Terms Used In Louisiana Revised Statutes 6:1101

  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
  • Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.
  • Reverse mortgage loan: means a nonrecourse loan secured by immovable property that meets all of the following criteria:

    (a)  The loan provides purchase money proceeds for the acquisition by a borrower of a domicile to be inhabited by the borrower as his principal domicile or cash advances to a borrower based on the equity or the value in a borrower's inhabited principal domicile. See Louisiana Revised Statutes 6:1083

A.  A reverse mortgage loan shall comply with all of the following requirements:

(1)  Prepayment, in whole or in part, shall be permitted without penalty at any time during the term of the reverse mortgage loan.  For the purposes of this Section, “penalty” shall not include any fees, payments, or other charges that would have otherwise been due upon the reverse mortgage being due and payable.

(2)  A reverse mortgage loan may provide for a fixed or adjustable interest rate or combination thereof, including compound interest, and may also provide for interest that is contingent on the value of the property upon execution of the loan or at maturity, or on changes in value between closing and maturity.

(3)  A reverse mortgage may include costs and fees that are charged by the reverse mortgage lender, or the reverse mortgage lender’s designee, originator, or servicer, including costs and fees charged upon execution of the loan, on a periodic basis, or upon maturity.

(4)  If a reverse mortgage loan provides for periodic advances to a borrower, these advances shall not be reduced in amount or number based on any adjustment in the interest rate.

B.  A reverse mortgage loan may become due and payable upon one of the following occurrences:

(1)  The property securing the loan is sold or title to the home is otherwise transferred.

(2)  Any fixed maturity date agreed to by the lender and the borrower occurs.

(3)  An event of default specified in the loan documents occurs.

C.  Repayment of the reverse mortgage loan shall be subject to the following conditions:

(1)  Temporary absences from the home not exceeding sixty consecutive days shall not cause the mortgage to become due and payable.

(2)  Extended absences from the home exceeding sixty consecutive days, but less than one year, shall not cause the mortgage to become due and payable if the borrower has taken prior action which secures and protects the home in a manner satisfactory to the lender, as specified in the loan documents.

(3)  A reverse mortgage lender shall prominently disclose in the loan agreement any interest rate or other fees to be charged during the period that commences on the date that the reverse mortgage loan becomes due and payable, and that ends when repayment in full is made.

D.  The first page of any mortgage securing a reverse mortgage loan shall contain the following statement in ten-point boldface type: “This mortgage secures a reverse mortgage loan.”

E.(1)  A reverse mortgage lender shall not:

(a)  Enter into any agreement that would obligate the borrower to purchase an annuity, an investment, or long-term care insurance before the closing of the reverse mortgage or before the expiration of the borrower’s right to rescind the reverse mortgage agreement, if a rescission period applies.

(b)  Refer the borrower to anyone for the purchase of an annuity before the closing of the reverse mortgage or before the expiration of the borrower’s right to rescind the reverse mortgage agreement, if a rescission period applies.

(2)  This Section shall not prevent a lender from offering or referring borrowers for title insurance, hazard, flood, or other peril insurance, or other similar products that are customary and normal to a reverse mortgage loan.

Acts 2010, No. 418, §1.