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Reverse Mortgage Occupancy

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Question From Vasilios on 8/14/2018

Can I rent out portion of my home? I have a reverse mortgage?

Expert Answer

Good Afternoon,

As long as the portion of the property you are renting is not for transient use (hotel, B and B, etc), for anything that is against the zoning or legal use of the property and you continue to live in the home as your primary residence there are no restrictions against you renting out a portion of the home.  Many owners do rent out a room or two in order to augment their income and this is perfectly acceptable.

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Question From Sandy R on 8/02/2018

My Grandmother lives in the state of Georgia. She has a reverse mortgage. She is thinking of moving in with her friend and renting the home to her granddaughter. Will this be OK or does she have o do some type of transfer?

Expert Answer

Hi Sandy,

Under the terms of the reverse mortgage, once your grandmother is no longer living in the home as her primary residence, that would be a default under the terms of the Note and the loan becomes due and payable.  If she were to make the move you describe, she needs to be ready to pay off the loan when the lender calls the Note due and payable.  The Note has a clause in it that is called an Assignment of Rents that when a borrower does default and the property is rented, your lender in Georgia may require the rents to be assigned or paid directly to the lender. 

Your grandmother can refinance the loan with another loan if she wishes to move and keep the property (could not be a reverse mortgage – they are only available for a borrower’s primary residence) or she could sell the property and pay off the loan that way.  But if she moves and rents the home, the ensuing default under the terms of the loan would cause the lender to move toward securing repayment which would ultimately include foreclosure if not paid before that point.  This outcome would ultimately not be good for anyone. 

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Question From Jim M. on 7/31/2018

My dad and step-mom have a reverse mortgage on their home in California. My step-moms health is failing and she was moved into a long term care facility in another state, Georgia to be close to her daughter. My dad is continuing to live in the home in California. In order for my step-mom to continue receiving Medicaid monies to pay for the care in Georgia they are requiring that the home be transferred into just his name and her name be removed from all of their accounts and the home title, has to do with Spousal Impoverishment Rules. Can she be removed from the title without jeopardizing the reverse mortgage rules?

Expert Answer

Hi Jim,

As long as at least one of the original borrowers on the loan remains on title and living in the property, they can add or remove anyone else from title they wish.  There would be no problem removing your step-mother from the title as long as dad was on the original loan, is still on title, and still lives in the home as his primary residence.

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Question From MaryAnn on 7/31/2018

My parents have life occupancy on the house but I will inherit it. Can I get my own reverse mortgage and pay theirs off?

Expert Answer

Hi Mary Ann,

You can get your own reverse mortgage as soon as you occupy the property and the title passes to you but you cannot get a reverse mortgage in your name if you are not occupying the home as your principal residence. 

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Question From Yoland on 7/29/2018

My mom has a reverse mortgage. She has applied for Medicaid and will go to a nursing home. Before going to the home Can she transfer the house deed to her 2 daughters to avoid probate and paying Medicaid fees for her care?

Expert Answer

Good Afternoon,

Anyway you look at it, the loan is going to become due and payable.  Once mom is no longer living in the home, the loan becomes due and payable.  If she transfers the title, the loan also becomes due and payable when she is no longer on title.  So either action will result in the loan becoming due and payable but if she transfers title, it would come to the lenders attention much quicker as the title transfer is immediate but mom has up to 12 months temporary absence before the lender can act on the absence without a title change and since you said she will go to a nursing home but presumably has not left yet. 

You need to decide what you are going to do knowing that the loan will need to be repaid either way.  If ultimately you need to make a move to protect the asset, then I would suggest you look into doing that sooner rather than later but you begin the steps immediately to either refinance the loan in one or both of the daughter’s names or place the property on the market for sale.  I can’t advise you legally with regard to the effect the transfer will or will not have on the Medicaid nor what you should ultimately do there.  But from the standpoint of the reverse mortgage, I can tell you that once mom is out of the home or once the title does transfer, the loan will be called due and payable so you need to be prepared to replace the existing financing or sell the home so the lender does not have to begin foreclosure to repay the obligation.

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Question From Gabbie on 7/28/2018

My concern is about occupancy checks. After receiving my reverse mortgage, I'm hoping to construct a partial second story level onto my home (such as an in-law suite, but with a private entrance,) and I want to confirm that I would be allowed to move upstairs into the new suite while renting out the original downstairs portion of the house to a long-term tenant. In the event the lender stopped by my property to make an occupancy check, he/she would likely knock on the front door of the original house, and my worry is that a tenant might mistakenly tell the lender that I don't live there, which could obviously raise a red flag.Is this living situation something that requires my lender approval before I move into the smaller upstairs suite? How might I avoid the possibility of a mistaken occupancy check?

Expert Answer

Hello Gabbie,

Most occupancy checks are done via the mail initially.  Your reverse mrotgage lender would already have received notification of the existence of the additional unit in order to send you the monthly statement and therefore would know that they could reach you at the location upstairs and not at the main entrance.  Secondly, since you are aware of the propensity for the misunderstanding, it would seem reasonable that you let your tenant know where you could be reached in the instance that someone knocked on their door attempting to locate you.  If the additional suite had a clear entrance and was marked for mail delivery, the lender should also have no problem locating it.

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Question From Steve L. on 7/28/2018

HiAs of 1/27/18 my 91 year old father (divorced in 2007, his ex-wife was a reverse mortgage co-borrower and quitclaimed the property to him and moved back to her home country) was temporarily placed in a six client assisted living home for rehabilitation after a hospital stay in Dec. 2017. Because of a previous car theft and check fraud by the thieves in Oct. 2017 who were ultimately arrested, we asked our daughter (along with our granddaughter) to temporarily stay at his home (which has a reverse mortgage) to act as a caretaker/deterrent to any possible vandalism, etc. She is not renting from him and pays all her own living expenses (Utilities, food, etc.). She maintains the property and gives us his mail regularly. The property is about an hour away, so this arrangement is working well for all parties and has my father's blessing. This also greatly benefits her as her own house lease expired on 1/31/18 and needed a place to live temporarily. She recognizes that this is a short term until grandpa returns home, which we expect will be in 2-4 mos. Question: Is this allowable if he is not physically there and temporarily at assisted living and no other loan borrower is at the property? CeLink (new subservicer taking over for Financial Freedom) recently sent 2nd notice Occupancy Verification dated July 2, 2018 Certificate. We have no record of the 1st notice. I will have him certify and sign the form and call them as I was listed as an authorized contact person.To the best of my knowledge, he has been signing these forms himself in the past (his signature only, not signing for her) since the divorce. I suspect that he has never notified any servicer about the divorce. Question: Could not notifying the servicer of the divorce be a potential issue?Finally, I believe we understand the 12 month rule as it applies to him. He has been in assisted living exactly six months as of July 27, 2018 including two hospital days for a total of 12 days.Question: How to approach/ notify CeLink without raising any unnecessary red flags concerning his temporary absence?

