Consumer Credit Legislation Amendment (Enhancements) Act 2012 (130 of 2012)

Schedule 2   Reverse mortgages

Part 3   Provisions applying to credit providers generally

National Consumer Credit Protection Act 2009

20   After section 86 of the National Credit Code

Insert:

Subdivision B - Ending of reverse mortgage by credit provider receiving value of reverse mortgaged property

86A Application of this Subdivision

(1) This Subdivision applies in relation to a credit contract for a reverse mortgage and a mortgage securing the debtor's obligations under the contract if:

(a) the debtor's accrued liability (whether or not due and payable) under the contract is more than the amount (the adjusted market value ) worked out under subsection (2) for the reverse mortgaged property; and

(b) the credit provider receives an amount at least equal to the adjusted market value for the reverse mortgaged property either:

(i) as a payment accepted from the debtor under the credit contract; or

(ii) as proceeds of the sale by the credit provider of the reverse mortgaged property.

(2) The adjusted market value for the reverse mortgaged property is the amount worked out by:

(a) working out the market value of the property in accordance with the regulations (if any); and

(b) adjusting that value in accordance with the regulations (if any).

Regulations for the purposes of paragraph (b) may prescribe different adjustments to be made in different circumstances.

86B Discharge of debtor's obligations under credit contract and discharge of mortgage

(1) The debtor's obligations under the credit contract are discharged by force of this subsection.

(2) The mortgage securing those obligations is discharged by force of this subsection.

Note: This section does not apply in some cases: see section 86E.

86C Credit provider must pay debtor excess of receipt over adjusted market value for reverse mortgaged property

If the amount received by the credit provider exceeds the adjusted market value for the reverse mortgaged property, the credit provider must pay the excess to the debtor.

Note 1: If the credit provider contravenes this requirement, the court may order the credit provider to compensate anyone affected by the contravention: see section 124.

Note 2: This section does not apply in some cases: see section 86E.

86D Credit provider must not demand or accept further payments

(1) The credit provider must not:

(a) purport to require payment under the credit contract; or

(b) accept a payment purportedly under the credit contract.

Note 1: If the credit provider contravenes this requirement, the court may order the credit provider to compensate anyone affected by the contravention: see section 124.

Note 2: This section does not apply in some cases: see section 86E.

(2) To avoid doubt, subsection (1) does not apply to the payment (if any) that is described in subparagraph 86A(1)(b)(i) and caused this Subdivision to apply.

86E Cases in which sections 86B, 86C and 86D do not apply

Sections 86B, 86C and 86D do not apply if:

(b) the debtor engaged in fraud, or made a misrepresentation, relating to the reverse mortgage before, at or after the time the credit contract was made; or

(c) circumstances prescribed by the regulations exist.

86F Relationship between this Subdivision and other provisions

This Subdivision does not limit any of the other provisions of this Division.

Subdivision C - Notice of first direct debit default