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 ?
This in turn placed the HECM insurance fund at risk, so HUD stepped in late last year mandating that loan providers conduct a financial assessment before approving HECM loans.
Last year, a CFPB study mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act indicated significant changes in how HECM loans are made, how borrowers use the funds and how industry practices affect loan performance.
The home value that may be used in calculating an HECM is capped by the FHA.
This is a problem that is being handled more and more by HECM counselors in response to changes in the HECM counseling protocol, which focuses on the senior borrower's ongoing obligations to continue to pay annual property taxes and insurance.
Details and concerns about the popular HECM Saver product
The negative rating actions reflect an increased risk of uninsured losses occurring when a HECM property becomes REO.
Bob Corker (R-Tennessee), a strong advocate for changes to the HECM program, issued a statement saying, "In December, Corker secured a commitment from FHA Commissioner and Assistant Secretary for Housing Carol Galante to make substantial changes to FHA underwriting requirements in order to begin restoring financial stability at FHA after substantial losses, primarily from a flawed reverse-mortgage program.
To attract a broader segment of the population, I believe a new HECM product is required--one that offers significantly reduced costs in exchange for significantly reduced proceeds.
Chapter 3 HECM Explained Reverse Mortgages Originated through the Home Equity Conversion Mortgage (HECM) Program.
The Fixed Freedom is designed to give consumers the most amount of flexibility available within the new HECM guidelines.
com is a leading reverse mortgage website which provides unbiased information about reverse mortgages as well as easy access to competitive quotes for seniors interested in the HECM program.
As a leading franchise in the reverse mortgage sector, RMS is fully committed to, and strongly supportive of, the HECM program and the benefits it provides to its customers.