Colorado Governor Jared Polis signed legislation (House Bill 1266) into law on June 7 that provides new protections for reverse mortgage borrowers who have to vacate their properties after a natural disaster temporarily.
The bill was sponsored by Rep. Kyle Brown (pictured) after one of his constituents nearly lost his home to foreclosure after it was rendered uninhabitable following the Marshall Fire in 2021.
Effective immediately, the new law prevents a HECM from being called due and payable because of a temporary absence from the home due to a natural disaster as long as:
- The borrower is engaged in repairing the home with the intent of reoccupying the home as a principal residence 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 the home does not reduce the lender’s security.
NRMLA worked closely with Rep. Polis, the Colorado Mortgage Bankers Association, and several Colorado-based NRMLA members to draft a bill acceptable to the industry and the Department of Housing and Urban Development.