The Florida Senate

697.01  Instruments deemed mortgages.

697.02  Nature of a mortgage.

697.03  Cooperative association mortgages.

697.04  Future advances may be secured.

697.05  Balloon mortgages; scope of law; definition; requirements as to contents; penalties for violations; exemptions.

697.06  Prepayment of note.

697.07  Assignment of rents.

697.08  Equity skimming.

697.10  Liability for error in mortgage deed or note.

697.20  Florida Home Equity Conversion Act; short title.

697.201  Home equity conversion mortgagee consortium.

697.202  Definitions of terms used in ss. 697.20-697.206.

697.203  Home Equity Conversion Mortgage Guaranty Fund.

697.204  Home equity conversion mortgage insurance.

697.205  Recoveries from the trust fund.

697.206  Department of Insurance; powers and duties.

697.01  Instruments deemed mortgages.--

(1)  All conveyances, obligations conditioned or defeasible, bills of sale or other instruments of writing conveying or selling property, either real or personal, for the purpose or with the intention of securing the payment of money, whether such instrument be from the debtor to the creditor or from the debtor to some third person in trust for the creditor, shall be deemed and held mortgages, and shall be subject to the same rules of foreclosure and to the same regulations, restraints and forms as are prescribed in relation to mortgages.

(2)  Provided, however, that no such conveyance shall be deemed or held to be a mortgage, as against a bona fide purchaser or mortgagee, for value without notice, holding under the grantee.

History.--s. 1, Jan. 30, 1838; s. 1, ch. 525, 1853; RS 1981; GS 2494; RGS 3836; CGL 5724; s. 12, ch. 20954, 1941.

697.02  Nature of a mortgage.--A mortgage shall be held to be a specific lien on the property therein described, and not a conveyance of the legal title or of the right of possession.

History.--ss. 1, 2, ch. 525, 1853; RS 1982; GS 2495; RGS 3837; CGL 5725.

697.03  Cooperative association mortgages.--

(1)  Hereafter, any mortgage or other instrument given by a cooperative association for the purpose of creating a lien on real or personal property, or both, may secure not only existing indebtedness, but also such future advances, whether obligatory or otherwise, as are made within 10 years from the date thereof. Such lien, as to third persons without actual notice thereof, shall be valid as to all such indebtedness and future advances from the time the mortgage or other instrument is filed for record as provided by law. The total amount of indebtedness that may be so secured may decrease or increase from time to time, but the total unpaid balance so secured at any one time shall not exceed a maximum principal amount which must be specified therein, plus interest thereon, and any disbursements made for the payment of taxes, levies, or insurance on the property covered by the lien, with interest on such disbursements.

(2)  A "cooperative association" within the meaning of this section means any corporation formed, reorganized or brought under any general or special law of this or any other state as a cooperative association.

(3)(a)  A mortgage executed by a cooperative association may cover and create a valid mortgage lien upon stocks or inventories of farm supplies and processed agricultural products, which stocks and inventories the mortgagor may be permitted to retain in possession and sell in the usual course of business. The lien of such mortgage shall be lost on such of the mortgaged property as is sold in the usual course of business up to the time a receiver, who shall be appointed as a matter of right upon application of the mortgagee by the court having jurisdiction of a proceeding instituted to foreclose said mortgage, shall have taken possession of the mortgaged property, and shall without further act, writing or formality attach to any proceeds of the sale thereof, including but not limited to accounts receivable arising from sale of the mortgaged property, but a purchaser of mortgaged property from any such mortgagor, not having actual notice of the attaching of such lien to said proceeds, shall not be liable for any payments made to the person who, except for the provisions of this subsection, would be entitled thereto; provided, however, that such lien as to said accounts receivable shall be subject and subordinate to assignments of any such accounts receivable which are protected assignments under the provisions of chapter 679. If so provided in the mortgage, the lien thereof shall, in addition to the stocks and inventories originally mortgaged, attach to farm supplies and processed agricultural products acquired after the execution and delivery of such mortgage.

