A reverse mortgage secures a home loan in which the homeowner receives monthly payments or a lump-sum payment from the lender, and the loan is repaid when the property is sold, often after the owner’s death. It’s often used by elderly people to secure cash flow from the equity in their home.
A new law specifies that a reverse mortgage foreclosure is subject to a 12-month redemption period instead of six months as with conventional mortgages. A redemption period is the time after the foreclosure sale during which the owner can regain ownership by paying off the mortgage loan in full.
The law also streamlines certain procedures in real estate law that will make it cheaper and easier to correct title defects and terminates purchase agreements that the buyer has failed to fulfill. It clarifies definitions to be used in relationship to the federal estate tax law changes that took effect Feb. 17, 2010, for deaths occurring in 2010 or after. It also delays the effective date of unrelated 2010 legislation that extends the time limits for collecting unpaid child support judgments.
The law is sponsored by Rep. Doug Wardlow (R-Eagan) and Sen. Linda Scheid (DFL-Brooklyn Park).
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