The letter was signed by NRMLA President Steve Irwin.
“We commend sponsors for introducing this bill as it provides much-needed clarity and relief from general rules that directly support the primary function of the mortgage product,” it reads.
The NRMLA said the current law — while intended to protect consumers from traditional second mortgages — is inconsistent with how reverse mortgages are structured or used by older homeowners.
The bill was introduced in the New Jersey Senate in early December.
Why NRMLA says change is necessary
Reverse mortgages allow homeowners — typically age 62 and older — to turn home equity into cash without making monthly payments.
The loan balance is usually paid off when the borrower sells the home, moves out permanently or dies.
NRMLA argued that this basic design conflicts with New Jersey’s requirement that second mortgage loans be repaid in equal installments, even if the requirement is unenforceable.
“The primary purpose of a reverse mortgage is to transform home equity for older homeowners. This is inherently inconsistent with the ‘equity payment’ requirement under current law,” the letter continued. “By design, reverse mortgages do not require monthly payments, so a requirement for specific payment amounts or repayment periods on reverse mortgages is not appropriate.”
Leaving the law unchanged could spell unintended consequences for lenders and borrowers alike — including legal uncertainty that could discourage lenders from offering reverse mortgage products in the state, NRMLA added.
“The current requirement, even if enforced, creates significant ambiguities that could prevent lenders from offering these products,” NRMLA said. “SB 4970 removes this ambiguity, ensuring continued access to these special financial options, which are often important in financing retirement, health care, and home services.”
Bill background and policy details
As introduced, SB 4970 amends Section 28 of PL2009, c.53, which governs the form and payment terms of second mortgage loans in New Jersey.
Current law requires those loans to be repaid in equal installments over equal periods of time – measured in weeks or months.
The bill would spell out specific exceptions for foreclosures, as defined under federal law in the Truth in Lending Act.
All other disclosures, documentation requirements and notices of secondary foreclosures will remain unchanged.
Lawmakers who sponsored the measure described it as a technical clarification rather than a rollback of consumer protections.
The law will take effect immediately upon its enactment.
Contact federal reverse mortgage programs
NRMLA also highlighted the importance of the bill The Federal Housing Administration’s Home Equity Conversion Mortgage Program — the nation’s leading mortgage product.
“This is closely related to the Federal Housing Administration Home Equity Conversion Mortgage (HECM) program, which includes a second loan in favor of the Department of Housing and Urban Development,” the letter said. “This second mortgage is only valid if the Mortgagee under the first mortgage is financially insolvent and/or out of business.”
The NRMLA urged the lawmakers to act immediately.
“We believe SB 4970 is an important technical amendment that recognizes the unique and beneficial nature of reverse mortgages,” the organization said. “By exempting reverse mortgages from non-essential regulatory requirements, the bill promotes financial stability for New Jersey seniors without sacrificing any meaningful consumer protections. We urge the House Commerce Committee to report this bill properly and encourage its swift passage.”
The NRMLA represents more than 300 member companies and claims that its members originate more than 90% of the loan repayments nationwide.