(b)  If so stipulated therein, such mortgage may secure not only existing indebtedness of the mortgagor to the mortgagee but also such future advances, whether obligatory or otherwise, as are made by the mortgagee to the mortgagor within 10 years from the date of such mortgage to the same extent as if such future advances were made on the date of the execution of such mortgage although there may be no advance made at the time of the execution of such mortgage and although there may be no indebtedness outstanding at the time any advance is made. Such lien shall be valid as to all such indebtednesses and future advances from the time the mortgage is filed for record as provided by law whether such stocks and inventories shall be in existence at the time of the execution of the mortgage or at the time of filing such mortgage for record or shall come into existence subsequent thereto or shall be subsequently acquired by the mortgagor.

(c)  The total amount of the indebtedness that may be so secured may decrease or increase from time to time but the total unpaid balance so secured at the time shall not exceed a maximum principal amount which must be specified in such mortgage, plus interest thereon, together with costs and attorney's fees, and any disbursements made for the payment of taxes, levies, assessments, or insurance on the property covered by the mortgage, with interest on such disbursements.

(d)  Such mortgage shall not be invalid or fraudulent against creditors because the mortgagor is permitted to retain in possession and sell the mortgaged property in the usual course of business or by reason of liberty in the mortgagor to use, commingle, or dispose of any such stocks or inventories or the proceeds of the sale of such stocks or inventories or by reason of the failure of the mortgagee to require the mortgagor to account for such proceeds or to replace mortgaged property.

(e)  The provisions of this subsection shall not be construed as impairing, limiting, or otherwise affecting the rights of a lender to, or other creditor of a mortgagor of such farm supplies or processed agricultural products, to deal with and make loans to such mortgagor upon the security of assignments of accounts receivable arising or to arise on account of the sale by the mortgagor of the mortgaged property.

(f)  This subsection shall not apply to any mortgages made on or after the effective date in this state of the Uniform Commercial Code.

History.--ss. 1, 2, ch. 20248, 1941; s. 1, ch. 65-540; s. 167, ch. 71-355.

697.04  Future advances may be secured.--

(1)(a)  Any mortgage or other instrument given for the purpose of creating a lien on real property, or on any interest in a leasehold upon real property, may, and when so expressed therein shall, secure not only existing indebtedness, but also such future advances, whether such advances are obligatory or to be made at the option of the lender, or otherwise, as are made within 20 years from the date thereof, to the same extent as if such future advances were made on the date of the execution of such mortgage or other instrument, although there may be no advance made at the time of the execution of such mortgage or other instrument and although there may be no indebtedness outstanding at the time any advance is made. Such lien, as to third persons without actual notice thereof, shall be valid as to all such indebtedness and future advances from the time the mortgage or other instrument is filed for record as provided by law.

(b)  The total amount of indebtedness that may be so secured may decrease or increase from time to time, but the total unpaid balance so secured at any one time shall not exceed a maximum principal amount which must be specified in such mortgage or other instrument, plus interest thereon; except that the mortgagor or her or his successor in title is authorized to file for record a notice limiting the maximum principal amount that may be so secured to an amount not less than the amount actually advanced at the time of such filing, provided a copy of such filing is also sent by certified mail to the mortgagee and, in the case of an open-end or revolving credit agreement, the mortgagor surrenders to the mortgagee all credit cards, checks, or other devices used to obtain further advances at the time of filing the notice, which notice shall be recorded and shall be effective from the date of filing. Notwithstanding the foregoing, any increase in the principal balance as a result of negative amortization or deferred interest shall be secured by the mortgage; and any disbursements made for the payment of taxes, levies, or insurance on the property covered by the lien, and any advances or disbursements made under a construction loan agreement referred to in a mortgage to enable completion of the contemplated improvement, with interest on such advances or disbursements, are secured by the mortgage or other instrument even though the mortgage or other instrument does not provide for future advances, or the advances or disbursements cause the total indebtedness to exceed the face amount stated in the instrument. This subsection does not apply to any mortgages, shipping contracts, or other instruments made and given by naval stores operators and producers to secure existing loans and future advances by naval stores factors.

