Reasons for NRMLA’s Request for Change
NRMLA President Steve Irwin signed a letter commending the sponsors for introducing a bill that provides clarity and regulatory relief for reverse mortgages. The current statute does not align with how reverse mortgages are structured or used by older homeowners.
The bill, introduced in the New Jersey Senate, aims to address this discrepancy. Reverse mortgages allow homeowners aged 62 and older to convert home equity into cash without monthly payments. Loan balances are typically repaid when the borrower sells the home, moves out permanently, or passes away.
NRMLA argues that New Jersey’s requirement for equal installment repayment of secondary mortgage loans conflicts with the design of reverse mortgages, which do not require monthly payments. Leaving the law unchanged could discourage lenders from offering reverse mortgage products in the state, leading to legal uncertainty for both lenders and borrowers.
Information on the Bill and Policy Details
SB 4970 seeks to amend Section 28 of P.L.2009, c.53 to create an exception for reverse mortgage transactions, as defined under federal law. This amendment would not affect other disclosure, documentation, or notice requirements for secondary mortgages.
The bill is described as a technical clarification rather than a rollback of consumer protections and would take effect immediately upon enactment.
Link to Federal Reverse Mortgage Programs
NRMLA emphasizes the relevance of the bill to the Federal Housing Administration’s Home Equity Conversion Mortgage program, the dominant reverse mortgage product nationwide. The bill’s exclusion of reverse mortgages from irrelevant regulatory requirements promotes financial stability for New Jersey’s senior population without compromising consumer protection.
NRMLA urges the Senate Commerce Committee to report the bill favorably and facilitate its swift passage to ensure continued access to reverse mortgage financing.
NRMLA, representing over 300 member companies that originate more than 90% of reverse mortgages nationwide, highlights the importance of the bill for the senior population’s financial well-being.