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A reverse mortgage-related bill that was introduced in the Maryland state Senate that would have put the onus on lenders to cover some extra expenses tied to the Home Equity Conversion Mortgage (HECM) origination process has been withdrawn by the sponsoring senator after conversations with reverse mortgage industry representatives.
Senate Bill 831 would have required reverse mortgage lenders “to establish a certain escrow account for the payment of eligible homeowner expenses and deduct a certain amount of funds from each loan distribution to a borrower.”
The bill would also have required lenders to “deposit the deducted funds into the escrow account, and deliver on-time payments from the escrow account to the appropriate collection entity for eligible homeowner expenses,” according to language reviewed by HousingWire’s Reverse Mortgage Daily (RMD).
But the sponsor of the bill, state Sen. Nick Charles, withdrew the bill on Monday. Late last week, the National Reverse Mortgage Lenders Association (NRMLA) informed its members that it had sent a letter of opposition to the senator. The letter explained how the bill would have a “disruptive” impact on the state’s reverse mortgage business and would actually charge borrowers interest on funds they have yet to draw.
Traditional escrow accounts have not been a part of the reverse mortgage process before, NRMLA added.
In addition to submitting the opposition letter, NRMLA explained in a recent email update that a member of its state and local issues committee testified in opposition to the bill at a hearing last week.
RMD reached out to Charles’ office for comment. A spokesperson for the senator explained that his office was contacted by a constituent who felt mistreated, with unexpected additional expenses arising from the HECM origination process. This bill was an attempt to put the onus on the lenders to pay these associated fees out of an escrow account.
But after conversations with representatives from NRMLA, who explained that the bill would likely conflict with federal HECM program requirements, they realized that any potential impact the bill could have would be neutralized by superseding HECM requirements. This led to Monday’s withdrawal of the bill.
Charles’s office is continuing to speak with the constituent who brought the matter to the senator’s attention, saying that the measure will be tabled for now. But the spokesperson also indicated that conversations with NRMLA will continue, and that the bill would be “workshopped” as they seek to find a potential path forward in the future.
Other state-based reverse mortgage bills in legislatures throughout the country have faced similar roadblocks recently.
In Oregon, a bill with language that purportedly targeted the reverse mortgage industry — but which was later determined to be targeting home equity investments — caused lawmakers to signal that the bill was likely in need of revisions before progressing further.
NRMLA had expressed to Oregon lawmakers that if enacted, the bill would have the potential to halt any proprietary reverse mortgage business that could take place there.
In Hawaii, a bill seeking to establish what would effectively be a state-based clone of the federal HECM program was introduced in the Legislature before being submitted to multiple committees for further deliberation. That process ultimately led to the bill’s expiration for the current session. It cannot be revisited until the 2026 session at the earliest.
Last week, NRMLA also registered its opposition to a bill in New York. That proposal seeks to bolster the disclosures that reverse mortgage lenders make to potential clients in an effort to broaden their understanding of the product.
