California Signs Bill Covering Reverse Mortgages

\r\nA new Bill signed by the Governor of California requires that information be made available to homeowners prior to engaging in a reverse mortgage, as well as having state funded classes available to educate the public. While the changes may seem to be small, Governor Arnold Schwarzenegger addressed the need for new laws due to the rise in reverse mortgage scams. The scams normally focus on senior citizens, and can easily result in the loss of property and money.\r\n

While the Bill was not in any way constricting to those wanting to obtain a reverse mortgage, it brought to attention the need for better education and harsher repercussions when it comes to fraud. The current housing market, especially in California, has many house rich but cash poor, fanning the rise in reverse mortgage applications. As a result, the new law requires that borrowers consult an independent advisor regarding the transaction prior to signing, requires that all documents be translated into the borrower’s native language and blocks the new trend of requiring the purchase of annuities that are not needed.\r\n