To prohibit authorized lenders of home equity conversion mortgages from requiring seniors to purchase an annuity with the proceeds of a reverse mortgage, and to provide other consumer protections to reverse mortgage borrowers.

SA 4489. Mrs. McCASKILL submitted an amendment intended to be
proposed by her to the bill H.R. 3221, moving the United States toward
greater energy independence and security, developing innovative new
technologies, reducing carbon emissions, creating green jobs,
protecting consumers, increasing clean renewable energy production, and
modernizing our energy infrastructure, and to amend the Internal
Revenue Code of 1986 to provide tax incentives for the production of
renewable energy and energy conservation; which was ordered to lie on
the table; as follows:

On page 18, strike line 1 and all that follows through page
20, line 24, and insert the following:

SEC. 122. HOME EQUITY CONVERSION MORTGAGES.

(a) In General.--Section 255 of the National Housing Act
(12 U.S.C. 1715z-20) is amended--
(1) in subsection (b)(2), insert `` `real estate,' '' after
`` `mortgagor','';
(2) by amending subsection (d)(1) to read as follows:
``(1) have been originated by a mortgagee approved by the
Secretary;'';
(3) by amending subsection (d)(2)(B) to read as follows:
``(B) has received adequate counseling, as provided in
subsection (f), by an independent third party that is not,
either directly or indirectly, associated with or compensated
by a party involved in--
``(i) originating or servicing the mortgage;
``(ii) funding the loan underlying the mortgage; or
``(iii) the sale of annuities, investments, long-term care
insurance, or any other type of financial or insurance
product;'';
(4) in subsection (f)--
(A) by striking ``(f) Information Services for
Mortgagors.--'' and inserting ``(f) Counseling Services and
Information for Mortgagors.--''; and
(B) by amending the matter preceding paragraph (1) to read
as follows: ``The Secretary shall provide or cause to be
provided adequate counseling for the mortgagor, as described
in subsection (d)(2)(B). Such counseling shall be provided by
counselors that meet qualification standards and follow
uniform counseling protocols. The qualification standards and
counseling protocols shall be established by the Secretary
within 12 months of the date of enactment of the Reverse
Mortgage Proceeds Protection Act. The protocols shall require
a qualified counselor to discuss with each mortgagor
information which shall include--''
(5) in subsection (g), by striking ``established under
section 203(b)(2)'' and all that follows through ``located''
and inserting ``limitation established under section
305(a)(2) of the Federal Home Loan Mortgage Corporation Act
for a 1-family residence'';
(6) in subsection (i)(1)(C), by striking ``limitations''
and inserting ``limitation'';
(7) by striking subsection (l);
(8) by redesignating subsection (m) as subsection (l);
(9) by amending subsection (l), as so redesignated, to read
as follows:
``(l) Funding for Counseling.--The Secretary may use a
portion of the mortgage insurance premiums collected under
the program under this section to adequately fund the
counseling and disclosure activities required under
subsection (f), including counseling for those homeowners who
elect not to take out a home equity conversion mortgage,
provided that the use of such funds is based upon accepted
actuarial principles.''; and
(10) by adding at the end the following new subsection:
``(m) Authority To Insure Home Purchase Mortgage.--
``(1) In general.--Notwithstanding any other provision of
this section, the Secretary may insure, upon application by a
mortgagee, a home equity conversion mortgage upon such terms
and conditions as the Secretary may prescribe, when the home
equity conversion mortgage will be used to purchase a 1- to
4-family dwelling unit, one unit of which that the mortgagor
will occupy as a primary residence, and to provide for any
future payments to the mortgagor, based on available equity,
as authorized under subsection (d)(9).
``(2) Limitation on principal obligation.--A home equity
conversion mortgage insured pursuant to paragraph (1) shall
involve a principal obligation that does not exceed the
dollar amount limitation determined under section 305(a)(2)
of the Federal Home Loan Mortgage Corporation Act for a 1-
family residence.
``(n) Requirements on Mortgage Originators.--
``(1) In general.--The mortgagee and any other party that
participates in the origination of a mortgage to be insured
under this section shall--

[[Page S2670]]

``(A) not participate in, be associated with, or employ any
party that participates in or is associated with any other
financial or insurance activity; or
``(B) demonstrate to the Secretary that the mortgagee or
other party maintains, or will maintain, firewalls and other
safeguards designed to ensure that--
``(i) individuals participating in the origination of the
mortgage shall have no involvement with, or incentive to
provide the mortgagor with, any other financial or insurance
product; and
``(ii) the mortgagor shall not be required, directly or
indirectly, as a condition of obtaining a mortgage under this
section, to purchase any other financial or insurance
product.
``(2) Approval of other parties.--All parties that
participate in the origination of a mortgage to be insured
under this section shall be approved by the Secretary.
``(o) Prohibition Against Requirements to Purchase
Additional Products.--The mortgagee or any other party shall
not be required by the mortgagor or any other party to
purchase an insurance, annuity, or other additional product
as a requirement or condition of eligibility for a mortgage
authorized under subsection (c).
``(p) Regulations to Protect Elderly Homeowners.--Not later
than 12 months after the date of enactment of the Reverse
Mortgage Proceeds Protection Act, the Secretary shall, in
consultation with other relevant Federal departments and
agencies, promulgate regulations to help protect elderly
homeowners from the marketing of financial products not in
the interest of such homeowners, including the marketing or
sale of an annuity or investment associated with obtaining,
or as a condition of obtaining, any home equity conversion
mortgage. This subsection shall not be construed to preempt,
supercede, or alter the authority of any State to regulate
the provision of insurance in that State, including the sale
or marketing of any insurance product.
``(q) Study to Determine Consumer Protections and
Underwriting Standards.--The Secretary shall conduct a study
to examine and determine appropriate consumer protections and
underwriting standards to ensure that the purchase of
products referred to in subsection (o) is appropriate for the
consumer. In conducting such study, the Secretary shall
consult with consumer advocates (including recognized experts
in consumer protection), industry representatives,
representatives of counseling organizations, and other
interested parties.''.
(b) Mortgages for Cooperatives.--Subsection (b) of section
255 of the National Housing Act (12 U.S.C. 1715z-20(b)) is
amended--
(1) in paragraph (4)--
(A) by inserting ``a first or subordinate mortgage or
lien'' before ``on all stock'';
(B) by inserting ``unit'' after ``dwelling''; and
(C) by inserting ``a first mortgage or first lien'' before
``on a leasehold''; and
(2) in paragraph (5), by inserting ``a first or subordinate
lien on'' before ``all stock''.
(c) Limitation on Origination Fees.--Section 255 of the
National Housing Act (12 U.S.C. 1715z-20), as amended by the
preceding provisions of this section, is further amended by
adding at the end the following new subsection:
``(r) Limitation on Origination Fees.--The Secretary shall
establish limits on the origination fee that may be charged
to a mortgagor under a mortgage insured under this section,
which limitations shall--
``(1) equal 1.5 percent of the maximum claim amount of the
mortgage unless adjusted thereafter on the basis of--
``(A) the costs to the mortgagor; and
``(B) the impact of such fees on the reverse mortgage
market;
``(2) be subject to a minimum allowable amount;
``(3) provide that the origination fee may be fully
financed with the mortgage;
``(4) include any fees paid to correspondent mortgagees
approved by the Secretary; and
``(5) have the same effective date as subsection (m)(2)
regarding the limitation on principal obligation.''.
______