According to ReverseMortgageDaily.com, a recent amendment to the High Risk Home Loan Act (HRHLA) ensures that high risk home loans do not include reverse mortgages.
“The purpose of this Act is to protect borrowers who enter into high risk home loans from abuse that occurs in the credit marketplace when creditors and brokers are not sufficiently regulated in Illinois,” states the HRHLA. “This Act is to be construed as a borrower protection statute for all purposes.”
The HRHLA describes a high risk loan as one wherein closing costs exceed more than 5 percent of the total loan amount. The new amendment says that high risk loans do not include reverse mortgages, thus making it legal in Illinois to obtain such a loan.
According to CNBC.com, a reverse mortgage is available to homeowners 62 years of age or older who own their home outright or have a small amount of payments left. The reverse mortgage taps into the equity of the home, providing a loan of up to 60 percent of its overall value in most cases.
The bill has been assigned to Financial Institutions and a hearing is scheduled for Thursday, March 10.