19 Dec Federal Regulatory and Oregon Legislative Update
The Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Company and the National Credit Union Administration recently published a final rule that revises their regulations implementing the Community Reinvestment Act to conform to new revisions to the Home Mortgage Disclosure Act (“HMDA”). The Oregon legislature recently amended its law regarding reverse mortgages. All items discussed in this memorandum are effective January 1, 2018.
OCC Bulletin 2017-58
“Home Mortgage Loan” is now defined to mean a closed-end mortgage loan or an open-end line of credit.
“Consumer Loan” is now defined as a loan to one or more individuals for household, family, or other personal expenditures and is not a home mortgage, small business, or small farm loan. Consumer Loan previously included home equity loans; these now fall under the definition of Home Mortgage Loans.
An institution required to report HMDA data no longer needs to provide its HMDA disclosure statement directly to the public or to maintain the disclosure statement in its public file; rather, the public may obtain a copy of the disclosure statement from the Consumer Financial Protection Bureau’s website.
Oregon House Bill 2562
None of the following requirements apply to:
- A financial institution – defined as an insured institution, an extranational institution, a credit union, an out-of-state credit union, or a federal credit union. (Insured institution means a company, the deposits of which are insured under the provisions of the Federal Deposit Insurance Act. Extranational institution means a corporation, unincorporated company, partnership or association organized under the laws of a nation other than the U.S., or other than a territory of the U.S., Puerto Rico, Guam, American Samoa, or the Virgin Islands, that engages directly in banking business.); or
- A licensee defined in Oregon Revised Statutes 725.010 (consumer finance lender).
In any advertisement, solicitation or communication that a lender intends as an inducement for a person to apply for or enter into a contract for a reverse mortgage, the lender must include a clear and conspicuous summary of the terms of the reverse mortgage. The summary must, at a minimum, disclose certain stated provisions of the reverse mortgage loan contract to the extent that the contract includes such provisions.
One of the provisions that must be disclosed is that:
- The person retains title to the property subject to the reverse mortgage until he sells or transfers the property;
- The person, therefore, is responsible for paying property taxes, insurance, maintenance and related taxes; and
- If the person fails to pay the items above, the reverse mortgage loan may become due immediately.
The amended law includes a requirement to disclose that the failure to pay the items above may also subject the property to a tax lien or other encumbrance or to possible foreclosure.
A new section has been added with a requirement for a lender who has a contract with a person for a reverse mortgage to send an annual notice containing the disclosures set forth above. The notice must be sent to the person or to any escrow agent, title insurance company or other agent that pays property taxes from an escrow account on the person’s behalf. The lender must send the notice to the person at the last-known address or to the escrow agent, title insurance company or other agent at the address the lender has in the lender’s records. The lender must send the notice at least 60 calendar days before property taxes are due for the property that is subject to the reverse mortgage.
The annual notice disclosure does not apply to a contract for a reverse mortgage that includes a reserve account for taxes.