1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
Senate Bill 534
Sponsored by Senator PATTERSON (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced.The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: Lets a lender who gives a lump sum as the loan in a reverse mortgage get only that part
of the total equity in the house to which the lump sum is equal at the time the lender gives the lump
sum. (Flesch Readability Score: 61.4)
Allows a lender that, in a reverse mortgage, provides a lump sum in exchange for a claim upon
the equity of a property to claim as the lender’s equity, and receive as proceeds in a sale of the
property, not more than the percentage of the total equity in the property to which the lump sum
is equivalent on the date the lender provides the lump sum.
Declares an emergency, effective on passage.
A BILL FOR AN ACT
Relating to allowable claims of equity in a property that is subject to a reverse mortgage; creating
new provisions; amending ORS 86A.196; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 86A.196 is amended to read:
86A.196. (1) As used in this section:
(a) “Clear and conspicuous” means:
(A) In larger type than the surrounding text or in a type, color or font that contrasts
with surrounding text of the same size or set off from surrounding text by symbols or other
marks in a manner that draws attention; or
(B) Spoken in a volume and cadence that is sufficient to enable a reasonable person to
hear and understand.
(b) “Reverse mortgage” means a residential mortgage transaction in which the lender
provides loan proceeds to a borrower in a lump sum or in monthly installments with the
expectation that the borrower will repay the loan from the proceeds of a sale or transfer of
the real property that secures the loan.
[(1)] (2) Before entering into an agreement with a borrower for a reverse mortgage, a lender
shall notify the borrower in writing of the provisions of ORS 311.700 (2).
[(2)(a)] (3) In any advertisement, solicitation or communication that a lender or an agent or af-
filiate of the lender intends as an inducement for a person to apply for or enter into a contract for
a reverse mortgage, the lender or the agent or affiliate of the lender shall include a clear and con-
spicuous summary of the terms of the reverse mortgage. The summary must, at a minimum, disclose
[these] the following provisions of the reverse mortgage loan contract to the extent that the con-
tract includes the provision:
[(A)] (a) At the conclusion of the term of the reverse mortgage loan contract, some or all of the
equity in the property that is the subject of the reverse mortgage no longer belongs to the person
and the person may need to sell or transfer the property to repay the proceeds of the reverse
NOTE:Matter in boldfaced type in an amended section is new; matter [italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 3093 SB534
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
mortgage from the proceeds of the sale or transfer or the person must otherwise repay the reverse
mortgage, with interest, from the person’s other assets.
[(B)] (b) The lender will charge an origination fee, a mortgage insurance premium, closing costs
or servicing fees for the reverse mortgage, all or any of which the lender will add to the balance
of the reverse mortgage loan.
[(C)] (c) The balance of the reverse mortgage loan grows over time and the lender charges in-
terest on the outstanding loan balance.
[(D)] (d) The person retains title to the property that is the subject of the reverse mortgage until
the person sells or transfers the property and is therefore responsible for paying property taxes,
insurance, maintenance and related taxes. Failing to pay these amounts may cause the reverse
mortgage loan to become due immediately and may subject the property to a tax lien or other
encumbrance or to possible foreclosure.
[(E)] (e) Interest on a reverse mortgage is not deductible from the person’s income tax return
until the person repays all or part of the reverse mortgage loan.
(4) A lender that in a reverse mortgage provides a lump sum in exchange for a claim
upon the equity of a property may claim as the lender’s equity, and receive as proceeds in
a sale of the property, not more than the percentage of the total equity in the property to
which the lump sum is equivalent on the date the lender provided the lump sum. A provision
in a contract for a reverse mortgage that entails or allows for a claim on the equity of the
property that is more than the percentage described in this subsection is void and without
effect.
[(b) As used in paragraph (a) of this subsection:]
[(A) “Clear and conspicuous” means:]
[(i) In larger type than the surrounding text or in a type, color or font that contrasts with sur-
rounding text of the same size or set off from surrounding text by symbols or other marks in a manner
that draws attention; or]
[(ii) Spoken in a volume and cadence that is sufficient to enable a reasonable person to hear and
understand.]
[(B) “Reverse mortgage” means a residential mortgage transaction in which the lender provides
loan proceeds to a borrower in a lump sum or in monthly installments with the expectation that the
borrower will repay the loan from the proceeds of a sale or transfer of the real property that secures
the loan.]
[(3)(a)] (5)(a) A lender [who] that has a contract with a person for a reverse mortgage each year
shall send a notice with the information specified in subsection [(2)(a)(D)] (3)(d) of this section to
the person or to any escrow agent, title insurance company or other agent that pays property taxes
from an escrow account on the person’s behalf. The lender shall send the notice to the person at the
person’s last-known address or to the escrow agent, title insurance company or other agent at the
address the lender has in the lender’s records for the escrow agent, title insurance company or other
agent. The lender shall send the notice at least 60 calendar days before property taxes are due for
the property that is subject to the reverse mortgage.
(b) Paragraph (a) of this subsection does not apply to a contract for a reverse mortgage that
includes a reserve account for taxes.
[(4)] (6) Subsections [(2)] (3) and [(3)] (5) of this section do not apply to a financial institution,
as defined in ORS 706.008, or to a licensee, as defined in ORS 725.010.
SECTION 2. The amendments to ORS 86A.196 by section 1 of this 2025 Act apply to con-
[2] SB534
1
2
3
4
5
6
tracts for a reverse mortgage that a borrower enters into with a lender on or after the ef-
fective date of this 2025 Act.
SECTION 3. This 2025 Act being necessary for the immediate preservation of the public
peace, health and safety, an emergency is declared to exist, and this 2025 Act takes effect
on its passage.
[3]