The Oregon legislature recently enacted a bill amending Oregon law to require non-bank reverse mortgage lenders to include in advertisements, solicitations or communications intended as inducements to apply for a reverse mortgage, among other things, a statement that: (1) at the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds; (2) charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees; (3) the loan balance grows over time and interest is charged on the outstanding balance; (4) the borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home; and (5) interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment.
The above disclosures must be clear and conspicuous. Specifically, these disclosures must: (1) include larger type than the surrounding text, or in a type, color or font that contrasts with surrounding text of the same size, or set off from surrounding text by symbols or other marks in a manner that draws attention; or (2) if spoken, be spoken in a volume and cadence that is sufficient to enable a reasonable person to hear and understand.
Further, reverse mortgage servicers must send a notice to their reverse mortgage borrowers (or to the agent who pays taxes on a borrower’s behalf), whose contracts do not include a reserve account for taxes, stating that failure to pay property, insurance, maintenance and related taxes may cause the loan to become due immediately and subject to a tax lien, other encumbrance, or foreclosure. This notice must be sent, at least 60 calendar days before property taxes are due, to the borrower’s last known address or to the borrower’s agent at the address the lender has on record for such agent.
Prior to these amendments, non-bank mortgage lenders, depository financial institutions as defined in ORS 706.008, and consumer finance licensees as defined in ORS 725.010 were exempt from the advertising and solicitation disclosure requirements. Depository financial institutions and consumer finance licensees continue to be exempt both from the advertising and solicitation disclosure requirements and from the servicing disclosure. Non-bank mortgage lenders, however, must comply with both the advertising and solicitation disclosures, as well as the servicing disclosures, outlined above.
The provisions of this bill are effective January 1, 2018.
A copy of the amendments can be viewed here: https://olis.leg.state.or.us/liz/2017R1/Downloads/MeasureDocument/HB2562.