PUBLIC LAW 100-242—FEB. 5, 1988
101 STAT. 1909
"(C) the appropriate scope and nature of participation by the Secretary in connection with home equity conversion mortgages for elderly homeowners. "(b) DEFINITIONS.—For purposes of this section: "(1) The terms 'elderly homeowner' and 'homeowner' mean any homeowner who is, or whose spouse is, at least 62 years of age or such higher age as the Secretary may prescribe. "(2) The terms 'mortgage', 'mortgagee', 'mortgagor', and 'State' have the meanings given such terms in section 201. "(3) The term 'home equity conversion mortgage' means a first mortgage which provides for future payments to the homeowner based on accumulated equity and which a housing creditor (as defined in section 803(2) of the Garn-St Germain Institutions Act of 1982) is authorized to make (A) under any law of the United States (other than section 804 of such Act) or applicable agency regulations thereunder; (B) in accordance with section 804 of such Act, notwithstanding any State constitution, law, or regulation; or (C) under any State constitution, law, or regulation, "(c) INSURANCE AUTHORITY.—The Secretary may, upon application by a mortgagee, insure any home equity conversion mortgage eligible for insurance under this section and, upon such terms and conditions as the Secretary may prescribe, make commitments for the insurance of such mortgages prior to the date of their execution or disbursement to the extent that the Secretary determines such mortgages— "(1) have promise for improving the financial situation or otherwise meeting the special needs of elderly homeowners; "(2) will include appropriate safeguards for mortgagors to offset the special risks of such mortgages; and "(3) have a potential for acceptance in the mortgage market. "(d) ELIGIBILITY REQUIREMENTS.—To be eligible for
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insurance
under this section, a mortgage shall— "(1) have been made to a mortgagee approved by the Secretary as responsible and able to service the mortgage properly; "(2) have been executed by a mortgagor who— "(A) qualifies as an elderly homeowner; "(B) has received adequate counseling by a third party (other than the lender) as provided in subsection (f); and "(C) meets any additional requirements prescribed by the Secretary; "(3) be secured by a dwelling that is designed principally for a 1-family residence and is occupied by the mortgagor and that has a value not to exceed the maximum dollar a m o u n t established by the Secretary under section 203(b)(2) for a 1-family residence; "(4) provide that prepayment, in whole or in part, may b e m a d e without penalty a t any time during the period of the mortgage; "(5) provide for a fixed or variable interest rate or future sharing between the mortgagor and the mortgagee of the appreciation in the value of the property, as agreed upon by the mortgagor and the mortgagee; "(6) contain provisions for satisfaction of the obligation satisfactory to the Secretary; "(7) provide that the homeowner shall not be liable for any difference between the net amount of the remaining indebted-
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