENTS OF CHECKLIST.—A written 

23 checklist, with respect to an applicant (or consumer, 

24 in the case described in paragraph (2)), complies 


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1 with this paragraph only if the checklist meets the 

2 following requirements: 

3 ‘‘(A) The checklist is in writing in 12-point 

4 type or larger. 

5 ‘‘(B) The checklist conspicuously notifies 

6 the applicant (or consumer) under the reverse 

7 mortgage that he or she should discuss with the 

8 counselor of the counseling agency the following 

9 issues: 

10 ‘‘(i) How unexpected medical or other 

11 events that cause the applicant (or con12 sumer) to move out of the home, either 

13 permanently or for more than one year, 

14 earlier than anticipated will impact the 

15 projected total annual loan cost of the 

16 mortgage. 

17 ‘‘(ii) The extent to which the appli18 cant’s (or consumer’s) financial needs 

19 would be better met by options other than 

20 a reverse mortgage, including less costly 

21 home equity lines of credit, property tax 

22 deferral programs, or governmental aid 

23 programs. 

24 ‘‘(iii) Whether the applicant (or con25 sumer) intends to use the proceeds of the 


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1 reverse mortgage to purchase an annuity 

2 or other insurance products and the con3 sequences of doing so. 

4 ‘‘(iv) The effect of repayment of the 

5 loan on nonborrowing residents of the 

6 home after all borrowers have died or per7 manently left the home. 

8 ‘‘(v) The applicant’s (or consumer’s) 

9 ability to finance routine or catastrophic 

10 home repairs, especially if maintenance is 

11 a factor that may determine when the 

12 mortgage becomes payable. 

13 ‘‘(vi) The impact that the reverse 

14 mortgage may have on the applicant’s (or 

15 consumer’s) tax obligations and eligibility 

16 for government assistance programs, and 

17 the effect that losing equity in the home 

18 will have on the applicant’s (or con19 sumer’s) estate and heirs. 

20 ‘‘(vii) The ability of the applicant (or 

21 consumer) to finance alternative living ac22 commodations, such as assisted living or 

23 long-term care nursing home registry, after 

24 the applicant’s (or consumer’s) equity is 

25 depleted. 


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1 ‘‘(e) COUNSELING REQUIREMENT.—A creditor may 

2 not accept a final and complete application for a reverse 

3 mortgage from a consumer or assess any fees upon a con4 sumer unless the creditor has complied with the following 

5 requirements: 

6 ‘‘(1) REQUIRED COUNSELING REFERRAL.—The 

7 creditor shall— 

8 ‘‘(A) refer the consumer to a housing 

9 counseling agency approved by the Secretary of 

10 Housing and Urban Development for counseling 

11 that meets the standards and requirements es12 tablished by the Secretary for reverse mortgage 

13 counseling; and 

14 ‘‘(B) provide the consumer with a list of at 

15 least 5 such housing counseling agencies ap16 proved by the Secretary, including at least two 

17 agencies that can provide counseling by tele18 phone. 

19 ‘‘(2) REQUIRED CERTIFICATION OF COUN20 SELING.—The creditor shall have received from the 

21 consumer or the authorized representative of the 

22 consumer— 

23 ‘‘(A) a written certification (which may be 

24 in the form of an electronic facsimile copy) that 

25 the consumer has received counseling regarding 


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1 reverse mortgages from an agency as described 

2 in paragraph (1), which shall be signed by the 

3 consumer and the agency counselor providing 

4 such counseling, and shall include the date of 

5 the counseling and the name, address, and tele6 phone number of both the counselor and the 

7 consumer; and 

8 ‘‘(B) a copy of the checklist provided to 

9 the consumer pursuant to subsection (d) that is 

10 signed by the agency counselor providing such 

11 counseling, if the counseling was done in per12 son, and by the consumer, and a copy of such 

13 signed checklist shall be provided to the con14 sumer. The creditor shall maintain the certifi15 cation described in paragraph (2)(A) in an ac16 curate, reproducible, and accessible format for 

17 the entire term of the reverse mortgage.’’. 

Æ 


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