6-1704. Reverse mortgage; provisions
A. A reverse mortgage may provide for a fixed or variable interest rate or future sharing between the originator and the borrower of the appreciation in the value of the property, as agreed on by the originator and the borrower.
B. The reverse mortgage agreement shall prominently disclose any interest rate or other fees to be charged during the period that begins on the date that the reverse mortgage becomes due and payable and that ends when repayment in full is made.
C. The reverse mortgage may provide for a single lump sum disbursal of monies out of home purchase proceeds and shall provide for future payments to the borrower based on accumulated equity minus any applicable fees and charges according to the method that the borrower selects from among the following:
1. Based on a line of credit.
2. On a monthly basis over a term specified by the borrower.
3. On a monthly basis over a term specified by the borrower and based on a line of credit.
4. On a monthly basis over the tenure of the loan.
5. On a monthly basis over the tenure of the loan and based on a line of credit.
D. Except in the case of a fixed rate reverse mortgage, the proceeds of which are fully disbursed at closing, the reverse mortgage shall provide that the borrower may convert the method of payment under this section to any other method offered by the lender during the term of the reverse mortgage.
E. The reverse mortgage shall contain restrictions that ensure the borrower does not fund any unnecessary costs for obtaining the reverse mortgage, including any costs of estate planning, financial advice or other related services. This subsection does not apply to counseling fees paid to a counselor who is qualified under section 6-1702.
F. A borrower's principal dwelling securing a reverse mortgage may be held in trust or may be an interest under a life estate or a long-term lease.
G. The originator shall make available to the borrower on an annual basis not later than January 31 a statement summarizing the total principal amount paid to the borrower under the loan secured by the reverse mortgage, the total amount of deferred interest added to the principal and the outstanding loan balance at the end of the preceding year.Section: Previous 6-1417 6-1418 6-1419 6-1501 6-1502 6-1601 6-1701 6-1702 6-1703 6-1704 6-1705 6-1706 6-1707 6-1708 Next
Last modified: October 13, 2016