Why it matters: Maryland SB 831, as drafted, requires reverse mortgage lenders to establish escrow accounts so that loan proceeds can be used to pay for property taxes, homeowners insurance and other property charges.
“Escrow accounts, however, are not now, nor have ever been, used in connection with or as a feature of a reverse mortgage,” says NRMLA in its comment letter.
- “If traditional escrow accounts were used for reverse mortgages, the requirement to have funds put into escrow would have the effect of charging borrowers interest on funds the borrower has not drawn or used.”
The bottom line: “We believe not only is SB 831 unnecessary, but if enacted, may have a disruptive effect on the offering of reverse mortgages to Maryland seniors who would otherwise choose to explore and obtain a reverse mortgage,” says NRMLA.
What’s next: A member of NRMLA’s State and Local Issues Committee testified in opposition to SB 831 at a public hearing this week. NRMLA will continue to monitor the bill’s status and report any new developments in future issues of Weekly Report.
