Articles in Category: Reverse Mortgage or HECM

June 15, 2011

Types of Reverse Mortgages

Federal law, including FHA regulations and requirements, govern how loans and many real estate services may be advertised or marketed to the consumer. But in spite of these laws, some companies choose to include misleading or intentionally vague wording about some loan products that may seem to imply that company is endorsed by the government or that the services offered are somehow in connection with the FHA or HUD. For example, not all reverse mortgages are FHA Home Equity Conversion Mortgages or HECM loans. But it would be very easy for a company to describe something very similar to an FHA HECM or reverse mortgage and allow the public to draw their own conclusions–however true or false–about whether that program is FHA approved. There are three basic types of reverse | more...

June 7, 2011

FHA Reverse Mortgage Loan Counseling Rules

By Joe Wallace

FHA Reverse Mortgages, also known as Home Equity Conversion Mortgages, have unique requirements because of the nature of the loan. HECM loans, which are intended for seniors age 62 and older, require no mortgage payments during the lifetime of the loan. HECM loans are paid off when the borrower dies or chooses to sell the property secured with the reverse mortgage. FHA rules state all HECM applicants must receive counseling to insure they are informed borrowers, fully aware of the responsibilities and requirements of a HECM loan as well as the benefits. This counseling must happen before the borrower commits to a reverse mortgage. According to Section 255(d) of the National Housing Act and FHA regulations found in 24 CFR 206.41, “all prospective Home Equity Conversion Mortgages (HECM) borrowers must | more...

May 24, 2011

FHA HECM Loans and Fees For Required Counseling

By Joe Wallace

An FHA Home Equity Conversion Mortgage or HECM loan lets qualified borrowers age 62 or older get a loan on their home which is not paid back in any way until the borrower dies or sells the property. Borrowers can get a line of credit or cash payments (or combinations of the two) depending on how the loan is set up. There are specific rules and requirements for HECM loans, and borrowers must get mandatory HECM loan counseling through an FHA-approved agency before the loan will be approved. The FHA is strict about the counseling requirements–an informed borrower is able to make the right choices for their circumstances. But HECM counseling is not free, and the counseling agencies are not government entities. Because the borrower is required to pay a | more...

May 20, 2011

FHA Loans: Ineligible Properties For HECM Purchase Loans

By Joe Wallace

The FHA Home Equity Conversion Mortgage, also known as a reverse mortgage, is for borrowers age 62 or older who want to borrow against the equity built up in their homes. There are a variety of requirements for this unique FHA loan product which allows eligible borrowers to make no mortgage payments, collect cash against the equity in the home or get a line of credit. The loan is paid off when the borrower dies or sells the property. There is a variation of the HECM loan known as a HECM Purchase loan. According to the FHA, HECM Purchase Loans allow “seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.” FHA HECM loan requirements include using the home as the primary | more...

April 28, 2011

FHA HECM Loans and Required Counseling Facts

By Joe Wallace

The FHA Reverse Mortgage program, also known as a Home Equity Conversion Mortgage, is a type of loan product available to borrowers age 62 and older and with sufficient equity built up in the property. The reverse mortgage program offered by the FHA has terms that include no monthly payments. The HECM is paid off when the owner dies or sells the property. The borrower gets the proceeds from the HECM loan dispensed according to the loan agreement, which can include a line of credit, installment payments or a combination of the two. Because of the unique nature of an FHA HECM loan compared to other mortgage loans, the FHA requires the applicant to get loan counseling before the loan may be approved. The FHA wants borrowers to be fully | more...

April 28, 2011

FHA LOANS: HECM Loan Terms and Conditions

By Joe Wallace

The FHA Home Equity Conversion Mortgage or HECM loan, also known as a reverse mortgage, has terms and conditions that must be clearly understood in order to get the most out of the loan. HECM loans have strict rules that must be followed in order to avoid violating the terms and conditions, which is why the FHA requires HECM loan borrowers to get counseling on reverse mortgages before they can be approved for an FHA HECM loan. The reason understanding these terms and conditions are so important has much to do with the nature of the loan itself–no payments are due from the borrower at any time unless he or she dies or sells the home. But if the borrower violates the terms of the loan, the lender is able | more...

April 12, 2011

FHA HECM Loans: Questions Seniors Should Ask

By Joe Wallace

The FHA reverse mortgage, also known as a Home Equity Conversion Mortgage or HECM loan for short, can be an important tool for many seniors. The FHA reverse mortgage is a home equity conversion loan that allows qualified borrowers age 62 and older to get a mortgage that has no monthly payments and is only payable when the borrower dies or sells the home. Like other FHA mortgages, FHA HECM loans have occupancy requirements and the borrower can only apply for a Home Equity Conversion Mortgage for the home they use as the primary residence. As with any major financial commitment, the HECM loan is not to be entered into lightly or without serious planning. That’s one reason why the FHA has mandatory counseling required as part of any HECM | more...

March 12, 2011

FHA Reverse Mortgages: What Makes Them Come Due?

By Joe Wallace

One of the most attractive features of an FHA reverse mortgage for some applicants is that the loan does not come due until the applicant dies or sells the property. There are no monthly mortgage payments on an FHA Reverse Mortgage, also known as an FHA Home Equity Conversion Mortgage. Instead, the loan is paid off as described above (when the owner dies or sells the home). The borrower–who must be age 62 or older–gets the proceeds from the loan to use as needed. But there are issues which could make a HECM loan due immediately–what could force the lender to call in the loan immediately? There are several scenarios. The terms of an FHA reverse mortgage require timely payment of property taxes, hazard insurance, and any other financial obligations | more...

February 25, 2011

Changes to FHA Refinancing Rules

By Joe Wallace

In our last blog post we discussed some changes to FHA refinancing loan rules. Effective immediately, the FHA requires all borrowers seeking streamline refinancing to make at least six mortgage payments on the property. There must also be a minimum of

February 15, 2011

FHA Reverse Mortgages: Should I Use An Estate Planner To Find a Lender?

By Joe Wallace

In our last blog post we discussed FHA Reverse Mortgages and the scammers who try to prey on people who want to apply for such mortgages. The FHA issues regular warnings against paying for services and information that's available for free from the FHA. Some third-party companies are fairly brazen in their attempts to sell services or information that's available free of charge, others are a bit more subtle in the approach, blurring the lines between scam and legitimate customer service.