(2)  As against the rights of creditors or subsequent purchasers for a valuable consideration, actual notice or record notice of advances to be made at the option of the lender, under the terms of such mortgage or other instrument, shall be valid only as to such advances as are to be made within 20 years from the date of such mortgage or other instrument; however, this subsection does not apply to any mortgages, shipping contracts, or other instruments made and given by naval stores operators and producers to secure existing loans and future advances by naval stores factors. Notwithstanding anything in this section to the contrary, future advances made pursuant to the terms of a reverse mortgage loan (as defined in s. 103(bb) of the federal Truth in Lending Act, 15 U.S.C. ss. 1601 et seq.) shall be secured to the same extent as if such future advances were made on the date of execution of the mortgage, irrespective of the date of any such advance.

(3)  Any such mortgage or other instrument shall be prior in dignity to all subsequent encumbrances, including statutory liens, except landlords' liens.

History.--ss. 1, 2, 3, ch. 20846, 1941; s. 1, ch. 28116, 1953; ss. 1, 2, ch. 61-135; s. 3, ch. 63-212; s. 1, ch. 70-34; s. 11, ch. 83-267; s. 10, ch. 83-311; s. 215, ch. 92-303; s. 7, ch. 96-210; s. 1761, ch. 97-102.

697.05  Balloon mortgages; scope of law; definition; requirements as to contents; penalties for violations; exemptions.--

(1)  Any conveyance, obligation conditioned or defeasible, bill of sale, or other instrument of writing conveying or selling real property for the purpose or with the intention of securing the payment of money, whether such instrument is from the debtor to the creditor or from the debtor to some third person in trust for the creditor, shall be deemed and held to be a mortgage and shall be subject to the provisions of this section.

(2)(a)1.  Every mortgage in which the final payment or the principal balance due and payable upon maturity is greater than twice the amount of the regular monthly or periodic payment of the mortgage shall be deemed a balloon mortgage; and, except as provided in subparagraph 2., there shall be printed or clearly stamped on such mortgage a legend in substantially the following form:

THIS IS A BALLOON MORTGAGE AND THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS $_____, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS MADE BY THE MORTGAGEE UNDER THE TERMS OF THIS MORTGAGE.

2.  In the case of any balloon mortgage securing the payment of an obligation the rate of interest on which is variable or is to be adjusted or renegotiated periodically, where the principal balance due on maturity cannot be calculated with any certainty:

a.  The principal balance due upon maturity shall be calculated on the assumption that the initial rate of interest will apply for the entire term of the mortgage;

b.  The legend shall disclose that the stated principal balance due upon maturity is an approximate amount based on such assumption; and

c.  A legend in substantially the following form suffices to comply with the requirements of this section:

THIS IS A BALLOON MORTGAGE SECURING A VARIABLE (adjustable; renegotiable) RATE OBLIGATION. ASSUMING THAT THE INITIAL RATE OF INTEREST WERE TO APPLY FOR THE ENTIRE TERM OF THE MORTGAGE, THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY WOULD BE APPROXIMATELY $_____, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS MADE BY THE MORTGAGEE UNDER THE TERMS OF THIS MORTGAGE. THE ACTUAL BALANCE DUE UPON MATURITY MAY VARY DEPENDING ON CHANGES IN THE RATE OF INTEREST.

(b)  This legend, including the principal balance due upon maturity, shall appear at the top of the first page or face sheet of the mortgage and also shall appear immediately above the place for signature of the mortgagor. The legend shall be conspicuously printed or stamped.

(3)  Failure of a mortgagee or creditor or a third party in trust for a mortgagee or creditor to comply with the provisions of this section shall automatically extend the maturity date of such mortgage in the following manner: The mortgagor shall continue to make monthly or periodic payments until the principal and interest which has accrued prior to the time of the balloon payment of the mortgage is paid in full, and the maturity date shall be automatically extended to the date upon which said payments would cause the mortgage debt to be paid in full assuming such payments are made when due upon such monthly or periodic schedule. The mortgagor shall be entitled to prepay the mortgage without penalty during the extension period.

