State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_53 > GS_53-270_1

§ 53‑270.1.  Contractsfor shared appreciation or shared value.

(a)        A lender and aborrower may agree, in writing, that in addition to the principal and anyinterest accruing on the outstanding balance of a reverse mortgage loan, thelender may receive:

(1)        Shared appreciationif it is in an amount not exceeding ten percent (10%) of the increase in thevalue of the property from the date of origination of the reverse mortgage loanto the date of loan repayment; or

(2)        Shared value if itis in an amount not exceeding ten percent (10%) of the value of the property atthe time of repayment of the reverse mortgage loan; and

(3)        The sharedappreciation or shared value is paid in conjunction with a loan that:

a.         Is outstanding for24 months or longer; and

b.         Either (i) isguaranteed or insured by an agency of the federal government, or (ii) has beenoriginated under a reverse mortgage program approved by Fannie Mae, theGovernment National Mortgage Association, or the Federal Home Loan MortgageCorporation, provided the loan is sold to one of those agencies or enterpriseswithin 90 days of loan closing, or has been originated under a reverse mortgageprogram of a person, firm, or corporation approved as an authorized lender bythe Commissioner; and

c.         Provides that theborrower receives additional economic benefit in exchange for paying the sharedappreciation or shared value, including, but not limited to, larger monthlypayments or a larger line of credit. The specific nature of the economicbenefit shall be provided to the Commissioner with the other information aboutthe reverse mortgage program required under G.S. 53‑264 for disseminationto the reverse mortgage counselors; and

d.         At least 14 daysprior to closing, the borrower receives a disclosure that explains theadditional costs and benefits of shared appreciation or shared value andcompares those costs and benefits with a comparable loan without sharedappreciation or shared value. These costs and benefits shall also be includedin the information required under G.S. 53‑264.

(b)        Under subdivisions(a)(1) and (2) of this section, in determining the value of the property at thetime of origination of the reverse mortgage loan and at the time of repayment,if repayment is not in conjunction with the sale of the property, the lenderand the borrower shall have the right to obtain an appraisal from an appraiserlicensed or certified in accordance with G.S. 93E‑1‑6. If theappraisals differ, and the parties cannot agree on a value, an average of theappraisals shall determine the value. If the borrower does not desire anappraisal, the lender may obtain an appraisal, which shall be controlling.Notwithstanding the foregoing, the parties may agree in writing to waive theserequirements and agree upon the value of the property.

(c)        If repayment ismade in conjunction with the sale of the property, the actual and reasonablecosts of sale shall be deducted from the value of the property prior to thecalculation of the amount of shared appreciation or shared value. (1998‑116, s. 2; 2001‑487,s. 14(b).)