Today I read where RI governor signed a bill for more disclosures about reverse mortgages last Friday. Don't get me wrong, if you have read my blog, I am all for the disclosures, in fact I may be in the minority that LIKES them, likes reverse mortgages, and think the disclosures should stay! However, a word of caution here. I don't mean to be sarcastic here, but does the RI governor have a clue how many disclosures and regulations are already in existence for reverse mortgages? I know each time I sit down with a client and go over the mortgage papers, when it is a reverse mortgage, I always point out the repetitive nature of the disclosures and how they say the same thing, several different ways and formats. This redundancy I think should be reduced, period. It is a waste of paper - no two ways about it. I just looked at the last loan package I did Saturday, and there was:
- three (3) different ways of listing the breakdown of the loan figures which included: 1) How much the home was appraised at; 2) based on that the total they could borrow; 3)after closing costs, mortgage insurance, existing mortgage payoff, and the set-aside fee, how much is left to borrow; and 4) From that amount, how much is in a line of credit and or monthly payment (in this case none, but when they do have an amount here, it breaks it down)
- Then the closing costs were listed four (4)times on the GFE, HUD, Exhibit 2 (Schedule of Liens and closing costs), and TIL. Two (2)times had who to contact (friend or relative) in case of emergency - on application & separate 'next of kin' form.
- Three (3) times had a form stating their property taxes & homeowners insurance would need to be paid by them - twice on the same 'Tax and Insurance' form, and then another one saying the same thing on big bold letters.
- The fact that the mortgage was adjustable and the breakdown of the interest rates, caps, etc, was listed four (4) times (technically six [6]) on: 1) Analyst Page (also breakdown entire loan info as stated above); 2) on both mortgages (2nd for HUD); 3) both notes (again 2nd for HUD); 4) and the TIL.
- The fact that annuities can't be tied to the reverse mortgage was disclosed three (3) times on: 1) Disclosure & 3rd Party form; 2)Request for Intent to purchase annuities information form; and 3) Notice about insurance products.
Also, a lot of this same information is gone over by an independent mortgage counselor that is REQUIRED prior to obtaining any FHA/HUD backed reverse mortgage. And they send them a lot of this same information in an informative packet after the counseling is completed, so they have much of this information given to them at the original loan application, by the independent counselor, and in the final loan package.
My two questions to all of you that think more disclosures and regulations are needed on reverse mortgages - 1) Why more on reverse mortgages? and 2) Why are these same disclosures and regulations even being CONSIDERED for regular forward mortgages? Regular mortgages are a major factor of the 'mortgage problems' and the cause of a lot, not all, but a lot of the economic problems we are facing today, NOT reverse mortgages. 
I think everything should be as up front, in your face, and FULLY disclosed on regular mortgages as they already are for reverse mortgages! Maybe, just maybe, that will lessen the potential of these problems ever happening again. I hope anyway, but none-the-less, I want to see more FULL disclosures and regulations enforcing disclosures on regular mortgages! NOW!
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