Puerto Rico is refining its laws on reverse mortgage lending with the enactment of the Reverse Mortgage Consumer Protection Act, which went into effect late last week after being enacted in late July.
The act, which imposes a duty of good faith on reverse mortgage lenders and brokers, requires reverse mortgage disclosures and establishes a “cooling-off” period for borrowers. Additionally, the act requires that reverse mortgage documentation and information exchange must be available both in English and Spanish, according to a memo prepared by National Reverse Mortgage Lenders Association counsel.
The “cooling‐off” period consists of seven days from the time the borrower receives a written offer to make a reverse mortgage loan during which the borrower cannot be compelled to proceed with the loan. Lenders must notify borrowers of the cooling off period in writing and it cannot be waived by the borrower.
The act also specifies that a lender must inform a borrower about counseling and must provide three suggested counseling agencies to the borrower.
View a summary from National Reverse Mortgage Lenders Association counsel on the new law.
Written by Elizabeth Ecker