Expert Answer

Hi Steve,

Dad can be out of the home on a temporary absence for up to 12 months with no problems.  There is no issue with the divorce and as long as one of the original borrowers remains in the home as his primary residence, it makes no difference that they divorced and his ex-wife has moved out of the house.

Dad can sign the occupancy certificate and if the servicer does an inspection, you need to be prepared with the records to show that dad has only been out for 6 months and that he will return within the next 6 months so that if they do an additional inspection at that time, he will be back at home before he has been out for 12 months or more.

Otherwise, they can call the loan due and payable under the terms of the loan.  But the fact that he has his granddaughter there now or even still there after he returns is immaterial.  There is no provision preventing him from having family living with him.

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Question From Kat on 7/28/2018

I was caretaking my mother in her reverse mortgage home. She has now moved into assisted living and will not return. My brother signed over the house to HUD two weeks ago without my knowledge. How long can I stay in the home? What are the details and ramifications if I stay?

Expert Answer

Hello Kat,

I can’t give you legal advice and I would suggest that you contact an attorney to determine your rights as an inhabitant of a home when that home is being taken back by the lender.  I know that by law, there are occupancy rights and I simply can’t advise you on those. 

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Question From Binwade M. on 7/27/2018

Can I rent out property in the scheme?

Expert Answer

Hello Binwade,

The reverse mortgage requires you to live in the home as your primary residence and once you no longer are doing so, the loan becomes due and payable.  If you are renting a portion of the property such as a room to a tenant while you still live there, you are still in compliance with the terms of the legal documents.  If you move out and rent out the entire home, that is a default under the terms of the loan and the lender will call the loan due and payable and if not paid back in a reasonable timeframe from that call, they would begin foreclosure proceedings.

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Question From Gary D. on 7/26/2018

My mother is moving into a HUD subsidized, senior income based living facility. Her primary residence has a reverse mortgage on it. She is not moving for any mental or physical reasons; the house is just becoming to much. I am her son and would like to live/occupy it (I actually grew up in this house in the 60's and 70's) for 12 months. Is this legal? If so, is there a way we inform the bank and senior facility? Thanks, Gary D.

Expert Answer

Hi Gary,

The home belongs to your mom until such time as she sells it or the HUD approved lender has to take it back by a foreclosure action to pay back the loan.  If you do not plan to seek other financing in your name and keep the house, I would suggest that you first check with a real estate agent and see what the property would most likely sell for if listed for sale.

If the home would sell for more money than is owed on the reverse mortgage (check mom’s most recent statement), you can sell the house and keep the money above and beyond the amount owed.  If there is no equity left in the home, mom still owns the home until the bank has to foreclose and if mom allows you to live in it up until that time, that is her choice.  It is not up to the bank who does and doesn’t live in the home while it still belongs to mom, mom has that call.

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Question From Louis on 7/25/2018

When a borrower has 2 reverse mortgages how does the lender verify that both are split time primary residences?

Expert Answer

Hello Louis,

This should never be the case.  Borrowers are only allowed one primary residence and therefore, only one reverse mortgage at this time.  In the distant past, there were jumbo/proprietary programs that did offer reverse mortgage options for bona fide second homes (not rentals) but those programs have not been available for quite some time.  Borrowers were never allowed two HUD HECM mortgages.  HUD has a system whereby borrower’s information is tracked and borrowers with an existing reverse mortgage are not eligible for a second loan.

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Question From Linda M. on 7/24/2018

Can someone with a reverse mortgage take in a room mate for a monthly rental amount?

Expert Answer

Hi Linda,

There are no provisions in the reverse mortgage that would prevent you from renting a room and collecting rental income.  You must continue to live in the home as your primary residence but if you choose to rent a room, that is not in any way a default under the terms of the mortgage as long as you are still living there and meeting the other obligations (paying the taxes and insurance on time and maintaining the home in a reasonable manner).

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Question From Marie on 7/16/2018

I have a tenant who signed a rental agreement last October for a year occupancy in my mother's 2nd floor unit home. Although, this tenant (a single mom with two kids) was struggling financially (she had only 1st month rent and couldn't afford the security deposit), my mother(who was gravely ill at the time) was kind enough to grant her the apartment, ONLY IF the tenant agreed to pay monthly rent plus payment installments on her security deposit until is paid off. This agreement is stated on the lease. The tenant made good in paying rent until my mother passed away this February and the house is going into foreclosure due to a unaffordable reverse mortage loan. the tenant has not paid rent since April, but was given several verbal notices by me (the executor of her estate)to vacate the apartment and plenty of time to find a new place. My question is Can I issue her a 5 day notice due to the following: 1) she has a boyfriend staying with her who is not on the lease which is a violation on her lease, 2) the boyfriend is accusing me of making harassing phone calls and has threaten to make trouble if it doesn't stop and 3) the tenant claims that she not entitled to pay anything (according to counsel with her lawyer)and can't afford to pay what she owes,

Expert Answer

Hi Marie,

I’m sorry but I can’t answer this for you.  This is a legal question that you have to direct to an attorney who specializes in this area of law.  The response has nothing to do with the type of loan on the property but more with renter’s and owner’s rights and obligations and for that you need to speak with a real estate attorney in the area where the property is located as those laws may differ from state to state.

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Question From Kelly on 7/12/2018

My in-laws have a reverse mortgage now, in both names. he has been in a nursing home for a few years paid for by medicare. while she still occupies the home. if she would sell the home, would they lose their proceeds to medicare

Expert Answer

Hi Kelly,

I cannot give you legal, insurance or tax advice – I am not licensed to provide guidance in any of those areas.  I would direct you to an elder care attorney for advice in this area.  I know that there are different programs that carry different benefits and different responsibilities and I cannot comment on them.

The reverse mortgage is just a loan, and the rights of the various programs should not change based on a reverse mortgage as opposed to any other home loan so this really isn’t even a reverse mortgage question.  And there is a real difference between Medicare and Medicaid and there are differences in the “cost sharing” of the programs and many people use the terms intermittently so I would be hesitant to comment anyway on the off-chance that your in-laws actually have Medicaid and not Medicare or are what is known as “Dually Eligible” and qualify for both.

