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The long road to remote reverse mortgage counseling in Massachusetts

From 2010 to 2024, the reverse mortgage industry sought to allow remote reverse mortgage counseling in the state of Massachusetts, citing an insufficient number of actual counselors and logistical challenges for senior clients.

But as time dragged on and state lawmakers seemed unwilling to seriously entertain the proposal, the ravages of the COVID-19 coronavirus pandemic helped to change the dynamics of the situation.

RMD has been covering the situation for much of that time period, including the exacerbation of the pandemic and the urgency it created for the business in the state, up through the various efforts to pass a law allowing for a permanent exception that would permit remote counseling.

Early days

In late April 2010, the Massachusetts State Senate introduced legislation requiring in-person reverse mortgage counseling.

Sponsored by the Senate’s Joint Committee on Housing and Urban Development, the law prohibited the origination of a reverse mortgage unless the borrower “affirmatively opts in writing for the reverse mortgage and has received certification from a counselor with a third ­party organization,” and in person, on the suitability of the loan.

George Downey, regional SVP at The Federal Savings Bank in Braintree, Mass.
George Downey

The bill ultimately passed on May 4 of that year under unanimous consent. Sponsored primarily by then-Sen. Susan Tucker (D), she told outlet ItemLive that the situation for reverse mortgages in the state amounted to a “Wild West” for seniors.

She recounted that “she’d heard story after story of sad people selling annuities and convincing people to take on reverse mortgages at a huge commission,” according to RMD’s reporting on the law’s passage by publication founder John Yedinak.

In subsequent interviews, George Downey — a leading reverse mortgage professional in the state and longtime advocate for relaxing the strict in-person counseling requirement — explained to RMD that the legislation came about from good intentions: A community activist sought to ensure that more seniors would be protected from potentially being “duped” into getting a loan they may not need.

’Logistically difficult’

Industry reactions at the time were swift. Originators were concerned about how the law would limit business, and a communications representative for the Massachusetts Bankers Association highlighted issues that people in the state would later say came to fruition. “The proposed change would be logistically difficult,” Yedinak reported in May 2010.

“Especially for people in rural areas, and for those with limited mobility, [the rep] said in-person counseling could be a challenge. And he said the organizations that do the counseling would have to ramp up their staffing to handle more in-person contact.”

In August 2010, the restriction was tightened further to apply to anyone meeting the label of a “low-income senior.” At the time, the National Reverse Mortgage Lenders Association (NRMLA) told RMD that of the 3,600 counseling sessions in Massachusetts in 2009, “approximately 130 of those being face-to-face, equaling a 96 percent opt-out rate for face-to-face counseling,” RMD reported. “Based on a recent ‘mystery shopping’ experiment, the association found only eight agency-approved face-to-face counselors in the entire state.”

That number would dwindle further in the following decade to roughly five. While industry advocates were successful in delaying the requirement to 2014, that would not improve the trajectory of available counselors. 

COVID-19 changes the dynamics

After an attempt to delay the implementation of the rule to 2016 failed, the rule went into full effect in 2014. Stories of business challenges immediately followed.

“[W]e have this mandated face-to-face counseling but there are many seniors not able to get the counseling, and so we continue to fight the fight,” Downey told RMD in 2015.

While former Massachusetts Rep. Paul Brodeur (D) had introduced legislation to roll back the in-person requirement shortly after its passage, legislation to that effect never materialized. At that point, Brodeur handed the issue off to his successor in the state’s 32nd Middlesex, Rep. Kate Lipper-Garabedian (D), who took office in 2019.

As the requirement persisted into early 2020, the onslaught of the COVID-19 pandemic — and its ability to cause more serious illness for seniors — would directly clash with a slew of mandates that restricted in-person business from taking place. The combination of the in-person reverse mortgage counseling requirement and the mandates restricting in-person business effectively stalled any reverse mortgage business in the state.

“Of course, everything was shut down,” Downey said in an interview with RMD. “People were working remotely and the mandate for in-person counseling was effectively neutralized, because people were not able to go out and to do it.”

Legislative action relaxing the in-person requirement on a temporary basis came swiftly, but it still wasn’t quite enough to do away entirely with the requirement that created logistical challenges for seniors in getting to their counseling appointments. It would still be four years before a permanent solution was placed onto the books.

Road to a permanent fix

Paul Brodeur was elected mayor of Melrose, Massachusetts — situated in the Greater Boston metropolitan area — in November 2019. Prior to that point, he had filed versions of a bill relaxing the in-person requirement in each of the two-year legislative sessions between 2010 and 2018. He handed the issue of a permanent legislative fix for the in-person requirement to his successor, Lipper-Garabedian.

Massachusetts Rep. Kate Lipper-Garabedian (D), who helped pass the bill permanently allowing remote reverse mortgage counseling in her state.
Massachusetts Rep. Kate Lipper-Garabedian (D)

She filed a bill seeking a permanent fix in 2020, but over the next few years, temporary relief was favored over a permanent solution. The process was long, involving meetings between industry stakeholders within the state, legislators and trade groups — including NRMLA and the Massachusetts Mortgage Bankers Association (MMBA). 

“What the pandemic did was approve the concept,” said Brett Kirkpatrick of The Federal Savings Bank, another key advocate for the permanent legislation. “Which means the sky didn’t fall when seniors were only counseling by telephone; it still worked. We had accumulated a track record and the counseling agencies were instrumental.”

These agencies surveyed their clients about their own preferences, which proved to be a major contributor to getting permanent changes over the finish line last month, Downey and Kirkpatrick said.

Not only can clients more easily attend their counseling sessions, but family members — often a reverse mortgage borrower’s most trusted advisers — could also attend them, no matter where in the world they might be, and thereby strengthening a consumer protection argument.

Passage relaxes the requirement

After a series of temporary extensions for years following the onset of the pandemic — which saw their expirations again threaten the existence of reverse mortgage business within the state multiple times — the final extension expired at the end of March 2024. This served as the catalyst for a final sprint to get some kind of permanent fix codified in legislation.

Brett Kirkpatrick

“For the last three months, we’ve been full-court press in trying to get this, and it finally worked,” Kirkpatrick said. “Thanks to Kate and other representatives, we were able to get [the permanent fix] attached to a budget bill. A budget bill is always the vehicle of choice because that’s a must-pass.”

The legislation including the language to relax the in-person requirement passed in the final days of April and was soon signed into law by Gov. Maura Healey (D). It included a retroactive provision allowing for remote counseling in the period between the expiration of the last extension and the beginning of permission for remote counseling sessions.

Downey and Kirkpatrick expressed gratitude to all of the involved parties that helped make it possible, including NRMLA, MMBA, the Division of Banks and members of the Massachusetts Legislature, including Lipper-Garabedian.

To get such legislative and lobbying work done, “the stars have to align,” Kirkpatrick said. “You have to have the person, the moment, and you have to be there and strike when the iron is hot.”

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