(4)  This section does not apply to the following:

(a)  Any mortgage in effect prior to January 1, 1960;

(b)  Any first mortgage, excluding a mortgage in favor of a home improvement contractor defined in s. 520.61(11) the execution of which is required solely by the terms of a home improvement contract which is governed by the provisions of ss. 520.60-¹520.992;

(c)  Any mortgage created for a term of 5 years or more, excluding a mortgage in favor of a home improvement contractor defined in s. 520.61(11) the execution of which is required solely by the terms of a home improvement contract which is governed by the provisions of ss. 520.60-¹520.992;

(d)  Any mortgage, the periodic payments on which are to consist of interest payments only, with the entire original principal sum to be payable upon maturity;

(e)  Any mortgage securing an extension of credit in excess of $500,000;

(f)  Any mortgage granted in a transaction covered by the federal Truth in Lending Act, 15 U.S.C. ss. 1601 et seq., in which each mortgagor thereunder is furnished a Truth in Lending Disclosure Statement that satisfies the requirements of the federal Truth in Lending Act; or

(g)  Any mortgage granted by a purchaser to a seller pursuant to a written agreement to buy and sell real property which provides that the final payment of said mortgage debt will exceed the periodic payments thereon.

History.--ss. 1, 2, 3, 4, 5, ch. 59-356; s. 1, ch. 61-472; ss. 12, 13, ch. 83-267; ss. 11, 12, ch. 83-311; s. 1, ch. 86-39.

¹Note.--Repealed by s. 31, ch. 87-91.

697.06  Prepayment of note.--Any note which is silent as to the right of the obligor to prepay the note in advance of the stated maturity date may be prepaid in full by the obligor or her or his successor in interest without penalty.

History.--s. 1, ch. 77-318; s. 1, ch. 87-351; s. 1, ch. 88-7; s. 774, ch. 97-102.

697.07  Assignment of rents.--

(1)  A mortgage or separate instrument may provide for an assignment of rents of real property or any interest therein as security for repayment of an indebtedness.

(2)  If such an assignment is made, the mortgagee shall hold a lien on the rents, and the lien created by the assignment shall be perfected and effective against third parties upon recordation of the mortgage or separate instrument in the public records of the county in which the real property is located, according to law.

(3)  Unless otherwise agreed to in writing by the mortgagee and mortgagor, the assignment of rents shall be enforceable upon the mortgagor's default and written demand for the rents made by the mortgagee to the mortgagor, whereupon the mortgagor shall turn over all rents in the possession of the mortgagor at the time of the written demand or collected thereafter (the "collected rents") to the mortgagee less payment of any expenses authorized by the mortgagee in writing.

(4)  Upon application by the mortgagee or mortgagor, in a foreclosure action, and notwithstanding any asserted defenses or counterclaims of the mortgagor, a court of competent jurisdiction, pending final adjudication of any action, may require the mortgagor to deposit the collected rents into the registry of the court, or in such other depository as the court may designate. However, the court may authorize the use of the collected rents, before deposit into the registry of the court or other depository, to:

(a)  Pay the reasonable expenses solely to protect, preserve, and operate the real property, including, without limitation, real estate taxes and insurance;

(b)  Escrow sums required by the mortgagor or separate assignment-of-rents instrument; and

(c)  Make payments to the mortgagee.

The court shall require the mortgagor to account to the court and the mortgagee for the receipt and use of the collected rents and may also impose other conditions on the mortgagor's use of the collected rents.

(5)  Nothing herein shall preclude the court from granting any other appropriate relief regarding the collected rents pending final adjudication of the action. The undisbursed collected rents remaining in the possession of the mortgagor or in the registry of the court, or in such other depository as ordered by the court, shall be disbursed at the conclusion of the action in accordance with the court's final judgment or decree.