To find out how their particular situation would be affected,  you should really consult the qualified individual and in this case, that would not be us.

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Question From Kathleen on 7/07/2018

Can a home owner that already got a loan from reverse mortgage rent her basement to a non family member and not report that income on her tax?

Expert Answer

Hi Kathleen,

Yes, you can rent your basement.  As far as claiming the income goes, that would depend on your total income and deductions and is a question for your qualified tax advisor.

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Question From Carol R. on 7/05/2018

I own my home. Can I use the reverse mortgage to add an in law apartment and let my daughter and family live in main part of house. She lives with me now

Expert Answer

Hello Carol,

As long as you occupy the home and continue to occupy the home as your primary residence, you can use the funds for whatever purpose you choose.  When first getting the loan, HUD likes to see that the borrower occupies the main portion of the home but after the loan has closed, there is nothing in the documentation that states what portion of the home you must occupy or where your family can live – just that you continue to live in the home as your primary residence.

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Question From Mari on 7/02/2018

If someone lives in a home and the owner receives their mail but does not live there and the Tenant pays rent what will happen

Expert Answer

Hi Mari,

This is not abiding by the reverse mortgage terms.  The lender can and often does do occupancy inspections as a condition of the loan.  If they determine that the home is being rented and that the borrower no longer occupies the home, the loan will be called due and payable in one lump sum at that time.  If the borrower is unable to pay the loan off when called, the lender would have to begin foreclosure proceedings due to the breach of the terms.  If the owner does not intend to occupy the home, they are better off either refinancing the loan or selling the property before this happens.

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Question From Alisha M. on 6/28/2018

HI my mom got a reverse mortgage and i have been living with my mom for the last pass 7 years......my mom now want to go to ASSISTANT LIVING i want to continue you to stay in the house and i want to take out a mortgage on the 95% value of the house....but my question will they let me stay in the house while i get the financing together?

Expert Answer

Hello Alisha,

Your mom is allowed a temporary time away from the home before they can call the Note due and payable anyway.  If you begin now, you should be able to have all your financing in place before your mom ever runs into her mandatory notification for leaving.  You can have the home ready to finance and change title before the lender is ready to call the loan due and payable.

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Question From Mike on 6/28/2018

Brother and sister both names in the home deed as owners. The loan has the brother name only, can reverse Mortgage for only the sister to occupy the home be feasible, sister lives with ssi but brother is willing to support her financially.

Expert Answer

Hello Mike,

If they are both on the title now and the sister is the only one living in the home, they can do a reverse mortgage with the brother still on title but he would be considered a non-borrowing individual.  What this means is that he can stay on title and so if anything happens to the sister, he will retain ownership to the home but since the sister is the only person on the loan, when she no longer occupies the home as her primary residence, the loan would become due and payable. 

If the sister has not been living in the home, she would have to establish occupancy first so that there would be no question as to the owner occupancy of the home.  There may be questions for things I do not know based solely on the content of your question.  For example, why are brother and sister on the title now but only brother on the loan?  Is brother also 62 and does he occupy the home or does he live elsewhere?  If brother does occupy the property and sister does not at this time and bother is not yet 62, it could be construed as an attempt to bring sister on just to meet the age requirement even though she does not and will not occupy the home so the situation will obviously be reviewed for total circumstances to be sure it meets all HUD requirements.

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Question From Mark M. on 6/28/2018

My primary residence is in New Jersey, I want to buy a small trailer in Texas to visit my children a few months a year is this allowed with my reverse mortgage? it won't be rented out. Thanks!

Expert Answer

Hi Mark,

There is nothing that says you can't own a second home or visit it from time to time.  As long as the reverse mortgage property remains your primary residence (you are there more than half the year and you get all your mail at that address) and you are not gone for more than 12 months for any one temporary absence above and beyond the more than 6 months per year for each ordinary year, you are fine.

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Question From Billie M. on 6/28/2018

When the home has a reverse mortgage in the homeowner goes into a nursing home. How long do the occupants of that house have to live there?

Expert Answer

Hi Billie,

The loan becomes due and payable when the owner no longer lives in the home as their primary residence.  The loan does give the owner a provision for temporary absences from the home for up to 12 months but if you know that the move is permanent, then the lender would seek to call the Note due and payable as soon as they became aware of the permanent move.

This can be quickly or it can take many months and then the process itself takes several months if the borrower or their family are not planning on selling the home to retain some of the equity.  The best thing I can tell you is that there is no exact time frame but you need to be aware that under the terms of the loan, once the last borrower on the loan is no longer living in the property, the lender can move to call the Note at any time.

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Question From Gloria C. on 6/26/2018

I bought a little house in Burbank, CA 91506 and I am on Reverse Mortgage. The house has leaking ceilings, bad plumbing, bad electric connection, bad sprinklers.... and other problems. I know I am wrong because I signed all the papers my Realtor told me to sign without reading them (I trusted him and I should not have) but isn't a Reverse Mortgage home be in order and habitable? The escrow closed on Feb. 23rd, 2018 and as of today I have not been able to move in the house. All my furniture is in the garage and the driveway as I would like to fix the house first.I am 85 y/o; I will be 86 this next August 10th, 2018 and I am alone with a puppy and nobody else. Please just give me an answer. Thank you for your time and kindness!

Expert Answer

Hi Gloria,

There are a number of issues here that you should consider.  Firstly, with all FHA loans you should have received a notice about getting a home inspection.  Did your real estate professional and lender give you this notice and if so, did you do it?  Because if you did the home inspection and if you have a warranty, the warranty company should be on the hook for anything they missed. 

The reverse mortgage is a home loan that is insured by FHA.  The lender relies on the borrower and even more so, the appraiser to be their eyes in the field when it comes to the property.  The appraiser can only make a visual inspection though.  If he/she goes through the home and sees signs of water damage from a leaking ceiling, that should be noted in the report and the lender would typically call for a roof inspection at that time.  If the tell-tale signs of a bad roof were repaired but not the roof (the seller painted with something to cover the signs of the leak but never corrected the leaking roof), or if you know that the seller or the realtor were aware of other issues and did not disclose them, you may very well have legal recourse against the seller, your agent and/or the seller’s real estate broker as there is a duty to disclose in many states and California is definitely one of them.  If you believe they were aware of these issues and kept them from you, I would suggest that you contact competent legal counsel and ask them to review your circumstances and documentation.  I cannot give you legal advice and do not know how strong your case is but there are definitely laws against defrauding buyers by non-disclosure of known issues and you may have legal remedy if that is what happened to you.

