Schwartzenegger signs reverse mortgage legislation

Gov. Arnold Schwarzenegger swept into Palo Alto today to sign a billthat adds new protections against scam artists offering reversemortgages.

“Getting a reverse mortgage can be very helpful to some people, butit’s also a huge decision to be made,” Schwarzenegger said beforesigning the law, which was sponsored by state Sen. Joe Simitian, D-PaloAlto. “I want to make sure that people get all the information.”

The bill-signing ceremony took place place at Avenidas, a non-profit agency serving seniors.

Most borrowers who use reverse mortgages tend to be elderly peoplewho are house rich and cash poor. They use the equity in their homes totake out a loan without having to sell or give up title. The loansdon’t have to be repaid until the home is sold or passed to an heir.

But some unscrupulous dealers have taken advantage of the mortgages,especially among the elderly and people with imperfect credit.

Among the new law’s provisions is that people must first receiveindependent counseling about the pluses and minuses of a reversemortgage from a certified counseling agency that does not have a profitmotive. Since May, Avenidas has employed two certified reverse mortgagecounselors after learning such counselors were in short supply.

Get the rest of the story at http://www.mercurynews.com/mld/mercurynews/news/breaking_news/15445902.htm