(a) A lender’s failure to make loan advances to the borrower under the reverse mortgage loan contract shall be deemed the lender’s default of the contract.  Upon the lender’s default, the lender shall forfeit any right to collect interest or service charges under the contract.  The lender’s right to recovery at loan maturity shall be limited to the outstanding balance as of the date of default, minus all interest.  Lenders may also be subject to other default penalties established by the Commissioner.

(b) Subsection (a) of this section shall not apply if the lender has previously declared the borrower in default under N.C. Gen. Stat. § 53-267, or if the lender makes the required loan advance within the time stated in the mortgage contract or within 30 days of receipt of notice from the borrower that the loan advance was not received. (1991, c. 546, s. 1; 1995, c. 115, s. 1.)