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Question From Louise on 6/25/2018

My labor is in a nursing home and squatters are inhabiting her home. What can i do?

Expert Answer

Hi Louise,

This is a bit tough.  If she hasn't been there for over a year, she is still within the terms of her reverse mortgage.  In that case, it would be entirely up to the homeowner or her family to contact the authorities to seek to have the Intruders removed.  I don't know what you can do as a non-owner of the property.

If she has been gone for over a year, you can contact HUD with the address and they should be able to notify the servicer of her loan.  I don't know how quickly they will react though.

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Question From Herb on 6/23/2018

Can my neighbor rent her home weekly during the summer months if she is not living in the house ?

Expert Answer

Hello Herb,

Transient rental use of the home is not permitted under the HUD program but HUD does allow the borrower to be away for temporary time periods.  Once the loan is closed, if the borrower is not gone too long I don't know how the lender would enforce the transient use prohibition but if the home was being rented at the time they perform an occupancy inspection it could cause them to call the loan die and payable.

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Question From Joan C. on 6/23/2018

I am married to a man in Australia for 25 years he wants to take out reverse mortgage on home its in his name only what happens to me if he dies can I get a claim on home?

Expert Answer

Hi Joan,

I’m a bit perplexed.  If he lives in Australia, he would not be eligible for the reverse mortgage here in the states as the property must be your (his) primary residence in order to be eligible.  However, the loan does nothing to your rights to the property after his death.  If you had a right to a claim after his death before the reverse mortgage, you would still have one after he obtained a reverse mortgage, but the loan would have to be paid off once he passed.  To determine that question, you need to seek the counsel of an attorney licensed in the state in which the property is located.

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Question From Thomas P. on 6/19/2018

If my mother plans on staying in a nursing home, who do I contact I've been having trouble trying to locate someone to report this to?

Expert Answer

Hi Thomas,

The first thing I would do is contact a real estate agent to determine if there is equity in the home and if it would benefit you both to sell the house.  If not, then get all of mom’s personal property out of the home and when you’re done, contact the servicer listed on the monthly statement she receives and tell them she has permanently vacated the home and you would like to make arrangements for them to take the home as you cannot sell it for at least what is owed on the loan.  They will take it from there!

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Question From Steve on 6/18/2018

Have a reverse mortgage on my residence in Las Vegas for the last 9 months. The house is too big and I over did it. Can i sell it and downsize and get another reverse mtg or do i have to be here for a special length of time?

Expert Answer

Hi Steve,

There is no minimum time you must keep the loan in order to be eligible to obtain another reverse mortgage if you sell this home and the loan is paid in full with no deficiency on the first reverse mortgage.  You can only have one reverse mortgage at a time and HUD will not grant you another one if they lose money on the first one they did until any deficiency balance is repaid, but with a repayment so quickly there should be no reason you cannot sell your property in this current market and repay the loan in full so that should not be a problem.

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Question From Karen S. on 6/13/2018

If my mother moves to an apartment what happens to her reverse mortgage?

Expert Answer

Hi Karen,

If your mom leaves the home, the loan would be called due and payable by the lender.  If that is the case, the loan would have to be paid in full (refinance or sale of the property) or the lender would have to foreclose on the loan to protect their interest.  If this is something that your mom feels she really needs to do, the first thing I would suggest she does is contact a real estate professional and get some information on selling the home.  If the house would sell for more than is owed on the loan, she would want to put the home up for sale so that she could sell it on her own terms and keep the remaining equity when it sells.  If the house is not worth as much as is owed, then you all have to decide if her moving to an apartment where she has to pay rent is better than her being able to stay in the home where she has no payments (but does have to pay the taxes, insurance and maintenance).

If you determine that she really must leave and there is no equity, then you probably would want to contact the lender and let them know once she has vacated and ask if they wish to take a Deed in Lieu of Foreclosure to end the process for mom as soon as possible.  If she has to leave the home anyway, it may benefit all parties if the lender can take the property back as soon as she has left to help mitigate some of the losses.  The loan is a non-recourse loan so the lender can look to no other assets to repay the loan so it is also in their best interest to try to resolve the situation as quickly as possible.  In any case though, if you can sell the home and retain some of the equity, that is by far your best outcome.

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Question From Mary J on 6/12/2018

My 89 year old father got a reverse mortgage in Hawaii in 2017. He now wants to sell the home and move into a nursing home. My two sisters and niece live with and help him; they are afraid they will not be able to afford a place to live on their own if he sells the home. Can he put them on his deed so they are able to stay in the home if he moves into the nursing home?

Expert Answer

Hi Mary,

Unfortunately, just putting them on the Deed doesn’t not help their situation.  Once he permanently moves out of the house, the loan will become due and payable.  They really should be looking at other options such as whether or not they can refinance the loan with a new loan in their names if they wish to stay in the home.  If he only got the loan in 2017, he has not had it very long and could not have accrued much interest and the loan to value should be relatively low.  If refinancing the loan is not an option, they can sell the home and use the proceeds to purchase a home that is more affordable for their budgets or look into renting at that time but the sooner they do make a move, the more equity will be left in the home giving them more money to work with on a refinance (less to pay off) or on a sale (more money in their pocket after the sale).

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Question From Al on 6/10/2018

How long do I have to own and live in my home before I can get a reverse mortgage?

Expert Answer

Hi Al,

As long as you live in the home as your primary residence, the home is complete and meets all HUD requirements, there is no set minimum time.

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Question From Denise C. on 6/08/2018

My father in law has a reverse mortgage ! My husband and I have lived with him for the past 12 yrs ! He recently fell and ended up having surgery and then rehab , he is a full assist , he wanted to come home so we made a lot of accommodations to the home to make it wheel chair accessible! He is now home with us but it’s getting very hard to take care of his needs where we can’t get any kind of care giving help. We both need to work full time ! My question is if we find him a nice nursing home , what happens to the house and do we need to leave ? Also can the state take it over if there is more value to the house even though my husband and I invested with the cost of material and labor ?

Expert Answer

Hi Denise,

The state is not a part of this equation.  The loan requires the property to be owner occupied or the loan becomes due and payable.  You are doing the right thing to be looking at solutions now, before he moves out of the property rather than waiting until after.

