BILL ANALYSIS Ó
AB 793
Page 1
Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 793 (Eng) - As Amended: April 4, 2011
Policy Committee: InsuranceVote:12
- 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill prohibits an insurance broker or agent from
participating in, being associated with, or employing any party
that participates in or is associated with a business that
provides reverse mortgages. This bill exempts from this
prohibition, brokers or agents who offer title insurance, hazard
insurance, and other types of insurance that are customarily
associated with reverse mortgages.
FISCAL EFFECT
While the bill adds an enforcement tool for the California
Department of Insurance (CDI) to use in its investigation of
reverse mortgages, it does not result in an increased workload
for the department. Therefore, there are no additional costs.
COMMENTS
1)Rationale . The purpose of this bill is to place restrictions
on insurance agents and brokers to help prevent seniors from
falling victim to predatory practices associated with reverse
mortgage transactions.
2)Background. In 2009, AB 329 (Feuer; Chapter 236, Statutes of
2009) was enacted into law to prohibit reverse mortgage
lenders and brokers from participating with, employing, or
making referrals to, an individual involved in the sale of
financial or insurance products.
While reverse mortgage lenders and brokers are prohibited from
promoting annuities or insurance, insurance agents can legally
AB 793
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direct senior clients to get a reverse mortgage to fund
insurance products. According to the author, as a result of
existing law, seniors are still targeted with aggressive and
abusive cross promotions of other financial products such as
long term care insurance or annuities that may not be suitable
for them.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081