(a) A lender‘s failure to make loan advances to the borrower under the reverse mortgage loan contract shall be deemed the lender’s default of the contract. Upon the lender’s default, the lender shall forfeit any right to collect interest or service charges under the contract. The lender’s right to recovery at loan maturity shall be limited to the outstanding balance as of the date of default, minus all interest. Lenders may also be subject to other default penalties established by the commissioner.

Terms Used In Tennessee Code 47-30-111

  • Borrower: means a natural person who occupies and owns in fee simple individually, or with another borrower as tenants by the entireties or as joint tenants with right of survivorship, an interest in residential real property securing a reverse mortgage loan, and who borrows money under a reverse mortgage loan. See Tennessee Code 47-30-102
  • Commissioner: means the commissioner of financial institutions. See Tennessee Code 47-30-102
  • Contract: A legal written agreement that becomes binding when signed.
  • lender: means :
    (A) A bank, savings and loan association, savings bank, savings institution, or credit union chartered under the laws of the United States or of Tennessee. See Tennessee Code 47-30-102
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Outstanding balance: means the current net amount of money owed by the borrower to the lender, calculated in accordance with §. See Tennessee Code 47-30-102
(b) Subsection (a) shall not apply if the lender has previously declared the borrower in default under § 47-30-112, or if the lender makes the required loan advance within the time stated in the mortgage contract or within thirty (30) days of receipt of notice from the borrower that the loan advance was not received.
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