County of Los Angeles Department of Consumer Affairs New Consumer Laws 2007

Reverse Mortgages: Greater Consumer Protections

Civil Code Sections 1632, 1923.2, 1923.5

This new law strengthens consumer protections by prohibiting certain self-dealing activities by companies providing reverse mortgages, requiring additional disclosures for reverse mortgages, and requiring translation of the contract for a reverse mortgage into the language in which it was negotiated. Specifically, this law:

• Prohibits requiring the purchase of an annuity as a condition to get a reverse mortgage;
• Prohibits offering an annuity or referring the borrower to another for an annuity prior to loan closing or before the end of buyer’s right to cancel;
• Requires referring the borrower to housing counseling agency;
• Prohibits accepting a full application for a reverse mortgage before the borrower receives housing counseling;
• Modifies the disclosure notice;
• Requires lender to provide a list of independent loan counselors; and
• Requires the contract to be translated into Spanish, Chinese, Tagalog, Vietnamese, or Korean if the reverse mortgage is primarily negotiated in that language.

For more information:
County of Los Angeles Department of Consumer Affairs
B-96 Kenneth Hahn Hall of Administration
500 W. Temple Street * Los Angeles, CA 90012-2706
Telephone (800) 593-8222 (within the County) * (213) 974-1452
web site: dca.lacounty.gov