(6)  The court shall expedite the hearing on the application by the mortgagee or mortgagor to enforce its assignment of rents. The procedures authorized by this statute are in addition to any other rights or remedies of the mortgagee or mortgagor under the mortgage, separate assignment-of-rents instrument, promissory note, at law, or in equity.

(7)  Nothing herein shall alter the lien priorities, rights, or interests among mortgagees or other lienholders or alter the rights of the mortgagee under the mortgage, separate assignment-of-rents instrument, at law or in equity, concerning rents collected before the written demand by the mortgagee. A mortgagee's enforcement of its assignments of rents under this statute shall not operate to transfer title to any rents not received by the mortgagee.

(8)  Any moneys received by the mortgagee pursuant to this statute shall be applied by the mortgagee in accordance with the mortgage, separate assignment-of-rents instrument, or promissory note, and the mortgagee shall account to the mortgagor for such application.

History.--s. 1, ch. 87-217; s. 1, ch. 93-88; s. 13, ch. 93-250; s. 12, ch. 97-93.

697.08  Equity skimming.--

(1)  It is unlawful for any person, with intent to defraud the owner of real property, to engage in equity skimming, which is, to:

(a)  Purchase, within a 3-year period, two or more single-family dwellings, two-family dwellings, three-family dwellings, or four-family dwellings, or a combination thereof, that are subject to a loan that is in default at the time of purchase or within 1 year after the time of purchase, which loan is secured by a mortgage or deed of trust;

(b)  Fail to make payments under the mortgage or deed of trust as the payments become due, regardless of whether the purchaser is obligated on the loan; and

(c)  Apply, or authorize the application of, rents from such dwellings for the person's own use.

(2)  A violation of subsection (1) constitutes a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

History.--s. 1, ch. 94-288; s. 775, ch. 97-102.

697.10  Liability for error in mortgage deed or note.--In any action relating to real property, if the court shall find that any person has prepared an instrument which due to an inaccurate or improper legal description impairs another person's title to real property, the court may award to the prevailing party all costs incurred by her or him in such action, including reasonable attorney's fees, and in addition thereto may award to the prevailing party all actual damages that she or he may have sustained as a result of such impairment of title.

History.--s. 2, ch. 84-52; s. 2, ch. 86-39; s. 776, ch. 97-102.

697.20  Florida Home Equity Conversion Act; short title.--Sections 697.20-697.206 shall be known and may be cited as the "Florida Home Equity Conversion Act."

History.--s. 4, ch. 84-251.

697.201  Home equity conversion mortgagee consortium.--It is the intent of the Legislature to encourage the use of home equity conversion plans in the private sector. In order to decrease the risks to individual mortgagees while instilling confidence among elderly homeowners in home equity conversion mortgages, the Legislature encourages the creation of a consortium of home equity conversion mortgagees who will participate in underwriting home equity conversion mortgages.

History.--s. 4, ch. 84-251.

697.202  Definitions of terms used in ss. 697.20-697.206.--As used in ss. 697.20-697.206, the term:

(1)  "Consortium" means two or more mortgagees who jointly negotiate and agree to provide home equity conversion plans to elderly homeowners, on agreed-upon terms and conditions.

(2)  "Department" means the Department of Insurance.

(3)  "Elderly homeowner" means any homeowner who is 70 years of age or older. If a home is jointly owned, both homeowners will be deemed elderly homeowners for purposes of ss. 697.20-697.206 if at least one of the joint homeowners is 70 years of age or older.

(4)  "Home equity conversion" means any method by which a homeowner can convert the equity in her or his home into cash without relinquishing occupancy rights.

(5)  "Home equity conversion mortgage" means a reverse mortgage loan made to an elderly homeowner, which mortgage loan is secured by a lien on real property.

(6)  "Mortgagee" means a party who makes a loan for which she or he receives a mortgage.

(7)  "Mortgagor" means a party who receives a loan for which she or he gives a mortgage.

