697.204  Home equity conversion mortgage insurance.--

(1)  The department is authorized upon application by a home equity conversion mortgagee to insure, as herein provided, any home equity conversion mortgage which is eligible for insurance. The department may make a commitment for the insurance of any such mortgage prior to the date of the execution of, or disbursement with respect to, the mortgage to the extent that the department determines such mortgage is eligible for insurance as provided herein.

(2)  To be eligible for insurance under this section, a mortgage must:

(a)  Be a home equity conversion mortgage which does not involve a principal obligation (including such initial service charges, appraisal fees, inspection fees, and other fees which the department approves and including all interest to be deferred and added to the principal) the anticipated amount of which principal obligation is in excess of 80 percent of the appraised value of the property as of the date the mortgage is accepted for insurance.

1.  If there is no outstanding mortgage or lien on the property, the home equity conversion mortgage must be a first lien on the property.

2.  If there is an outstanding mortgage or lien on the property at the time the home equity conversion mortgage is executed, the home equity conversion mortgage must be a wrap-around mortgage; and such wrap-around home equity conversion mortgage may only be insured for an amount up to 80 percent of the value of the home, less any outstanding liens or mortgages.

(b)  Have been made to, and be held by, a mortgagee who has been approved by the department as responsible and able to service the mortgage properly.

(c)  Provide that the loan may only become due, notwithstanding paragraph (d), upon the sale of the property by the mortgagor, upon the death of the mortgagor, or when the property ceases to be the principal residence of the mortgagor for at least 18 months. If the mortgage is executed by more than one mortgagor as joint owners, this condition will be met only by the deaths of both mortgagors or the simultaneous absences of both mortgagors from the residence for at least 18 months.

(d)  Provide for a term of the loan which is equal to or greater than the life expectancy of the homeowner plus 1 year. If the mortgage is executed by more than one mortgagor as joint owners, the term of the loan shall be equal to or greater than the life expectancy of the younger mortgagor plus 1 year. As used in this section, the term "term" is used for purposes of determining the payments to be made to the mortgagor based on the predetermined line of credit. A mortgagee may not demand payment on or foreclose upon a reverse mortgage during or after its term except as provided in paragraph (c). The mortgagee may, however, charge interest on the full amount of the outstanding mortgage between the time the mortgage term expires and the time the mortgage becomes due as provided in paragraph (c). Such interest shall be based on and shall not exceed the contract rate of interest provided for in the original home equity conversion mortgage.

(e)  Provide that prepayment of the loan in whole or in part may be made without penalty at any time during the term of the loan.

(f)  Be secured by a property which is designed principally as a single-family residence and occupied by the mortgagor or mortgagors.

(g)  Contain provisions satisfactory to the department for full satisfaction of the obligation.

(h)  Contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserve, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the department may prescribe.

(3)  The home equity conversion mortgage shall provide for either periodic or lump-sum payments to be made directly by the lender to the mortgagor upon such terms as are agreed to by the parties.

(4)  A home equity conversion mortgage may provide for either a fixed or variable interest rate.

(5)  The department shall require that the mortgagee make available to the mortgagor, at the time of the loan application, a written explanation of the details of the home equity conversion mortgage. This explanation shall include, but is not limited to, an explanation of the risks and benefits involved, the provisions for the disposal of the property at the end of the loan term, and the provisions for circumstances such as there being a temporary move on the part of the homeowner or diminished physical or mental capacity of the homeowner.

(6)  The mortgagee shall apply for insurance prior to the execution of the mortgage. If such insurance is denied, the department shall provide the mortgagee with a written explanation for such denial. The mortgagee shall have 30 days within which to make any necessary changes in the mortgage and to reapply for such insurance. If such insurance is approved, the mortgagee shall forward to the department an insurance premium the amount of which is determined by the department. Such premium shall be deposited by the department into the ¹Home Equity Conversion Mortgage Guaranty Fund.

(7)  No mortgage executed after July 1, 1993, will be eligible for insurance under this section unless the department has agreed prior to that date to provide such insurance.

History.--s. 4, ch. 84-251; s. 43, ch. 85-62; s. 1, ch. 85-162; s. 3, ch. 86-267; s. 2, ch. 87-84.