home equity conversion mortgage

Also found in: Dictionary, Acronyms, Encyclopedia.

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 ?
to meet the special needs of elderly homeowners by reducing the effect of the economic hardship caused by the increasing costs of meeting health, housing and subsistence needs at a time of reduced income, through the insurance of home equity conversion mortgages to permit the conversion of a portion of accumulated home equity into liquid assets.
According to the National Reverse Mortgage Lenders Association, the industry closed 112,100 Home Equity Conversion Mortgages (HECMs) during fiscal year 2008, which ended Sept.
Ginnie Mae announced that reverse-mortgage lender Financial Freedom Senior Funding Corporation, Irvine, California--a subsidiary of Indymac Bank FSB, Pasadena, California--is a new issuer under Ginnie Mae's Home Equity Conversion Mortgage (HECM) Mortgage-Backed Securities (HMBS) program.
Contract Awarded for Home Equity Conversion Mortgages (HEMC)
Using home equity conversion mortgages -- commonly known as reverse mortgages -- strategically can help improve clients' retirement sustainability and build a larger legacy to leave their heirs, according to Wade Pfau, professor of retirement income at The American College and director of retirement research at McLean Asset Management and inStream Solutions.
Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), which are offered by private lenders and insured by the FHA; borrowers must be at least age 62.
Urban is an originator of home equity conversion mortgages, also referred to as reverse mortgages, in the US.
Urban is focused on home equity conversion mortgages (HECM), also known as reverse mortgages.
Wells Fargo Home Mortgage (NYSE: WFC) has said that it will discontinue the origination of Home Equity Conversion Mortgages (HECM), commonly known as reverse mortgages.

Full browser ?