California has the strongest reverse mortgage borrower protections in the country. The state's 2014 cooling-off bill (AB 1700) added safeguards on top of the federal HECM rules. As a California reverse mortgage borrower, you have rights that don't exist in many other states. Here's exactly what they are and how they protect you.
The 7-day California cooling-off period
Under California AB 1700, effective January 1, 2015, no lender can accept a final and complete reverse mortgage application from you, or assess any fees, until at least seven days have passed since you completed your HUD-required counseling session. The seven days are real calendar days, not business days.
This means: even if you're certain after counseling that you want to proceed, the lender legally cannot start the formal application clock for a full week. The purpose is straightforward — give you and your family time to talk, sleep on it, ask additional questions, and decide without pressure.
The mandatory California Reverse Mortgage Worksheet Guide
Every California borrower must receive and review a state-specific document called the Important Notice to Reverse Mortgage Loan Applicant and Reverse Mortgage Worksheet Guide. This is in addition to the federal HECM disclosures.
The worksheet forces critical reflection on questions like:
- Have you considered all alternatives to a reverse mortgage?
- Do you understand how the loan balance grows over time?
- Have you discussed this with your family or financial advisor?
- Do you understand your obligations to maintain the property?
You'll review this with your HUD counselor as part of the counseling session.
The federal 3-day right of rescission
On top of California's protections, federal law gives you a 3-day right of rescission after signing your loan documents. During these three business days (not counting Sundays or federal holidays), you can cancel the entire transaction for any reason — or no reason at all — with no penalty. Your loan does not actually fund until this period expires.
Combined, California borrowers get: 7 days minimum between counseling and application, plus 3 days after signing. At least ten total days of buffer between “I think I want this” and “the money is in my account.”
HUD-approved counseling is independent
Your reverse mortgage counselor must be from the HUD-approved counselor list. They cannot work for the lender. They cannot have any financial interest in whether your loan closes. Their job is to make sure you understand exactly what you're signing.
At Lyon House Reverse, we coordinate the counseling appointment for you (it's typically conducted by phone or video), but we have no influence over the counselor or what they tell you. The counseling fee is approximately $125-$200 and can usually be paid from your loan proceeds rather than out of pocket.
State agency oversight
California reverse mortgage lenders are regulated by the California Department of Financial Protection and Innovation (DFPI). If you have a complaint about a reverse mortgage lender, you can file directly with the DFPI — in addition to the federal CFPB and your state attorney general.
How we use these protections at Lyon House
The California cooling-off period exists to protect you. Some borrowers are eager to skip ahead. We won't. We make sure your counseling happens first, the seven days run their course, and you have time to talk to anyone you want before we move on. If a lender is willing to bend or hurry these rules, that's the first sign you should walk to a different lender.