Arizona Laws 6-1706. Borrower liability; prohibited practices; investments; annuities
A. The borrower is not liable for any difference between the net amount of the borrower’s remaining debt under the reverse mortgage and the amount recovered by the originator from the net sales proceeds from the dwelling that is subject to the reverse mortgage. This amount is based on the amount of the accumulated equity selected by the borrower to be subject to the reverse mortgage as agreed on by the originator and the borrower.
Terms Used In Arizona Laws 6-1706
- Agreement: means the document that on execution obligates the borrower and originator under the reverse mortgage. See Arizona Laws 6-1701
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Dwelling: means a residence that is designed principally for at least one and not more than four families in which the borrower occupies at least one of the units. See Arizona Laws 6-1701
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
- Originator: means a person who regularly makes or brokers reverse mortgages, including a creditor or broker. See Arizona Laws 6-1701
- Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.
- 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
B. An originator shall not:
1. Enter into any agreement that would obligate the borrower to purchase an annuity, an investment or long-term care insurance before the closing of the reverse mortgage or before the expiration of the borrower’s right to rescind the reverse mortgage agreement if a rescission period applies.
2. Refer the borrower to anyone for the purchase of an annuity before the closing of the reverse mortgage or before the expiration of the borrower’s right to rescind the reverse mortgage agreement.
C. This section does not prevent a lender from offering or referring borrowers for title insurance, hazard, flood or other peril insurance or other similar products that are customary and normal under a reverse mortgage loan.