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Tuesday, August 29, 2006
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Hema Sareen Mohan (650) 688-6384
SENIOR GROUPS URGE GOVERNOR TO SIGN BILL TO CURB ELDER FINANCIAL ABUSE
SACRAMENTO – Senior groups are urging Governor Arnold Schwarzenegger to sign State Senator Joe Simitian’s (D-Palo Alto) Senate Bill 1609, a bill to protect seniors from predatory lending practices and abuse in connection with reverse mortgages, a popular type of loan that allows seniors age 62 or older to receive cash by borrowing against the equity of their homes.
Tom Porter, State Director of AARP California, said, “On behalf of over three million AARP members in California, I encourage the Governor to sign SB 1609. Reverse mortgages are complex transactions that often involve a senior’s largest asset—his or her home. Senator Simitian’s bill will add significant protections for seniors, and empower them to make the most informed decision.”
SB 1609 does three things to ensure that seniors are protected from fraud and abuse associated with reverse mortgages.
First, it requires that seniors receive financial counseling from a Department of Housing and Development approved counselor. Second, it requires lenders to prepare loan documents in the language in which the reverse mortgage was negotiated. Third, it prohibits lenders from requiring a borrower to purchase an annuity as a condition of the loan.
“Reverse mortgages can help many seniors get much needed cash, but they can also be highly complex, expensive, and unclear,” said Simitian. “Confusing fine print and, in some cases, unscrupulous lenders can leave some seniors in complete financial disarray. We need to make sure that seniors know what they’re agreeing to before they sign on the dotted line.”
“We urge the Governor to sign SB 1609 into law. Unfortunately there are countless examples of financial abuse of senior homeowners. Non-English speaking seniors are an even more vulnerable group. Senator Simitian’s SB 1609 provides much needed reforms for all of California’s seniors,” said Jacki Fox Ruby, Legislative Director of the California Alliance for Retired Americans.
“Because reverse mortgages are marketed to seniors who are ‘house-rich and cash-poor,’ they are ripe for fraud. We hope that the Governor will sign the bill so that this very vulnerable population is protected, and has the tools it needs to make decisions that are in their best interests,” said Gary Passmore, Legislative Director of the Congress of California Seniors.
Simitian, who previously chaired the Legislature’s Select Committee on Elder Abuse, added, “Advanced age and accumulated assets make seniors a tempting target of fraud. We have an obligation to help protect our growing elderly community from this terrible crime.”
In addition to senior groups, SB 1609 has support from the lending industry including the California Mortgage Brokers Association, the National Reverse Mortgage Lenders Association, and the National Association of Insurance and Financial Advisors. It has also garnered widespread support from consumer and law enforcement groups including the Law Foundation of Silicon Valley, the Consumer Attorneys of California, and the Los Angeles County District Attorney’s office.
Simitian introduced SB 1609 after the idea was suggested to him by Shirley Hochhausen, an attorney at Community Legal Services in East Palo Alto and an instructor at Stanford Law School, in his annual “There Oughta Be A Law” contest, which invites Californians to submit ideas for new state legislation.
To learn more about SB 1609, visit http://www.senate.ca.gov.
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