New Law Protects Seniors from Predatory Mortgage Lenders

Reverse mortgages have become very popular in California and across the nation.  Seniors facing costly home maintenance and/or experiencing health problems are often placed in daunting financial situations.  Limited income combined with a large amount of home equity; make these seniors perfect candidates for a reverse mortgage.  It is unfortunate, but these seniors can be particularly vulnerable to unscrupulous home mortgage scam artists.  It is because of this that Shirley Hochhausen and Shirley Krohn decided to try to do something about this unfortunate situation.

Their opportunity arose when they found out about Senator Joe Simitian’s (D-Palo Alto) yearly contest “There Oughta be a Law”. Constituents are invited to submit ideas on issues that they think should be considered.  The Hochhausen/Krohn team won this year’s contest with their Reverse Mortgage Bill. 

Hochhausen is from Community Legal Services in East Palo Alto, and Krohn is the Board Chair of the Corporation for Fair Lending.  Their proposal requires that all reverse borrowers receive HUD certified counseling.  Additionally, all loan documents will need to be translated into the same language as the borrower.  Finally, the sale of an annuity will not be a part of the reverse transaction.  A three-day waiting period will be enacted.

In a special press conference at the Avenidas Senior Center in Palo Alto on Tuesday, September 5, 2006, Governor Arnold Schwarzenegger signed this Simitian Bill into Law.  Both Shirley Hochhausen and Shirley Krohn participated in the signing. Seniors will now have protections that will enable them to make informed decisions on this very complex product.