(8)  "Reverse mortgage" means any mortgage under the terms of which a predetermined line of credit is gradually drawn down in lump-sum or periodic payments. Such line of credit includes both a principal amount and an amount of deferred interest.

(9)  "Sponsor" means any private or public person, association, corporation, limited partnership, or other entity which offers, promotes, or finances any plan, program, or instrument for home equity conversion.

History.--s. 4, ch. 84-251; s. 1, ch. 86-267; s. 777, ch. 97-102.

697.203  Home Equity Conversion Mortgage Guaranty Fund.--In order to encourage the involvement of private sector mortgagees in issuing home equity conversion mortgages and in order to provide security for such mortgagees in the event that deficiencies result in such mortgages upon foreclosure, the following home equity conversion mortgage guaranty fund is created:

(1)  There is established in the State Treasury a separate trust fund to be called the "Home Equity Conversion Mortgage Guaranty Fund." All moneys appropriated by the Legislature pursuant to this section, as well as all assessment fees provided herein, shall be deposited into the trust fund. This trust fund shall be administered by the department. The department shall assess against each mortgage insured under s. 697.204 an insurance premium fee, which amount assessed shall be collected by the department at the time the mortgage loan is insured and deposited into the trust fund. Any interest earned from the investment of trust funds shall revert to the trust fund. A portion of such interest may be used by the department to defray the reasonable administrative and personnel costs incurred in implementing the provisions of ss. 697.20-697.206.

(2)  The trust fund shall be disbursed as provided in s. 697.205 to any eligible person who has obtained a deficiency decree in a mortgage foreclosure suit pursuant to chapter 702.

(3)  The department is authorized to:

(a)  Make such investigations and studies of data as may be appropriate to establish and administer the trust fund in accordance with principles of economic and actuarial soundness.

(b)  Adopt and enforce rules consistent with ss. 697.20-697.206 for the administration of the trust fund. Prior to the adoption of any such rule, the department must approve the rule within a reasonable amount of time, not to exceed 14 days. Such rules shall include, but are not to be limited to, rules:

1.  Establishing criteria for insuring mortgage instruments under the guidelines of this section and s. 697.204.

2.  Developing a standard for establishing the insurance premium to be applied to each mortgage, which premium shall be charged against the total loan amount and collected at the origination of the loan, and the amount of which premium shall be based upon data which reflect the capital requirements of the trust fund.

3.  For entering such contracts and agreements, and accepting funds under such contracts and agreements, with federal units of government, public and private entities, and others as the department determines to be necessary or desirable to carry out the purposes of this section.

(4)  The funds of the trust fund shall be invested by the Treasurer pursuant to s. 18.10(2), under the same limitations as other state funds; and the interest earned on the investments shall be deposited to the credit of the trust fund and shall be available for the same purposes as are other moneys deposited in the trust fund.

(5)  After the last mortgage insured prior to July 1, 1993, by the department has been amortized or, if foreclosed, after the deficiency on the mortgage has been reimbursed pursuant to s. 697.205, the trust fund shall cease to exist, and any proceeds remaining in the trust fund shall revert to the General Revenue Fund.

History.--s. 4, ch. 84-251; s. 2, ch. 86-267; s. 1, ch. 87-84; s. 2, ch. 89-287.

697.204  Home equity conversion mortgage insurance.--

(1)  The department is authorized upon application by a home equity conversion mortgagee to insure, as herein provided, any home equity conversion mortgage which is eligible for insurance. The department may make a commitment for the insurance of any such mortgage prior to the date of the execution of, or disbursement with respect to, the mortgage to the extent that the department determines such mortgage is eligible for insurance as provided herein.

(2)  To be eligible for insurance under this section, a mortgage must:

(a)  Be a home equity conversion mortgage which does not involve a principal obligation (including such initial service charges, appraisal fees, inspection fees, and other fees which the department approves and including all interest to be deferred and added to the principal) the anticipated amount of which principal obligation is in excess of 80 percent of the appraised value of the property as of the date the mortgage is accepted for insurance.

