The National Consumer Credit Protection Act has been amended to include regulations covering reverse mortgages.
Brokers and lenders who arrange reverse mortgages must now make reasonable enquiries about the borrower’s requirements and objectives in meeting their possible future needs.
A reverse mortgage contract will be generally unsuitable if the loan to valuation ratio exceeds 15 per cent for borrowers aged 55 or younger, increased by 1 per cent for each year that the youngest borrower is older than 55.
A lender must give the borrower(s) a Reverse Mortgage Key Information Statement before making a credit assessment.
Source: The Adviser
