2.3 Reverse Mortgages

A Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, is a federally insured loan that enables homeowners who are 62 years of age or older to withdraw some of the equity in their home or use the loan proceeds to refinance or buy a new primary residence. Unlike a traditional mortgage, no repayment is required until the borrowers no longer use the home as their principal residence or fail to meet the mortgage obligations. Borrowers are responsible for property taxes, general upkeep of the property, and keeping all required insurance premiums current for the property. The regulations that govern the origination and servicing of an HECM are available at 24 C.F.R. § 206. Importantly, 24 C.F.R. § 206.27(c)(1) provides that the mortgage balance will be due and payable in full if a mortgagor dies and the property is not the principal residence of at least one surviving mortgagor or if a mortgagor conveys all of his or her title in the property and no other mortgagor retains title to the property.