(205 ILCS 5/6.1) (from Ch. 17, par. 313.1)
Sec. 6.1. Non-recourse reverse mortgage loans.
(a) It is the intent of this amendatory Act of 1991 that homeowners at least 62 years of age be permitted to meet their financial needs by accessing the equity in their homes through a reverse mortgage. The General Assembly recognizes that many restrictions and requirements that exist to govern traditional mortgage transactions are inapplicable in the context of reverse mortgages. In order to foster reverse mortgage transactions and better serve the citizens of this State, this Section authorizes the making of reverse mortgages, and expressly relieves reverse mortgage lenders and borrowers from compliance with inappropriate requirements.
As used in this Section, "borrower" means any homeowner who is, or whose spouse is, at least 62 years of age.
For purposes of this Section, "real property" includes a manufactured home as defined in subdivision (53) of Section 9-102 of the Uniform Commercial Code which is real property as defined in Section 5-35 of the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act.
As used in this Section, "reverse mortgage" means a non-recourse loan, secured by real property, that complies with all of the following:
(1) Provides cash advances to a borrower based on the
equity in a borrower's owner-occupied principal residence, provided that it is a residence designed to be occupied by not more than 4 families.
(2) Requires no payment of principal or interest
until the entire loan becomes due and payable.
(b) Reverse mortgage loans shall be subject only to all of the following provisions:
(1) Payment, in whole or in part, shall be permitted
without penalty at any time during the term of the mortgage.
(2) A reverse mortgage may provide for an interest
rate that is fixed or adjustable and may provide for interest that is contingent on appreciation in the value of the property.
(3) If a reverse mortgage provides for periodic
advances to a borrower, the advances may not be reduced in amount or number based on any adjustment in the interest rate.
(4) A reverse mortgage may be subject to any
additional terms and conditions imposed by a lender that are required under the provisions of the federal Housing and Community Development Act of 1987 to enable the lender to obtain federal government insurance on the mortgage if the loans are to be insured under that Act.
(c) The repayment obligation under a reverse mortgage is subject to all of the following:
(1) Temporary absences from the home not exceeding 60
consecutive days shall not cause the mortgage to become due and payable.
(2) Temporary absences from the home exceeding 60
days, but not exceeding one year shall not cause the mortgage to become due and payable, provided that the borrower has taken action that secures the home in a manner satisfactory to the lender.
(3) The lender must disclose any interest or other
fees to be charged during the period that commences on the date the mortgage becomes due and payable and ends when repayment in full is made in accordance with applicable State and federal laws, rules, and regulations.
(d) A reverse mortgage shall become due and payable upon the occurrence of any of the following events:
(1) The real property securing the loan is sold.
(2) All borrowers cease to occupy the home as a
principal residence.
(3) A fixed maturity date agreed to by the lender and
the borrower is reached.
(4) An event that is specified in the loan documents
and that jeopardizes the lender's security occurs.
(e) No reverse mortgage commitment may be made by a lender unless the loan applicant attests, in writing, that the applicant has received from the lender, at the time of initial inquiry, a statement prepared by the Department on Aging regarding the advisability and availability of independent information and counseling services on reverse mortgages.
(Source: P.A. 98-749, eff. 7-16-14.)
Sections: Previous 5 5a 5b 5c 5d 5e 5f 6.1 6.2 7 8 9 9.5 10 11 Next
Last modified: February 18, 2015