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Shortly after completing the application, borrowers would then receive transaction-specific disclosures that reflect the actual terms of the reverse mortgage being offered. For reverse mortgages, the proposal would also:  

Prohibit lenders from conditioning the reverse mortgage on the borrower’s purchase of another financial product. Require that borrowers receive counseling about reverse mortgages before the lender imposes nonrefundable fees or closes the loan.

The Fed has provided model forms and sample language that credit unions and others may use to satisfy the disclosure and notice requirements that are outlined in the proposal. Click here for a compilation of these forms and samples or refer to the document that accompanied this Comment Call. Below is more information about these disclosures and the substantive provisions that are addressed in the proposed rule. Reverse Mortgages Disclosure Requirements The proposal would require new disclosures for reverse mortgages, which are products for borrowers who are at least 62 years of age who receive their home equity in cash that is then repaid at a later time, such as when the borrower dies or moves into a new home. Before the earlier of when the borrower applies for such a loan or when the borrower pays a nonrefundable fee (except for a fee for reverse mortgage counseling, as described below), the lender must provide a new, two-page notice that has been prepared by the Fed that summarizes basic information about reverse mortgages, titled “Key Questions to Ask about Reverse Mortgage Loans.” This would replace the current application disclosures that are provided for mortgage loans. Also, the notice and consent provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) would not apply to this disclosure in certain situations, such as when the borrower is accessing an online application or advertisement. Within three business days of application, and again before the loan is consummated, disclosures must be provided regarding the loan costs, which replaces the current disclosures. In addition to information about rates and fees, these new disclosures would include a table that shows how the dollar amount of the reverse mortgage balance grows over time. This would include the amount that has been advanced to the borrower, the total of all costs and charges that are imposed, and the total amount the borrower will have to repay. These would be outlined for loan periods of one, five, and ten years. The calculation of the balance growth would include certain assumptions, such as the balance will grow based on the initial interest rate, no repayments are made during the term of the reverse mortgage, and closing and other costs are financed by the lender, unless agreed otherwise. Also, any amounts set aside for the borrower’s benefit, such as for making repairs, would be treated as amounts advanced to the borrower, and any shared equity or appreciation with the lender must be added to the amount owed by the borrower. For shared appreciation, there would be an assumption that the home value will rise by 4 percent per year, and the disclosure in these situations must include a numerical example of how the appreciation is shared, based on a hypothetical $100,000 increase in the home’s value. For purposes of the balance growth table that is included in the disclosures, the lender must assume that no further advances are made if the borrower elects to receive at least 50 percent of the available loan amount. Otherwise, the lender must assume that the entire loan amount is advanced at closing. The applicable APR would have to be in 16-point type size, but this type size requirement would not apply to any minimum, maximum, or other rates that could apply in other situations. Certain other information would be in bold type. For variable rates, there would need to be additional information about the index and margin that is used and how the rate is calculated, including any minimum and maximum rates that could apply. Information about the highest and lowest value of the index and margin over the past 15 years would also be required. If there is an introductory rate, the disclosure must include the rate that


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