home equity conversion mortgage


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Reverse Mortgage

A loan borrowed against the value of one's home. In this situation, the lender gives the borrower the amount of the loan and the borrower makes no payments and retains title to his/her home. When the borrower moves from the house or dies, the lender takes possession of the home, which it then sells to repay the loan. Any extra profit is remitted to the borrower or his/her estate. A lifetime reverse mortgage allows a homeowner to access his/her home's equity without the inconvenience of moving. It is a financial instrument designed to help homeowners who are cash poor, and is limited to senior citizens. In the United States, one must be 62 years old in order to be eligible for a lifetime reverse mortgage, while the U.K. requires potential borrowers to be at least 55. It is also known as a lifetime reverse mortgage.

home equity conversion mortgage (HECM)

An FHA-insured reverse mortgage loan allowing persons to borrow money against the equity in their home with no repayment usually necessary until after death.The money may be taken in one lump sum,or in payments over time.

The important elements are

• The borrower and any other current owners of the home must be aged 62 or over and live in the home as their principal residence.

• The home must be a single-family residence in a one- to four-unit building, a condomini- um, or part of a planned unit development (PUD). Some manufactured housing is eligible, but cooperative apartments are not.

• The home must be at least 1 year old and must meet HUD minimum standards, except that the HECM can be used to make necessary repairs.

• Applicants must discuss the program with a HUD-approved counselor before making any decision.

• Repayment in full is due (1) when the last surviving borrower dies, (2) when the home is sold, (3) when the borrowers permanently move elsewhere or fail to live in the home for 12 months, or (4) if there is a default in mortgage terms, such as failing to pay property taxes or keep the property insured or allowing it to deteriorate below HUD minimum standards.

Home Equity Conversion Mortgage (HECM)

A reverse mortgage program administered by FHA.

See Reverse Mortgage/FHA's Home Equity Conversion Mortgage (HECM).

References in periodicals archive ?
Various types of reverse mortgages have been offered by brokers since the late 1970s, and in 1989 the federal government instituted the home equity conversion mortgage, which is federally insured and regulated.
A reverse mortgage (you may know it by its more formal name - Home Equity Conversion Mortgage or HECM) lets people who are at least 62 years old access that equity using an entirely different approach: Homeowners can take money out of their homes without having to make any monthly payments.
Home Equity Conversion Mortgage Securitizations' (June 4, 2007)
The article, "Reverse Mortgage Reform 2013 (Updated HECM Guidelines)" starts off by telling a bit about the home equity conversion mortgage : "For most people, the only way to make use of the equity you've built up in your home is by selling or refinancing and pulling equity out at closing.
Chapter 3 HECM Explained Reverse Mortgages Originated through the Home Equity Conversion Mortgage (HECM) Program.
They grew in popularity and spread throughout Europe during the 1970s, and Finally crossed the Atlantic in the 1980s, reaching national prominence in 1987 with the creation of the Home Equity Conversion Mortgage program.
FHAs Home Equity Conversion Mortgage program has become the dominant reverse mortgage product in the marketplace, and lawmakers have approved a number of recent enhancements - including a significant hike in the HECM loan limits.
A small, but growing share of older households is taking advantage of the ability to convert some of their home equity into a reverse mortgage or home equity conversion mortgage.
The Home Equity Conversion Mortgage (HECM) has set the standard for reverse mortgages and has been gaining in popularity.
By working with All Reverse Mortgage, seniors can obtain FHA's Home Equity Conversion Mortgage (HECM) to help them access their home equity during retirement.
An understanding of loan termination behavior and expected resulting cash flow is vital to supporting a robust secondary market for reverse mortgages, which is now being facilitated by Ginnie Mae's new Home Equity Conversion Mortgage (HECM) mortgage-backed securities (MBS)--known as HMBS.
With the arrival of the closed-end Home Equity Conversion Mortgage (HECM) in 2009, came the trend for a one-time full draw.

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