South Carolina § 29-4-30 - Rules governing reverse mortgage loans.

§ 29-4-30. Rules governing reverse mortgage loans.

Reverse mortgage loans are governed by these rules, without regard to the requirements set out elsewhere for other types of mortgage transactions:

(1) Payment in whole or in part is permitted without penalty at any time during the period of the loan.

(2) An advance made under a reverse mortgage and interest on the advances have priority over a lien filed after the closing of a reverse mortgage and after the filing of the lien.

(3) A reverse mortgage may provide for an interest rate which is fixed or adjustable and may also provide for interest that is contingent on the value of the property including appreciation at loan maturity.

(4) If a reverse mortgage provides for periodic advances to a borrower, the advances may not be reduced in amount or number based on an adjustment in the interest rate.

(5) For purposes of default under this chapter:

(a) A lender defaults in its obligation to make loan advances when after having received written notification from the borrower that an advance has not been received within fifteen days of its due date, the lender fails to cure the default within fifteen days of receiving the notification. Upon default the lender forfeits all future rights to collect interest. A lender avoids the forfeiture of interest if the lender can show a good faith effort to comply with its obligations under the terms of the loan documents.

(b) If a default is not cured in accordance with subitem (a), the borrower may file a complaint with the Department of Consumer Affairs and the lender must respond to any inquiry made by the Department of Consumer Affairs.

(c) Upon wilful default by a lender which results in forfeiture of interest under this item, the Department of Consumer Affairs is authorized to take action necessary to protect the interests of the borrower including bringing an action in circuit court for enforcement of the contract.

(6) The recordation tax on reverse mortgages may not exceed the actual cost of recording the mortgage.

(7) The mortgage only may become due and payable upon the occurrence of one of the following:

(a) the home securing the loan is sold;

(b) all borrowers cease occupying the home as a principal residence;

(c) any fixed maturity date agreed to by the lender and the borrower is reached; or

(d) an event occurs which is specified in the loan documents and which jeopardizes the lender's security.

(8) The repayment requirement is also expressly subject to the following additional conditions:

(a) temporary absences from the home not exceeding sixty consecutive days do not cause the mortgage to become due and payable;

(b) temporary absences from the home exceeding sixty consecutive days but less than one year do not cause the mortgage to become due and payable so long as the borrower has taken prior action which secures the home in a manner satisfactory to the lender;

(c) the lender's right to collect reverse mortgage proceeds is subject to the applicable statute of limitations for loan contracts. Notwithstanding the applicable statute of limitations for loan contracts, the statute of limitations commences on the date that the mortgage becomes due and payable;

(d) the lender must prominently disclose any interest or other fees to be charged during the period that commences on the date that the mortgage becomes due and payable and ends when repayment in full is made.

HISTORY: 1994 Act No. 376, SECTION 1.