Skip to main content
Colorado General AssemblyToggle Main Menu
Agency NameToggle Agency Menu

Reverse Mortgage Repayment When Home Uninhabitable

Concerning the suspension of a reverse mortgage from the repayment requirement when a force majeure renders the subject property uninhabitable as a principal residence.
2023 Regular Session
Financial Services & Commerce
Bill Summary

Under current law, the borrower in a reverse mortgage transaction is relieved of the obligation to occupy the subject property as a principal residence (principal-residence requirement) if the borrower is temporarily absent for up to 60 days or, if the property is adequately secured, for up to one year. The bill adds a third exception to the principal-residence requirement to cover situations in which a natural disaster or other serious incident beyond the borrower's control (force majeure) renders the property uninhabitable, and in which case the reverse mortgage does not become due and payable if:

  • The borrower is engaged in repairing the home with the intent of reoccupying the home as a principal residence offering the home for sale, or selling the home;
  • The borrower stays in communication with the lender while the home is being repaired;
  • The borrower complies with all other terms and conditions of the reverse mortgage; and
  • Repairing or rebuilding of the home does not reduce the lender's security.

The maximum time allowable for a temporary absence under these circumstances is 5 years. The bill requires that the lender disclose these conditions suspending the repayment requirement on a reverse mortgage due to a force majeure to the borrower in writing at the time of closing.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)




Bill Text

Email addresses for the Colorado legislature have changed from the domain to the domain on December 1, 2022. Details