The home belongs to dad, not the lender and certainly not the state.  If dad is still able to handle his financial affairs (after all, the fall may make him physically unable but he may still be mentally fit), then dad can add you and your husband to title now and you can look into refinancing the loan into a standard or forward loan which you would just keep, even after dad moves to the new accommodations.  Don’t have dad transfer all of his interest or that would trigger the due and payable clause of the Note when dad no longer had an interest in the property (but dad can add whoever he wants as long as he is still on title as well).  If a new loan is not possible, then with the remaining equity in the home, you would want to look into a possible sale now, before the loan became due and payable so that you could list the home and sell it on your terms and timeframe, not when you had a time crunch and might have to accept an offer that might not be the most advantageous for your family.  There again, your family gets to keep the equity and any added value for improvements made, not the lender.

These are the hard conversations that people need to have before all options, or at least several of them, are taken away.  The home and the equity still belong to dad.  Therefore, you don’t lose anything if you plan accordingly and you are able to take action based on your family’s needs and not necessarily the timing of the lender.

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Question From Carey R. on 6/04/2018

My dad has a reverse mtg, can he be forced to move out of his house if the value of the house is less than the loan amount, due to the fees being added to the loan?

Expert Answer

Hi Carey,

That’s one of the great things about the reverse mortgage, dad can live there for the rest of his life while making no mortgage payments, regardless of what the values do.  He is responsible to pay the taxes and insurance and maintain the home in a reasonable manner and must live in the home as his primary residence and after that, he can remain in the home for life without fear of shortfalls due to rising balances and falling values.  And since the reverse mortgage is a non-recourse loan, the lender cannot look to the estate or any other assets for repayment of the loan once he does pass or move out of the property.

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Question From Jan W. on 5/27/2018

We have had a reverse mortgage for 9 years. We have a large basement and would like to move into the basement and rent out the main floor. Would this be a problem?

Expert Answer

Hi Jan,

As long as you are still living there, that would be fine.

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Question From Ed on 5/21/2018

If I have a reverse mortgage but I spend four weeks in the summer at a different location can I rent my home while I am away?

Expert Answer

Hello Ed,

Now you’re getting into a possible gray area.  Under the HUD guidelines, you cannot use your home for transient purposes such as short term rentals like an Air Bnb or hostel/hotel and qualify to get a new reverse mortgage.  However, once you already have the loan, as long as you meet the requirements, that is you live in the home as your primary residence, you stay there for the majority of the year, you pay your taxes and insurance on time and maintain the home in a reasonable manner, there really is nothing that would prevent you from going away for a short trip and collecting rent on your home during a once a year, short trip.

I think you might want to look into it further just to be sure you aren’t going to run into issues with the lender/servicer if you plan to do it more than once a year, or if that time period begins to become longer than just one month, especially if they do their yearly occupancy inspection during the time you are away and renting the home.  The last thing you would want is for an inspector to knock on the door and have a renter give them the wrong information or the impression that the home is a year-round rental as that could cause the lender to call the Note due and payable.

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Question From Debra E. on 5/15/2018

Hi. Can an elderly person with a reverse mortgage move out prior to the sale of the home ?

Expert Answer

Hello Debra,

When the borrower permanently moves from the home, the loan becomes due and payable.  If the home is listed for sale at the time and is about ready to close, this would probably not be a problem as the sale would close before any action by the lender could take place.  If the borrower wanted to move out and then sell the home 2 years later, this would not work under the terms of the reverse mortgage.  So I guess it all depends on the period of time you think will elapse between the move and the sale.  If it is just a short period of a couple of months or less, you should have no issues.  If the home is not even sold yet, the time when the home was not occupied by the borrower could drag out with the time required to sell, delays, etc. and the borrower could eventually find herself/himself in a situation where the loan has been called due and payable, but the borrower does not yet have a buyer.  That would not be a good thing if they did not have the resources available to pay off the loan balance and the lender had to initiate foreclosure proceedings.

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Question From Kurt on 5/14/2018

Neighbor has a reverse mortgage but has moved out of state and purchased a condo but has allowed her son to live in the house for almost 3 years and drug problems have happened. What recourse do neighbors have? The mortgage company refused to do anything

Expert Answer

Hello Kurt,

The mortgage company has no control over the drug issues but the loan itself does require the borrower to live in the home as their primary residence.  If the borrower has not lived in the home for 3 years, they are falsifying their annual occupancy affidavit.  Allowing non-eligible people to live in the home and lying about their occupancy absolutely can cause a financial loss to HUD which also hurts other eligible borrowers when HUD has to lower benefit amounts due to program losses.  You can contact HUD directly and notify them of the occupancy fraud with the property address and they should contact the lender to take appropriate action.

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Question From Dawn on 5/09/2018

My parents are both part of a reverse mortgage contract. Mom moved to a Nursing Home last June (2017). Dad is still in the house, with no plans to move. Should we tell the mortgage company about this arrangement? As long as Dad is still in the house, he won't lose the house, will he?

Expert Answer

The reverse mortgage is fine as long as at least one original borrower on the loan still lives in the property as their primary residence.  Everything is fine and there is no notification required.

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Question From on 5/04/2018

What happens when a borrower becomes ill/incapacitated (dementia) and no longer can occupy the premises/residence?

Expert Answer

Hello,

Once there are no borrowers left from the original loan still living in the home as their primary residence, the loan becomes due and payable. At that time, you would have to decide if you plan to sell the home or pay the loan off and keep it as with a refinance loan.  The borrower can be in a temporary hospice for up to a year before they are deemed permanently gone but I would advise not to wait until the last minute if you do not believe the owner will be able to return.

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Question From Sally on 5/03/2018

1. My mother-in-law owns her home but rents out part of it to two tenants. Can she obtain a reverse mortgage? 2. Can this rental income be included in her income calculation? 3. If she first obtains a "line of credit" from a bank, could this prevent her from getting a reverse mortgage?

Expert Answer

Hello Sally,

As long as you mother in law has a history of renting the property for at least 2 years and claims the income on her tax returns, the income can be used (and as long as it is mom's primary residence and the rental is not transient as in a air BNB or bed and breakfast type arrangement, that is ok as well). 

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Question From Baldwin F. on 4/27/2018

My brother and I own property deeded to us by our elderly parents. If one of us wants to occupy the house, must both of us reside there in order to apply for a reverse mortgage? We are both in our seventies.

Expert Answer

Hello Baldwin,

If you are both owners of the property, you must both occupy the home in order to obtain a reverse mortgage.  If the non-occupant is willing to deed the property to the brother who intends to occupy, you could get the loan under that scenario and he can even deed you back on to title after the loan closes but you must remember that if something happens to him and due to death, illness or whatever reason, if he no longer occupies the home, the loan would become due and payable at that time.

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Question From Ladonna on 4/25/2018

Can a reverse mortgage be rented? Non owner occupied?

