A bill which would amend the Illinois High Risk Home Loan Act (HRHLA) to ensure that reverse mortgage loans would not be considered “high risk home loans” passed the House of Representatives by a vote of 53-1 and now makes it way to the Senate.
Sponsored by Senator Terry Link, SB 3287 would exempt Federal Housing Administration loans including reverse mortgages from the definition of “high risk home loans”.
Currently, the HRHLA applies to all closed end loans and requires lenders to compute the ratio of closing costs to loan amount or, in the case of a reverse mortgage, principal limit, in an effort to identify high-cost loans. Closing costs which exceed 5% of the principal limit are considered high-cost and is the reason many reverse mortgage lenders no longer offer a fixed rate reverse mortgage in the state.
In an alert to members, the National Reverse Mortgage Lenders Association told members that it’s watching the bill closely.
You can see a copy of the bill here.