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The letter was signed by NRMLA<\/a> President Steve Irwin.<\/p>\n \u201cWe commend the sponsors for introducing this bill as it provides necessary clarity and common-sense regulatory relief that directly supports the core function of the reverse mortgage product,\u201d it read.<\/p>\n NRMLA said the current statute \u2014 while aimed at protecting consumers in traditional second-lien lending \u2014 does not align with how reverse mortgages are structured or used by older homeowners.<\/p>\n The bill<\/a> was introduced in the New Jersey Senate in early December.<\/p>\n Reverse mortgages allow homeowners \u2014 typically age 62 and older \u2014 to convert home equity<\/a> into cash without making monthly mortgage payments. <\/p>\n Loan balances are generally repaid when the borrower sells the home, moves out permanently or dies.<\/p>\n NRMLA argued that this basic design conflicts with New Jersey\u2019s<\/a> requirement that secondary mortgage loans be paid back in equal installments, even when the requirement is not actively enforced.<\/p>\n \u201cThe fundamental purpose of a reverse mortgage is to convert home equity into cash flow for senior homeowners. This is inherently incompatible with the \u2018substantially equal payment\u2019 requirement under the current law,\u201d the letter continued. \u201cBy design, reverse mortgages do not require monthly payments, so a requirement for certain payment amounts or timing of payments on reverse mortgage transactions is inapt.\u201d<\/p>\n Leaving the law unchanged could spell unintended consequences for lenders<\/a> and borrowers alike \u2014 including legal uncertainty that might discourage lenders from offering reverse mortgage products in the state, NRMLA added. <\/p>\n \u201cThe current requirement, even if unenforced, creates a significant legal ambiguity that could impede lenders from offering these products,\u201d NRMLA stated. \u201cSB 4970 removes this ambiguity, ensuring continued access to this specialized financing option, which is often essential for funding retirement, healthcare, and in-home services.\u201d<\/p>\n As introduced, SB 4970 amends Section 28 of P.L.2009, c.53, which governs the form and repayment terms of secondary mortgage<\/a> loans in New Jersey.<\/p>\n Current law generally requires those loans to be repaid in substantially equal payment amounts over substantially equal periods \u2014 measured in weeks or months.<\/p>\n The bill would carve out an explicit exception for reverse mortgage transactions, as defined under federal law in the Truth in Lending Act. <\/p>\n All other disclosure, documentation and notice requirements for secondary mortgages would remain unchanged.<\/p>\n Lawmakers sponsoring the measure describe it as a technical clarification rather than a rollback of consumer protections.<\/p>\n The legislation would take effect immediately upon enactment.<\/p>\nWhy NRMLA says the change is needed<\/h2>\n
Bill background and policy specifics<\/h2>\n
Connection to federal reverse mortgage programs<\/h2>\n