1.  If there is no outstanding mortgage or lien on the property, the home equity conversion mortgage must be a first lien on the property.

2.  If there is an outstanding mortgage or lien on the property at the time the home equity conversion mortgage is executed, the home equity conversion mortgage must be a wrap-around mortgage; and such wrap-around home equity conversion mortgage may only be insured for an amount up to 80 percent of the value of the home, less any outstanding liens or mortgages.

(b)  Have been made to, and be held by, a mortgagee who has been approved by the department as responsible and able to service the mortgage properly.

(c)  Provide that the loan may only become due, notwithstanding paragraph (d), upon the sale of the property by the mortgagor, upon the death of the mortgagor, or when the property ceases to be the principal residence of the mortgagor for at least 18 months. If the mortgage is executed by more than one mortgagor as joint owners, this condition will be met only by the deaths of both mortgagors or the simultaneous absences of both mortgagors from the residence for at least 18 months.

(d)  Provide for a term of the loan which is equal to or greater than the life expectancy of the homeowner plus 1 year. If the mortgage is executed by more than one mortgagor as joint owners, the term of the loan shall be equal to or greater than the life expectancy of the younger mortgagor plus 1 year. As used in this section, the term "term" is used for purposes of determining the payments to be made to the mortgagor based on the predetermined line of credit. A mortgagee may not demand payment on or foreclose upon a reverse mortgage during or after its term except as provided in paragraph (c). The mortgagee may, however, charge interest on the full amount of the outstanding mortgage between the time the mortgage term expires and the time the mortgage becomes due as provided in paragraph (c). Such interest shall be based on and shall not exceed the contract rate of interest provided for in the original home equity conversion mortgage.

(e)  Provide that prepayment of the loan in whole or in part may be made without penalty at any time during the term of the loan.

(f)  Be secured by a property which is designed principally as a single-family residence and occupied by the mortgagor or mortgagors.

(g)  Contain provisions satisfactory to the department for full satisfaction of the obligation.

(h)  Contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserve, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the department may prescribe.

(3)  The home equity conversion mortgage shall provide for either periodic or lump-sum payments to be made directly by the lender to the mortgagor upon such terms as are agreed to by the parties.

(4)  A home equity conversion mortgage may provide for either a fixed or variable interest rate.

(5)  The department shall require that the mortgagee make available to the mortgagor, at the time of the loan application, a written explanation of the details of the home equity conversion mortgage. This explanation shall include, but is not limited to, an explanation of the risks and benefits involved, the provisions for the disposal of the property at the end of the loan term, and the provisions for circumstances such as there being a temporary move on the part of the homeowner or diminished physical or mental capacity of the homeowner.

(6)  The mortgagee shall apply for insurance prior to the execution of the mortgage. If such insurance is denied, the department shall provide the mortgagee with a written explanation for such denial. The mortgagee shall have 30 days within which to make any necessary changes in the mortgage and to reapply for such insurance. If such insurance is approved, the mortgagee shall forward to the department an insurance premium the amount of which is determined by the department. Such premium shall be deposited by the department into the Home Equity Conversion Mortgage Guaranty Fund.

(7)  No mortgage executed after July 1, 1993, will be eligible for insurance under this section unless the department has agreed prior to that date to provide such insurance.

History.--s. 4, ch. 84-251; s. 43, ch. 85-62; s. 1, ch. 85-162; s. 3, ch. 86-267; s. 2, ch. 87-84.

