§1648 — Title 15 Commerce and Trade | U.S. Code

Summary

Creditors must give the borrower, at least 3 days before the loan closes, a clear table that estimates the mortgage’s total cost using yearly interest rates. Each yearly rate must be based on a projected loan balance that uses an assumed home appreciation rate and a loan term. The table must show rates for at least 3 different appreciation scenarios and at least 3 time periods, including a short-term reverse mortgage, a term equal to the borrower’s actuarial life expectancy, and a longer term the Bureau requires. The form must also say the borrower is not required to finish the loan just because they got the disclosure or signed an application. When making the estimates, the lender must count any shared appreciation or equity the lender will get, all fees and charges (including the cost of any annuity tied to the loan), all payments to or for the borrower (including annuity payments paid from loan proceeds), and any limits on the borrower’s liability, such as nonrecourse limits or equity conservation agreements.

Title 15, §1648

Commerce and Trade — Source: USLM XML via OLRC

(a)In addition to the disclosures required under this subchapter, for each reverse mortgage, the creditor shall, not less than 3 days prior to consummation of the transaction, disclose to the consumer in conspicuous type a good faith estimate of the projected total cost of the mortgage to the consumer expressed as a table of annual interest rates. Each annual interest rate shall be based on a projected total future credit extension balance under a projected appreciation rate for the dwelling and a term for the mortgage. The disclosure shall include—

(1)statements of the annual interest rates for not less than 3 projected appreciation rates and not less than 3 credit transaction periods, as determined by the Bureau, including—

(A)a short-term reverse mortgage;

(B)a term equaling the actuarial life expectancy of the consumer; and

(C)such longer term as the Bureau deems appropriate; and

(2)a statement that the consumer is not obligated to complete the reverse mortgage transaction merely because the consumer has received the disclosure required under this section or has signed an application for the reverse mortgage.

(b)In determining the projected total cost of the mortgage to be disclosed to the consumer under subsection (a), the creditor shall take into account—

(1)any shared appreciation or equity that the lender will, by contract, be entitled to receive;

(2)all costs and charges to the consumer, including the costs of any associated annuity that the consumer elects or is required to purchase as part of the reverse mortgage transaction;

(3)all payments to and for the benefit of the consumer, including, in the case in which an associated annuity is purchased (whether or not required by the lender as a condition of making the reverse mortgage), the annuity payments received by the consumer and financed from the proceeds of the loan, instead of the proceeds used to finance the annuity; and

(4)any limitation on the liability of the consumer under reverse mortgage transactions (such as nonrecourse limits and equity conservation agreements).

Notes & Related Subsidiaries

Editorial Notes

Amendments

2010—Subsec. (a)(1). Pub. L. 111–203 substituted “Bureau” for “Board” in two places.

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

§1648 Reverse mortgages