Expert Answer

Hello Ladonna,

No, properties with reverse mortgages cannot be non-owner occupied homes.  The borrower will not qualify for the loan if they do not occupy the property as their primary residence and if they move out at any point during the loan and rent the home, the lender would call the loan due and payable.

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Question From Kathleen B. on 4/19/2018

If we have a reverse mortgage can we add one of our children to our deed

Expert Answer

Hi Kathleen,

Under the terms of the reverse mortgage, as long as at least one of the original borrowers remains on title and lives in the property, you can add anyone else you wish. So yes, you can add one or all of your kids to title as long as you are on the title with them and you still occupy the home as your primary residence.

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Question From Tina on 4/15/2018

Say someone rented out their house for four yrs without living in it. Can they get in trouble?

Expert Answer

Hi Tina,

Trouble?  I am assuming you are talking about a borrower with a reverse mortgage and the answer is No, with a qualification.  There is no law that has been broken and therefore the borrower is in no “trouble”.  HOWEVER, the borrower would have violated the terms of the loan and lender could call the loan due and payable.  If the lender were to discover that the home is no longer owner occupied, they would issue a demand for payment in full and if not paid, the loan would be placed into foreclosure.

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Question From Cindy B. on 4/14/2018

Hi my parents have a reverse mortgage I am their daughter and I'm moving to Arizona they would like to come spend some time with me and they're thinking about letting their grandson rent the house when they're gone how long can they be away from their home and how does the lender keep track of when they come and go how does that happen because they would probably like to do it periodically when they come back to the residents how long are they required to stay before they leave again

Expert Answer

Hi Cindy,

Your parents have no problem as long as the home remains their primary residence.  To be a Primary residence, that would mean that they live in the home more than 6 months a year, have all their mail going there and use it as their residence for legal purposes.  They really should not be “renting” the home, but if they collect rental from their grandson for renting a room, that’s ok.  The security agreement allows for a temporary leave for up to 12 months for times when needed for things like hospice care, etc, but that can’t be every year or regular trips because then the home is no longer their primary residence.  The lender can do occupancy inspections at any time.  If your parents are found to be out of the home more often or if it is determined that the home is being used as a rental, the lender can call the loan due and payable.

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Question From Richard L. on 4/13/2018

My mom and dad took a reverse mortgage out on the house about 6 years ago me and my son lives here with them I'm 53 and my son is 10 I'm a single parent with custody.. my mom passed away 2 years ago and now my dad is in hospice.. don't know how long he has. Whats gonna happen. Or what can I do to be able to stay in our home? Can I pay rent to stay?

Expert Answer

Hi Richard,

If Dad permanently moves out of the home, the loan becomes due and payable. If you are their heir, you would own the home at that time.  You would need to make arrangements to either refinance the loan in your own name at that time or you would have to contact a real estate agent to see about selling. 

Dad can be out of the house temporarily for up to 12 months in the hospice care before it is considered a permanent move. I would suggest that you start looking into each of the options now though since it may take some time to get everything done and it is not any easier if you wait until the clock starts ticking on the final time frame.  It's best to know all your options and to have a plan in advance. 

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Question From Jan on 4/10/2018

My 88 yr old mother in law owns two houses in Fl.. Can she do reverse mortgage on primary residence if she owns two homes? I was told the second home would have to be sold first because it's considered an asset. Thank you

Expert Answer

Hi Jan,

There are no restrictions on the number of homes your mother in law can own and still do a reverse mortgage.  As long as she qualifies with the expenses of any other homes and she does live in the home on which she is placing the reverse mortgage as her primary residence (and her documentation supports this), there is no problem with her owning other property.

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Question From Christopher V. on 4/04/2018

I have someone a similar question to some on here but not the answer I need me and my wife and kids are living with my uncle and he has a reverse mortgage on the house but yet he had to move out a month ago only due to the fact that his daughter pulled him out thinking he's unfit to live on his own what rights do we have in the house and how long do we have to be before we have to move? And I live here in Southern California

Expert Answer

Hi Christopher,

With regard to your specific question, I can’t tell you what “rights” you may or may not have as occupants of the property, you would need to speak with an attorney to ascertain legal rights under the law.  I can tell you what the reverse mortgage provisions state.  The owner of the home is required to live in the home as his primary residence to be in compliance with the terms of the reverse mortgage.  He can be gone with a temporary leave for up to 12 months and still be in compliance (for travel, hospice stay, visiting relatives. etc).  After 12 months, his absence would be considered permanent though and the loan would become due and payable.

If he just moved out a month ago, he has another 11 months to move back into the property before it would trigger the lender calling the loan due and payable under the temporary absence rules unless his daughter contacted the lender and previously notified them that he had permanently vacated the home.  If the lender had been notified of a permanent move,  the lender would call the loan due and payable immediately.  I would suggest that you contact the daughter and determine whether or not the home still has any equity in the property before any of this happens to see if it would not be better for all concerned to place the home on the market for sale before the lender calls the loan and/or possibly begins foreclosure action.  Many places in Southern California have experienced good levels of appreciation and it might be better for all if the home were sold before the lender had to step in now that your uncle has had to move. 

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Question From Kat on 4/03/2018

Mom broke hip and is in rehab. Might stay on but this isn't decided. When do we have to notify reverse mortgage company if she transitions to memory care unit permanently? How long do we have before foreclosure? The house has fallen into disrepair also. How does this affect outcomes?

Expert Answer

Hello Kat,

Mom can be out of the home at rehab for up to 12 months before the absence is considered permanent.  My suggestion is that you reassess mom’s condition at various stages to determine if you think she will ever re-enter the home and not wait for the entire 12 months to pass.  It also pays to be prepared.  I would contact a local realtor and determine the value of the home in its current condition and what it would sell for if some basic repairs were completed.  You can then determine if it is feasible and advisable to complete those repairs in anticipation of selling the home to retain any equity.  If there is no equity in the home and you realize that mom will not be returning, then I would recommend you contact the lender as soon as you remove mom’s personal effects from the home so that they can make arrangements to take the home and prevent it from falling further into disrepair. 

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Question From Tammy C. on 4/02/2018

My husband me, and my daughter are staying with my uncle. He is under reverse mortgage. Will the lender foreclose because we stay with him?

Expert Answer

Hi Tammy,

There are no restrictions on the loan with regard to who the borrowers can have living with them.  The home belongs to the borrower and as long as at least one original borrower still lives in the home as their primary residence, there is no restriction on how many family members can live with them (or non-family members as well for that matter).

