House committee advances bill requiring counseling before reverse mortgage transactions

House Bill 1466, which would require counseling from an approved financial counselor before a consumer may complete a reverse mortgage transaction, was reported out of the House Aging & Older Adult Services Committee as amended.

The bill matters because reverse mortgages can carry high fees and interest, risk homeowners’ equity and interrupt eligibility for other housing programs; sponsors and witnesses said counseling would give older homeowners more information about alternatives.

Chuck, a committee staff member, told the committee the bill "amends title 7 of banks and banking by requiring face to face counseling by an approved financial counselor before an applicant can begin a reverse mortgage process." Representative Cephas, the prime sponsor, told members a reverse mortgage is "a financial tool available to homeowners, typically 62 or older, that allows them to convert part of the equity in their home into cash." Cephas said such products can leave borrowers "at risk of losing their home due to defaulting on property taxes or homeowners insurance" and can erode generational wealth.

The bill would require face-to-face counseling; if an in-person meeting cannot occur, the borrower could meet with a counselor by phone or video teleconference. An amendment (A1102) described by staff as a technical change that provides a definition for reverse mortgage was offered, agreed to and passed unanimously. After discussion the committee "reported the bill as amended."

Several members asked for clarification about who may serve as an "approved financial counselor." Representative Nelson asked, "who would qualify as an approved financial adviser?" Chuck responded that the measure "mirrors the federal law," and Representative Cephas said the bill follows HUD guidelines; other members noted they would like follow-up to confirm whether the certification process would apply only to banks or also to other counseling entities. Representative Gleim also asked whether there was a required timeline between counseling and completing a transaction; Cephas and staff said there is no set timeline in state text beyond the requirement that counseling occur before the transaction is completed, and that the counseling requirement reflects HUD practice.

Committee members and staff identified supporting organizations on the bill record, including AARP, the Department of Aging, the Department of Banking and the Pennsylvania Housing Finance Agency; Chuck said there was no known organized opposition. The committee did not set a new requirement beyond the counseling itself; members asked staff and sponsors to clarify post-committee how the state certification or approval process will align with federal HUD counseling rules.

The committee vote on the amendment and on the final report were unanimous; staff will carry the bill forward to the full House calendar with the amendment incorporated. The transcript shows members requesting follow-up about counselor certification; sponsors and staff said they will provide that clarification as the bill advances.