W. Va. Code R. § 106-19-11

Current through Register Vol. XLI, No. 36, September 6, 2024

Section 106-19-11 - Required Disclosures For Reverse Mortgage Loans

11.1. Disclosure Requirements. -- Prior to accepting an application for any loan, but in any event prior to a lender accepting an application fee, a lender must disclose to each loan applicant the following information, as is relevant to the type of loan being offered:

11.1.a. The following notice, or a similar notice to like effect:

YOU SHOULD CONSULT YOUR TAX, LEGAL OR FINANCIAL ADVISERS OR CONSULT WITH APPROPRIATE AUTHORITIES REGARDING ENTITLEMENTS AND TAX AND ESTATE PLANNING CONSEQUENCES OF A REVERSE MORTGAGE LOAN.

In addition, the lender shall furnish the applicant with a statement prepared by the West Virginia Division of Banking concerning the availability of independent counseling and information services;

11.1.b. The lender's toll free telephone number and the name of a person to whom applicants and mortgagors may address questions, comments or complaints;

11.1.c. A notice that the mortgagor(s) or applicant can submit written complaints to the West Virginia Division of Banking, State Capitol Complex, 1900 Kanawha Boulevard East, Building 3, Room 311, Charleston, West Virginia, 25305-0240;

11.1.d. The events which would terminate or accelerate the loan and an explicit warning, if applicable, that the mortgagor(s) may be compelled to move out of his or her home at the expiration of the loan term or upon acceleration of the loan;

11.1.e. That the loan, if applicable, provides for the lender to receive a percentage of the future appreciated value of the property, i.e., "shared appreciation", what that percentage is, and the lender's method of calculating that amount. In addition, the lender shall provide both a narrative explanation and an example of the application of its methodology in determining the amount. This example must use as its projected real estate appreciation or depreciation rate for home prices the average of the yearly changes in the Consumer Price Index for Shelter for the South Region of the United States for the eight years preceding the year in which the loan is made;

11.1.f. That interest accrues from the time monies are advanced to or on behalf of the mortgagor(s) and whether accrued interest is added to the loan principal;

11.1.g. That the only asset of the mortgagor(s) which may be used by the lender to satisfy the loan is the real property securing the loan and any limitation thereon as may be provided for in subsection 6.7 of this rule. No deficiency judgment may be sought or granted in any civil action involving a reverse mortgage;

11.1.h. That the loan may be prepaid at any time without penalty. The lender shall specify how the value of the home at the time of prepayment will be determined and the method by which the then outstanding loan balance will be prepaid;

11.1.i. All fees, costs and payments to be paid by the mortgagor(s) and whether the application fee, loan origination fee, and/or broker fees are non-refundable;

11.1.j. The mortgagor(s)= right to designate a third party whom the lender would notify in writing of any event that could lead to termination of the loan and to whom the lender must furnish a copy of any foreclosure documents;

11.1.k. A description of any conditions or limitations in connection with the refinancing or extension of any loan, and if applicable, the mortgagor(s)= right to refinance or extend the loan;

11.1.l. The interest rate(s) to be charged on the outstanding principal under any loan and whether the rate(s) are fixed, variable or both. In addition, in a term loan with a fixed rate of interest, the lender shall disclose the total interest payable on the loan principal, assuming maturity of the loan at expiration of the term. In a term loan with a variable rate of interest, the lender shall disclose the estimated total interest payable on the loan principal using the yearly average of the base index and margin chosen by the lender for the eight year period preceding the loan closing and assuming the maturity of the loan at expiration of the term. For tenure reverse mortgage loans, the same disclosures shall be made, except that maturity shall be assumed to occur at the actuarial life expectancy of the mortgagor, or, if there is more than one mortgagor, the younger of the mortgagors;

11.1.m. The following notice, or a similar notice to like effect:

THE LENDER MAKING THIS REVERSE MORTGAGE LOANS IS IN COMPLIANCE WITH THE CRITERIA ESTABLISHED BY THE COMMISSIONER OF THE WEST VIRGINIA DIVISION OF BANKING FOR THE MAKING OF SUCH LOANS.;

11.1.n. If applicable, the availability of an annuity, whether an annuity will be required, and if there is an annuity, when the annuity payments will commence, who will own the annuity and the affiliation, if any, between the lender and the company from which the annuity is purchased;

11.1.o. Whether an escrow account will be established, for what purposes and when the escrow account will be terminated;

11.1.p. Whether a reserve fund will be established and for what purposes;

11.1.q. Whether and what type(s) of insurance will be required and the cost of any premiums;

11.1.r. Whether the mortgage broker or any entity acting in a mortgage brokerage capacity, as a general business practice, utilizes the services of two or fewer lenders, and if so, the name(s) of the lender(s);

11.1.s. If applicable, that the loan provides for the lender to receive "equity participation", the maximum total percentage obligation of the mortgagor(s) to the lender arising from the reverse mortgage loan, the minimum amount due at closing, if any, and what is included and what is excluded from these amounts. In addition, the lender shall provide both a narrative explanation and an example demonstrating equity participation; and shall, if applicable, provide an explanation and demonstration of anticipated shared appreciation; and

11.1.t. Any additional information as the lender believes appropriate, as long as the information is complete, accurate and not misleading.

11.2. Disclosure Requirement Procedures. B The lender shall furnish the information required by subdivisions 11.1.a through 11.1.c of this subsection to the mortgagor(s) on a separate sheet. The information set forth in subdivisions 11.1.d through 11.1.f must be furnished by the lender to the mortgagor(s) on a separate sheet and in bold type.

11.3. Counseling Information. -- Prior to an applicant's receiving counseling pursuant to subsection 6.11 of this rule, the lender shall furnish for term loans, a schedule of estimated payments to the mortgagor(s) and the total payment in dollars over the term of the loan. For tenure loans, a schedule of estimated payments to the mortgagor(s) shall be furnished. The lender shall label the schedules as "estimates". The lender shall make the foregoing disclosure prior to or simultaneously with the approval of the application.

11.4. Notice in Writing Regarding Move-out. -- Six months prior to the end of a term loan, the lender shall disclose, in writing, if applicable:

11.4.a. that the mortgagor(s) is responsible for making real estate tax and insurance payments; and

11.4.b. that the mortgagor(s) will have to vacate his or her home upon the expiration of the term and the exact date that the move-out is required.

W. Va. Code R. § 106-19-11