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Question From Kate on 4/01/2018

My dad has a reverse mortgage on his home but does not live there. He has people renting the home. I understand that he is breaking the terms of the loan and if he is caught he risks losing the home. Could he also go to jail?!

Expert Answer

Hello Kate,

Unless your father actually set about to commit mortgage fraud and purposely obtained a reverse mortgage with no intention of ever living in the home, he has no fear of criminal prosecution.  That would be extreme and only an option if the lender and HUD determined that your father was part of a scheme to defraud the government and the lender.  They would call the loan due and payable immediately though if they determine that the home is not being owner occupied and is being used as a rental.  Under that scenario, he may or may not lose the home as he would have to  pay off or refinance the loan with a new loan which could cause him to possibly have to sell if he was unable to do so.

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Question From John on 3/31/2018

I have a reverse mortage on my home can i buy landlords ins. instead homeoweners

Expert Answer

Hello John,

If you did not live in the home (and thus the landlord’s policy over the homeowner’s policy), you would not be in compliance with the terms of the reverse mortgage and the lender would call the loan due and payable.  The loan terms require that you carry adequate insurance and that you live in the home as your primary residence.  If the lender were to receive evidence that either condition were not met, that would be a default under the terms of the Note and Deed of Trust and your loan would be called due and payable.

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Question From Jennifer on 3/26/2018

Do I qualify for a reverse mortgage, if the house is not my primary residence?

Expert Answer

Hello Jennifer,

The house on which you wish to place a reverse mortgage loan must be your primary residence. 

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Question From Nancy on 3/25/2018

If we are separated, jointly own house, one lives in the house. can we qualify?

Expert Answer

Hi Nancy,

The issue of separated borrowers is one of the most sensitive when it comes to reverse mortgages.  The short answer is yes, you can get the loan.  But the non-occupant would be considered a ineligible borrower and would still have to go through the counseling process and sign all the documentation for the loan.  If anything happened to the borrower who lived in the home (the eligible, borrowing spouse), the loan would become due and payable.  The only way to keep from having to go through all this with both spouses involved in the counseling, documents, etc. would be to wait for the divorce to be final and then do the loan in just the name of the spouse who would be the owner of the home in just their name.

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Question From Karen on 3/23/2018

Does the person who did a reversed mortgage have to live there? And if she has moved out of state is she committing fraud. If so who do I contact to report it as the home is really in bad condition the people she has living do not maintain it

Expert Answer

Hello Karen,

The borrower does have to live in the home as their primary residence under the terms of the reverse mortgage.  They can be out of the property less than half the year every year and it can still qualify as their primary residence.  They can also be gone up to 12 months for a temporary leave under the terms and still meet the occupancy requirement.  However, if the owner has permanently left the home, then she is no longer in compliance with the terms of the loan. 

A borrower no longer living in the home is not considered fraud, but the loan would be called due and payable nonetheless.  I cannot tell you how to determine who her lender/servicer is, I do not have that information.  If the owner is letting the property fall into disrepair, you could check with the local city and if they file a notice for services (weed abatement, etc), that would alert the lender or you could attempt to notify HUD with the property address.  To find the HUD office that services the area where the property is located, just go to HUD.gov, “STATE INFO” in the topics across the top, click on your state  and then click where it says Contact My Local Office. 

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Question From Tracie E. on 3/23/2018

We currently live with a Pastor friend who allowed us to live on the 3rd floor of his home. He has a reverse mortgage. We are not paying rent or operating a business . Under the reverse laws are we allowed to stay in his home?

Expert Answer

Hi Tracie,

There is no issue whatsoever with a homeowner allowing others to live with him just because he has a reverse mortgage.  HUD doesn’t even prohibit the rental of a portion of the home as would be the case if he was renting you a room.  They don’t allow the transient use for a bed and breakfast or the use of more than 25% or the home for a home-based business but what you are describing is perfectly fine.

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Question From Mary on 3/16/2018

I have a reverse mortgage with a significant other. She is now in a nursing home. How can I have her name removed from the mortgage?

Expert Answer

Hi Mary,

The name would not be removed from the loan but the fact that her name is still on it does not affect anything.  Both of you still own the property by law and as long as one of you still occupies the home as your primary residence, the terms of the reverse mortgage are still met so there is no need to make any change, whether she lives there or not for the loan.  In fact, even if you were to change title, that is if she came off title and you remained on, it does not change the terms of the existing mortgage.  Therefore it would not change your options on the loan either.  You would still be able to live in the home for life even if your partner does not, has permanently left the home and has deeded her interest in title to you.  However, if at any time both of you came off title or both of you no longer lived in the home, then the loan would become due and payable.

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Question From Jim D. on 3/13/2018

On my property at the time I got my reverse mortgage,2009, I had a detached work shop and a small guest house attached to the shop. Can I rent the guest house as long as I live in the main house?

Expert Answer

Hello Jim,

HUD has no prohibition which would prevent you from renting a small portion of your property.  They do not allow transient or business use so if you wanted to use the guest house as a bed and breakfast that would be a different situation.  But if you had a tenant in your guest house and you live in the main house, you are not in violation of the terms of the reverse mortgage.

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Question From Joanne on 3/09/2018

If the borrower is put in a nursing home can the children take over the mortgage?

Expert Answer

Hi Joanne,

The loan becomes due and payable when the last original borrower on the loan no longer lives in the home.  The borrower may be absent for a temporary stay in a hospice or convalescent home, but if the borrower is permanently gone or out for more than 12 consecutive months, then the loan would be due and payable.  Heirs cannot take over or assume a reverse mortgage loan.

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Question From Lisa S. on 3/08/2018

My old landlord that I lived with and care for has fallen ill . he was moved out west with his family last week . I still live in the home . All of equity has been taken out at $200,000. The house inside is trashed and in my opinion needs to be gutted . It is not worth 200 ,000 . my question is ... Would I have a shot at a rent to own on this property . credit score should be in 700"s next yr and qualify for FHA loan. Of course it would take years to fix up, little at a time .

Expert Answer

Hi Lisa,

I assume the question involves the fact that he had a reverse mortgage?  The loan will become due and payable now that he no longer occupies the property.  The lender will probably have to foreclose on the property based on your description of the improvements and his absence in order to obtain title to the home (since he or other family members are not interested in stepping in to pay off the loan and the lender can’t do anything with the property until they own it and the foreclosure would give them title to the property).  At that point, the home would be sold at foreclosure auction and the starting bid would be the lender’s and that would be the amount owed.  Since you feel that the property is not worth the amount owed, it is very likely that the lender would become the owner with no other bidders at auction.

