SB1440 - Reverse Mortgage Act Summary

• Establishes the Reverse Mortgage Act as a comprehensive regulatory framework for reverse mortgages in Illinois, defining key terms including borrowers, lenders, homestead property, and reverse mortgages as non-recourse loans.

• Requires lenders to provide borrowers with educational documents from the Attorney General about reverse mortgages, alternatives, and counseling services; prohibits requiring purchase of annuities, investments, or insurance as loan conditions except customary property/casualty and title insurance.

• Mandates a mandatory 3-business-day cooling-off period after borrower acceptance of a written commitment, during which borrowers cannot be required to close or proceed with the loan and cannot waive this right.

• Establishes when reverse mortgages become due and payable: upon property sale, borrower ceasing to occupy home as principal residence, reaching a fixed maturity date, borrower default, or death of borrower or last surviving joint tenant.

• Restricts third parties from receiving loan proceeds (except spouses/partners and bona fide origination fees) and prohibits lenders from sharing borrower information with annuity sellers; violations enforceable by the Attorney General as unlawful practices under consumer fraud law.