697.205  Recoveries from the trust fund.--

(1)(a)  Any person is eligible to seek recovery from the Home Equity Conversion Mortgage Guaranty Fund if:

1.  Such person was the mortgagee of a home equity conversion mortgage which was foreclosed upon termination, and the proceeds from the foreclosure sale were insufficient to repay the full loan amount due;

2.  Such person has caused to be issued a writ of execution upon a decree rendered pursuant to chapter 702, and the officer executing the writ has made a return showing that no real or personal property of the judgment debtor can be found which is liable to be levied upon in satisfaction of the decree or that the amount realized on the sale of the judgment debtor's property pursuant to such execution was insufficient to satisfy the judgment;

3.  Such person has made all searches and inquiries which are reasonable to ascertain whether the judgment debtor possesses real or personal property or other assets subject to being sold or applied in satisfaction of the judgment, and such person through her or his search has discovered no property or assets or has discovered property and assets and taken all necessary action and proceedings for the application of such property and assets in satisfaction of the judgment but the amounts thereby realized were insufficient to satisfy the judgment;

4.  Such person has applied any amounts recovered from the judgment debtor, or from any other source, to the deficiency decree; or

5.  The mortgage on which recovery is sought was insured pursuant to s. 697.204 prior to July 1, 1993.

(b)  Any person who meets all of the conditions prescribed in subsection (1) may apply to the department for payment to be made to such person from the Home Equity Conversion Mortgage Guaranty Fund in an amount equal to the unsatisfied portion of such person's deficiency decree. In no event shall such amount exceed the difference between the amount of the proceeds from a foreclosure sale and the loan amount due, including principal and interest.

(c)  Upon receipt by the mortgagee of the payment from the Home Equity Conversion Mortgage Guaranty Fund, the mortgagee shall assign to the department any additional right, title, and interest in the judgment, to the extent of such payment.

(2)¹(a)  In the event that a search is made by the mortgagee to determine all of the debtor's real and personal property which may be applied towards payment of the debt and it is determined that foreclosure of the home equity conversion mortgage would not result in recovering any significant additional assets of the debtor which may be used to satisfy the mortgage, the mortgagee may still be able to recover from the fund without having to foreclose, provided that such mortgage was insured pursuant to s. 697.204 prior to July 1, 1993.

(b)  Any person who meets all of the conditions set by rule for recovery under this subsection may apply to the department for payment to be made to such person from the Home Equity Conversion Mortgage Guaranty Fund in an amount equal to the maximum recovery as provided herein.

History.--s. 4, ch. 84-251; s. 44, ch. 85-62; s. 2, ch. 85-162; s. 4, ch. 86-267; s. 3, ch. 87-84; s. 56, ch. 95-211; s. 778, ch. 97-102.

¹Note.--Section 4, ch. 86-267, purported to amend "paragraph (a) of subsection (2)," but did not set out in full the amended paragraph to include subparagraphs 1. and 2. Because their omission is not otherwise supported by affirmative evidence that the Legislature intended to repeal subparagraphs 1. and 2., the subparagraphs are set out as follows for reference purposes, pending clarification by further action by the Legislature:

1.  Such recovery shall be provided for by rule promulgated pursuant to s. 697.203; shall be conditioned on the mortgagee acquiring the mortgaged property by deed; and shall be based on a reasonable appraised value of the property. The rules promulgated for such recovery shall include provisions for requiring the mortgagee to determine the total assets of the debtor; provisions for determining whether foreclosure would result in recovering any additional assets of the debtor which may be used to satisfy the mortgage; and provisions for determining what constitutes a reasonable appraised value of the property.

2.  The maximum recovery to be allowed by this section shall be the difference between the loan amount due, including principal and interest, and the appraised value of the property.

697.206  Department of Insurance; powers and duties.--

(1)  The Department of Insurance shall have all the powers necessary or appropriate to carry out the purposes and provisions of ss. 697.20-697.206, including the power to:

(a)  Make contracts and agreements with other agencies of the state, the Federal Government, any other public agency, or any other public person, association, corporation, local government, or other entity in exercising its powers and performing its duties under ss. 697.20-697.206.

(b)  Seek and accept funding from any public or private source.

(2)  On or before March 1 of each year, the Department of Insurance shall make a report to the Legislature on the activities undertaken pursuant to ss. 697.20-697.206.

History.--ss. 4, 5, 6, ch. 84-251; s. 4, ch. 87-84; s. 45, ch. 92-173.