6-1701. Definitions

In this chapter, unless the context otherwise requires:

1. "Agreement" means the document that on execution obligates the borrower and originator under the reverse mortgage.

2. "Dwelling" means a residence that is designed principally for at least one and not more than four families in which the borrower occupies at least one of the units.

3. "Housing counseling agency" means an agency that is approved by the United States department of housing and urban development to provide reverse mortgage counseling.

4. "Originator" means a person who regularly makes or brokers reverse mortgages, including a creditor or broker.

5. "Reverse mortgage" means a nonrecourse consumer credit obligation to which all of the following apply:

(a) A mortgage, deed of trust or equivalent consensual security interest securing one or more advances is created in the borrower's principal dwelling.

(b) Any principal, interest or shared appreciation or equity is due and payable only after the borrower dies, the dwelling is transferred or the borrower ceases to occupy the dwelling as a principal dwelling. This subdivision does not apply in the case of default.

(c) Cash advances may be provided to a borrower:

(i) Based on the equity or the value in the borrower's owner occupied principal residence.

(ii) If loan proceeds are used by the borrower to purchase the borrower's dwelling that secures the reverse mortgage.

(d) The consumer credit obligation is not a home equity conversion mortgage insured by the federal housing authority.