"NRMLA said the current statute while aimed at protecting consumers in traditional second-lien lending does not align with how reverse mortgages are structured or used by older homeowners. The bill was introduced in the New Jersey Senate in early December. Reverse mortgages allow homeowners typically age 62 and older to convert home equity into cash without making monthly mortgage payments. Loan balances are generally repaid when the borrower sells the home, moves out permanently or dies."
"The fundamental purpose of a reverse mortgage is to convert home equity into cash flow for senior homeowners. This is inherently incompatible with the substantially equal payment' requirement under the current law, the letter continued. By 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."
SB 4970 amends Section 28 of P.L.2009, c.53 to resolve ambiguity about repayment forms for secondary mortgage loans. The bill removes the substantially equal-installment requirement that conflicts with reverse mortgage structures, which do not require monthly payments and are repaid when borrowers sell, move out permanently, or die. Reverse mortgages allow homeowners typically age 62 and older to convert home equity into cash without monthly mortgage payments. The current equal-payment requirement creates legal uncertainty that could discourage lenders from offering reverse mortgages in New Jersey. Removing the ambiguity ensures continued access to financing often essential for retirement, healthcare, and in-home services.
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