- Regulatory changes in 2014/2015
- What must I pay to protect my home
- Why the bank does not want my home
This long held belief comes from the original reverse mortgage design several decades ago. At the time there was no backing, insurance or support from the Federal Government and very little oversight of any type of financial transaction. There were just a handful of lenders, who lend funds to the very elderly who were close to death and had no resources other than their home. The lenders made loans with no payments required and both the homeowner and lender both knew that this was a short-term strategy to allow someone to stay in their home until passing. Essentially the homeowner signed over their home in exchange for being able to stay their until they died. BUT they rarely told family or heirs and so when they passed and the lender took the home, the belief was created that reverse mortgage lenders would take the home eventually.
Today, this could not be further from the truth! Banks and lenders do not want to own or sell homes. With the HUD insurance and protections in place for seniors, extraordinary measures are taken to avoid foreclosures and to pass home equity to the owners’ rightful heirs.
Keep in mind, however, that a HECM (Home Equity Conversion Mortgage), more commonly referred to as a Reverse Mortgage, is still a mortgage. If the homeowner fails to honor their obligations to the lender, a foreclosure can still happen, and the lender ends up owning the home. Those obligations among others are the same for all borrowers:
- Make timely property tax payments
- Keep hazard on the home
- Keep the home in reasonable shape
- Occupy and certify occupancy annually as a primary residence
There are several Reverse Mortgage Myths that are just not true – for example, many people believe the cost of a Reverse Mortgage is exorbitant, check out “Are Reverse Mortgages Expensive You can learn more about the truths and realities of the HECM, by checking out our “7 Minute Reverse Mortgage Overview”