Oregon’s House Bill 2532 – New Advertising Rules for Reverse Mortgages

onlineed newsConsumer complaints about reverse mortgages are so common that Oregon House Bill 2532 requires a clear summary of terms

By Jeff Sorg, OnlineEd Blog


(December 26, 2015)
 –   Reverse mortgages are a complex type of mortgage in which funds are available as a line of credit, cash advance, or periodic payment to be repaid with interest when the borrower dies, moves permanently from the house, or sells the house. Consumer complaints about these complex mortgages are common, so House Bill 2532 requires a clear summary of the terms to be provided to the borrower.

The following are the disclosure requirements as set forth in ORS 86A.196 for those interested in delving into the details of the required disclosures:

ORS 86A.196

(2)(a) In any advertisement, solicitation or communication that a lender or an agent or affiliate of the lender intends as an inducement for a person to apply for or enter into a contract for a reverse mortgage, the lender or the agent or affiliate of the lender shall include a clear and conspicuous summary of the terms of the reverse mortgage. The summary must, at a minimum, disclose these provisions of the reverse mortgage loan contract to the extent that the contract includes the provision:

  1. At the conclusion of the term of the reverse mortgage loan contract, some or all of the equity in the property that is the subject of the reverse mortgage no longer belongs to the person and the person may need to sell or transfer the property to repay the proceeds of the reverse mortgage from the proceeds of the sale or transfer or the person must otherwise repay the reverse mortgage with interest from the person’s other assets.
  2. The lender will charge an origination fee, a mortgage insurance premium, closing costs or servicing fees for the reverse mortgage, all or any of which the lender will add to the balance of the reverse mortgage loan.
  3. The balance of the reverse mortgage loan grows over time and the lender charges interest on the outstanding loan balance.
  4. The person retains title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts may cause the reverse mortgage loan to become due immediately.
  5. Interest on a reverse mortgage is not deductible from the person’s income tax return until the person repays all or part of the reverse mortgage loan.

You can read the full text of House Bill 2532 at the Oregon State Legislature website:
https://olis.leg.state.or.us/liz/2015R1/Downloads/MeasureDocument/HB2532/Introduced

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 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

Categories: Mortgage, Real Estate
Jeff Sorg

About the Author

Jeff Sorg is a co-founder of OnlineEd®, a Web-based vocational school founded in 1997 where he also serves as Corporate Secretary, Chief Operating Officer, and School Director. Sorg holds vocational instructor licenses in Oregon, Washington, California, and Nevada and has authored numerous pre-licensing and continuing education courses. Sorg was awarded the International Distance Education Certification Center's CDEi Designation for distance education in 2008. OnlineEd® provides real estate, mortgage broker, insurance, and contractor pre-license, post-license, continuing education, career enhancement, and professional development and designation courses over the Internet.