Insurance Commissioner Jones Announces Governor Brown Signs Bill Protecting Seniors From Reverse Mortgage Scams
News: 2011 Press Release
Insurance Commissioner Dave Jones today announced that Governor Jerry Brown signed Department-sponsored legislation into law that would protect seniors from being persuaded to use the proceeds of a reverse mortgage to buy unsuitable insurance products.
Assembly Bill 793, authored by Assembly Banking and Finance Committee Chair Mike Eng (D-Monterey Park), prohibits unscrupulous insurance agents and brokers from participating with, employing, or making referrals to an individual involved in the sale of reverse mortgages with the sole purpose of cross-selling inappropriate and unsuitable non-casualty insurance products such as an annuity. It also prohibits, with exceptions, individuals transacting insurance from being compensated, earning a commission, or given a direct incentive for providing reverse mortgage borrowers with a non-casualty insurance product that is connected to or a result of the reverse mortgage.
"There is an increasing need for this bill as the growth of the reverse mortgage business has been accompanied by aggressive marketing and abuse, especially when reverse mortgages are marketed along with insurance products or financial investment vehicles," said Commissioner Jones. "A reverse mortgage should be an option of last resort only for seniors with an immediate need for cash and have no other means."
AB 793 is designed to stop the predatory practices of insurance agents and brokers who act improperly based on knowing that a senior has recently acquired a reverse mortgage to, in turn, inappropriately solicit those same funds from the senior for a non-casualty insurance product.
"This new law will help return the concept of a reverse mortgage to its original form and protect seniors from being sold products they simply don't need - and, in fact, actually harm them financially," said Commissioner Jones.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.