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Reverse-mortgage protections bill passes Arizona House
2010-03-26

A bill that will better protect Arizonans applying for reverse mortgages passed the state's House of Representatives this week.

Under the bill - called HB 2242 - reverse mortgage lenders have to offer applicants clear and understandable loan terms. All costs associated with the loan have to be laid out in writing before a reverse mortgage is signed, and the projected cost of the loan must be established during the application process.

Applicants will have to receive counseling from an independent third party; attendance at a counseling session must be confirmed before an application moves forward.

And once a reverse mortgage is on the books, the originator has to provide the borrower with annual summaries of principal amount paid and the outstanding loan balance.

The bill comes as reverse mortgages get more popular in a rapidly graying state. In 2004, the Federal Housing Administration says, 577 reverse mortgages were issued in Phoenix; by 2006, that number had spiked to 2,905.

Arizona Attorney General Terry Goddard noted at a seniors' crime-prevention conference last week that 17 percent of Arizonans are over 60. By 2020, 25 percent of the state will be older than 60 - meaning that far more people will be eligible for reverse mortgages.
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