PRIA, Government Policy, Made Personal

Summary

Creditors must give a borrower a clear estimate at least 3 days before closing a reverse mortgage. The estimate must be a table of annual interest rates that shows the projected total cost of the loan. The table must include at least 3 home-appreciation scenarios and at least 3 time periods set by the Bureau, including a short-term option, a term equal to the borrower’s expected remaining lifetime, and a longer term the Bureau chooses. The form must also say that getting the estimate or signing an application does not force the borrower to go through with the loan. When making the estimate, the creditor must count any shared appreciation or equity the lender will get; all fees and charges, including costs for any annuity the borrower buys or must buy; all payments to the borrower (including annuity payments paid with the loan); and any limits on the borrower’s liability, such as nonrecourse rules or equity-conservation agreements.

Title 15, §1648

Commerce and Trade, Source: USLM XML via OLRC

(a)In general

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)Projected total cost

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