Arizona Laws 6-1705. Prepayment; repayment conditions
A. Prepayment, in whole or in part, shall be permitted without penalty at any time during the term of a reverse mortgage.
Terms Used In Arizona Laws 6-1705
- Agreement: means the document that on execution obligates the borrower and originator under the reverse mortgage. See Arizona Laws 6-1701
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Property: includes both real and personal property. See Arizona Laws 1-215
- Reverse mortgage: means a nonrecourse consumer credit obligation to which all of the following apply:
(a) A mortgage, deed of trust or equivalent consensual security interest securing one or more advances is created in the borrower's principal dwelling. See Arizona Laws 6-1701
- Statute: A law passed by a legislature.
- Statute of limitations: A law that sets the time within which parties must take action to enforce their rights.
B. For the purposes of this section, penalty does not include:
1. Any fees, payments or other charges that would otherwise be due when the reverse mortgage becomes due and payable.
2. Any closing costs that the agreement states are owed by the borrower if the borrower repays the reverse mortgage in whole before the date in the agreement, if the repayment occurs within five years after the date on which the agreement was made.
C. A reverse mortgage becomes due and payable if any of the following applies:
1. The property is not the principal residence of at least one borrower.
2. A borrower conveys all of the borrower’s title in the property and no other borrower retains title.
3. For a period of longer than twelve consecutive months, a borrower fails to occupy the property because of physical or mental illness and the property is not the principal residence of at least one other borrower.
4. A borrower does not perform an obligation under the mortgage.
D. A reverse mortgage does not become due and payable if the legal title to the property is held in the name of a trust and the occupant of the property uses the property as a principal residence and is a beneficiary of that trust.
E. The creditor’s or the creditor’s assignee’s right to collect the outstanding balance of the reverse mortgage under the loan is subject to the applicable statute of limitations for written loan contracts. Notwithstanding any other law, the statute of limitations begins on either of the following:
1. The date that the reverse mortgage becomes due and payable as specified in the agreement.
2. The date the creditor or the creditor’s assignee accelerates the loan due to the borrower’s default on a provision in the agreement.