New Washington Law Affects Reverse Mortgage Choices

On June 12th, Gov. Gregoire signed a new Bill which greatly reduced the ability of several fine lenders offering reverse mortgages to work within the State of Washington. In an effort to protect citizens from mortgage companies previously exempt from licensing under the Mortgage Brokers Practices Act since they were Mortgage Bankers, not Brokers, all those exempt had to be licensed under the Consumer Loan Act. Good intentions, but in doing so, the newly licensed companies found that State Law regarding the Act prohibited them from doing certain types of mortgages, like reverses. Even though the State was made aware of this mistake, (acknowledged it as an error), they decided to take no action until sometime next year when the legislators come back into session and agree to address it.
What seniors are now left with, is a few lenders that have banking operations in the State and a few brokers that may or may not have the best interest of seniors in mind. Those brokers offering reverse mortgages are limited in their choice of lenders since several of the reverse mortgage lenders have decided not to get licensed under that act and have pulled out of lending in Washington. A further check that I did resulted in finding that certain banks offering the reverse mortgage product were charging the maximum allowable fees in regards to the origination fee and the monthly servicing fee. (Less competition = Less reason to discount fees).

I would encourage all seniors to write to their various representatives, senators, and the governor and demand that the licensing be restructured in a way that allows the lenders that were previously offering reverse mortgages to once again be allowed to offer them. It will benefit seniors in having greater loan choices.