Chapter 625

2006 -- H 7237 SUBSTITUTE A AS AMENDED

Enacted 07/14/06

A N A C T

RELATING TO PROPERTY -- REVERSE MORTGAGES

Introduced By: Representatives Palumbo, and Corvese

Date Introduced: February 14, 2006

It is enacted by the General Assembly as follows:

     SECTION 1. Section 34-25.1-7 of the General Laws in Chapter 34-25.1 entitled "Reverse

Mortgages" is hereby amended to read as follows:

34-25.1-7. Term of loan advancements. -- (a) Reverse mortgages may be written over

any amortization period currently in use by lending institutions and may provide that the reverse

payments made on the amount borrowed be payable by the mortgagee to the mortgagor over

monthly periods not to exceed ten (10) years with the then outstanding balance due and payable at

the conclusion of the term or amortized on a standard payment basis for the remainder of the

original term of amortization. Interest on the outstanding advance may either be charged to the

mortgagor throughout the initial payment term, or may be accumulated and due upon the

conclusion of the original payment term.

(b) Reverse mortgages may be written over any amortization period currently in use by

lending institutions with a portion of the mortgage proceeds used to purchase an immediate or

deferred life annuity contract from companies authorized to issue annuity contracts in this state.

In such cases, the monthly annuity payments shall be used to pay interest payments on the

mortgage loan with the remainder forwarded to the mortgagor. Repayment of principal in such

cases would occur on the sale of the security or the closing of the mortgagor's estate, whichever

first occurs.

(a) Reverse mortgages may be written over any period currently in use by lending

institutions, with the outstanding balance due and payable upon the first to occur of the maturity

of the loan or the mortgagor's default thereunder. Interest on outstanding advances may either be

charged to the mortgagor throughout the term of the loan, or may be accumulated and due upon

the first to occur of the maturity of the loan or the mortgagor's default thereunder.

(b) A portion of the mortgage proceeds of a reverse mortgage may be used to purchase an

immediate or deferred life annuity contract from companies authorized to issue annuity contracts

in this state. In such cases, the monthly annuity payments may be used to pay interest payments

on the mortgage loan with the remainder forwarded to the mortgagor. Repayment of principal in

such cases would occur upon the first to occur of the maturity of the loan, the mortgagor's

default thereunder or the closing of the mortgagor's estate.

(c) Any reverse mortgage made in the state prior to passage of this act shall be deemed in

compliance with chapter 34-25.1 as amended by this act if made pursuant to the provisions of

section 255 of the National Housing Act and the regulations thereunder.

     SECTION 2. This act shall take effect upon passage.

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LC02190/SUB A/2

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