45-1068 Reverse-mortgage loan; rules governing; how made or acquired; charges authorized; forfeiture by lender. - Nebraska Statutes

45-1068. Reverse-mortgage loan; rules governing;how made or acquired; charges authorized; forfeiture by lender.(1) For purposes of this section, reverse-mortgage loan means a loanmade by a licensee which (a) is secured by residential real estate, (b)is nonrecourse to the borrower except in the event of fraud by the borroweror waste to the residential real estate givenas security for the loan, (c) provides cash advances to the borrower basedupon the equity in the borrower's owner-occupied principal residence, (d)requires no payment of principal or interest until the entire loan becomesdue and payable, and (e) otherwise complies with the terms of this section.(2) Reverse-mortgage loans shall be governed by the following ruleswithout regard to the requirements set out elsewhere for other types of mortgagetransactions: (a) Payment in whole or in part is permitted without penaltyat any time during the period of the loan; (b) an advance and interest onthe advance have priority over a lien filed after the closing of a reverse-mortgageloan; (c) an interest rate may be fixed or adjustable and may also providefor interest that is contingent on appreciation in the value of the residential real estate; and (d) the advanceshall not be reduced in amount or number based on an adjustment in the interestrate when a reverse-mortgage loan provides for periodic advances to a borrower.(3) Reverse-mortgage loans may be made or acquired without regard tothe following provisions for other types of mortgage transactions: (a) Limitationson the purpose and use of future advances or any other mortgage proceeds;(b) limitations on future advances to a term of years or limitations on theterm of credit line advances; (c) limitations on the term during which futureadvances take priority over intervening advances; (d) requirements that amaximum mortgage amount be stated in the mortgage; (e) limitations on loan-to-valueratios; (f) prohibitions on balloon payments; (g) prohibitions on compoundedinterest and interest on interest; and (h) requirements that a percentageof the loan proceeds must be advanced prior to loan assignment.(4) A licensee may, in connection with a reverse-mortgage loan, chargeto the borrower (a) a nonrefundable loan origination fee which does not exceedtwo percent of the appraised value of the owner-occupied principal residence atthe time the loan is made, (b) a reasonable fee paid to third parties originatingloans on behalf of the licensee, and (c) such other fees as are necessaryand required, including fees forinspections, insurance, appraisals, and surveys.(5) Licensees failing to make loan advances as required in the loandocuments and failing to cure the default as required in the loan documentsshall forfeit an amount equal to the greater of two hundred dollars or onepercent of the amount of the loan advance the licensee failed to make. SourceLaws 1995, LB 397, § 2; Laws 1997, LB 555, § 27; R.S.1943, (1998), § 45-1,116; Laws 2001, LB 53, § 101; Laws 2010, LB892, § 24.