Under current law, the borrower in a reverse mortgage transaction is relieved of the obligation to occupy the subject property as a principal residence (principal-residence requirement) if the borrower is temporarily absent for up to 60 days or, if the property is adequately secured, for up to one year. The act adds a third exception to the principal-residence requirement to cover situations in which a natural disaster or other serious incident beyond the borrower's control (force majeure) renders the property uninhabitable, in which case the reverse mortgage does not become due and payable if:
- The borrower is engaged in repairing the home with the intent of reoccupying the home as a principal residence or selling the home;
- The borrower stays in communication with the lender while the home is being repaired;
- The borrower complies with all other terms and conditions of the reverse mortgage; and
- Repairing or rebuilding of the home does not reduce the lender's security.
The act requires that the lender disclose these conditions suspending the repayment requirement on a reverse mortgage due to a force majeure to the borrower in writing at the time of closing.
APPROVED by Governor June 7, 2023
EFFECTIVE June 7, 2023
(Note: This summary applies to this bill as enacted.)