It would be at this time that you could approach the lender and HUD to negotiate sale/purchase of the property.  I have never heard of them doing a “rent to own” deal on a sale, but I have heard of HUD real estate owned sales (REO) sometimes being sold with very little to no down payments and that may very well achieve a better outcome.  Usually a rent to own situation with a private seller requires you to pay sufficient rent to cover what the normal rent would be plus an additional amount to go toward the purchase price and is likely to be above what a payment would be on a new FHA mortgage.  With good credit, you may find that you can pick up the home at a better deal and it certainly doesn’t hurt to approach them and see what they can do.

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Question From Susan on 2/22/2018

We have have a reverse mortgage on our 2 story home which sits on 2 acres plus I believe they included the adjacent 17 acre parcel. Due to health issues we built a single level home on the 17 acres. My daughter would like to live in the original 1890 house. Would the lender call the loan due? If we rented would we put landlord insurance on original house and homeowners insurance on the new house?

Expert Answer

Hi Susan,

If the lender received verification that you had rented the main dwelling secured by the loan (such as a landlords insurance policy), they would move to call the loan due and payable.  Your circumstances are really borderline as you describe them and I can’t really advise you fully and would suggest you contact your servicer.  Typically, when the loan is underwritten, the underwriters check to be certain that the owners live in the main dwelling and not an accessory dwelling unit (ADU).  There are rules which HUD allows for the rental of ADU’s but none for the rental of the main home and the occupancy of the ADU by the borrower.  I don’t want to tell you anything is automatic based on what you have outlined but I surely would not want to see you blindsided either and strongly suggest you discuss this with your lender before making any moves.

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Question From Rose on 2/20/2018

My Mom has a Reverse Mortgage and she's in failing health and unable to live alone anymore. She's 90 years old. How can she get away from the Reverse Mortgage. Thank you.

Expert Answer

Hi Rose,

She can sell the home and keep any equity in the home.  If there is no equity remaining and she is forced to leave the property, you or her other heirs have the option to keep the home and pay off the loan at 95% of the current market value if the balance is higher than the current value or she can contact the lender and let them know that she must leave and work out arrangements to Deed the property back to them if she does not want to do any of the above.  In any case, the loan is non-recourse and the lender cannot look to any other assets to repay the obligation.

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Question From Suzie on 2/15/2018

My home is in reverse mortgage and I am no longer there but have to pack up the home and will then vacate home and once I have notified the bank how long will I be given to move out?

Expert Answer

Hi Suzie,

You own the home so no one can make you pack up and leave the home.  There is a process for when borrowers no longer meet the loan requirements but before we get into that, have you contacted a local real estate professional to see if there is any equity in the home?  If so, that is your equity and you can sell the home now and keep that money.  If you have determined that there is no equity in the property and that you cannot continue to live in the home (without having to make a mortgage payment) for some reason or another and you leave the home, the lender will call the loan “due and payable”, requesting you to pay the loan off.  The agreement you have with the lender says that you will occupy the property as your primary residence and once that is no longer the case and they discover this fact, the first step is to request payment in full.

If you cannot or choose not to sell the home or pay the loan off with other funds once it has been called due and payable, then the lender must go through a series of steps required by HUD to begin foreclosure proceedings.  Start to finish, that takes different amounts of time in different areas of the country depending on the foreclosure laws.  In most instances, this whole process cannot be completed in less than 4 – 5 months between notice to you and foreclosure processes and that’s why the lender cannot afford to wait too long once they become aware of breaches.  It’s usually many months before they even know about this type of situation and many more before they can secure the home after foreclosure and most of the time the home is neglected and possibly vandalized if no one is living in it or taking care of it.  Therefore they look to be aggressive when they know that the property is vacant.

My advice to you is to first contact a real estate sales professional and see if you can sell the home and maybe keep some of the proceeds.  As I started, it’s your house and if there is equity, why not keep it?  Absent that, I would say that if you cannot sell the home, take all your personal belongings and then contact the lender and see what options are available to you with regard to Deed In Lieu of foreclosure options.  This is where you voluntarily Deed the property back to the lender once you are completely out of the property and they do not have to go through the time or expense of a foreclosure.  Because the lender and HUD save money when this happens in many instances, you may find that you are able to receive some compensation in the Cash for Keys program from HUD.  At any rate, I wish you the best.

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Question From Koffy B. on 1/29/2018

How does the lender find out if the borrower has died?

Expert Answer

Hello Koffy,

There are a number of different reports available to servicers including the Social Security rolls.  Usually, Funeral Directors will notify social security when a person passes. 

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Question From Sue on 1/26/2018

Husband and mom co owned home for 17 years, as she QCD to him as tenants in common, so we could add a condo onto existing home for her to live in since Dad had died and we were able to live by her.Then she QCD her portion to me and her son as JT in April. She is no longer owner. In July husband and I closed on a reverse mortgage. Now at age 90 if she needs to go to Medicaid assistant living place would we have a lien put on the home from Medicaid when we tried to sell or if we stayed til we died would our kids have to pay back that lien plus any money that was due from the reverse mortgage? Thank you, we did not think about this possibility when taking out the reverse mortgage.

Expert Answer

Hi Sue,

I can’t answer the Medicaid lien portion of your question because that is a legal question and I am not licensed to give legal advice.  I don’t know how Medicaid can put a lien on a property no longer owned by someone but I also think you should seek professional assistance from a licensed elder care attorney because I am pretty sure there are all manner of ways people seek to avoid payment of things and Medicaid may have a way to do things of which I am not aware (and I am not saying that is why you folks made any of the changes you did, only that they may still have recourse I have not considered or don’t even know exists). 

Now with regard to the loan itself and your heirs, they have total choice on the matter of repayment.  They can sell the home and repay the loan with the proceeds, they can pay the loan off with other funds available to them or they can obtain a new loan with a refinance transaction to pay the loan off.  They can never owe more than the property is worth no matter how much you borrow, how long you live there, how much interest accrues or what property values do.  In fact, they can pay off the loan by paying the balance of the mortgage or 95% of the current market value, whichever is less.  And then if they don’t want the house for any reason at all, the reverse mortgage is a non-recourse loan so they can also choose to walk away with no liability at all.  The lender has only the home for security and can never seek repayment from any other assets.  If you are concerned with other liens or creditors (such as Medicaid), then you really need to bring that topic up with the senior specialist attorney for guidance on that issue.

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Question From Carol on 1/23/2018

Is it OK for a family member to come in an be a caregiver to the borrower?

Expert Answer

Hi Carol,

Absolutely!  There are no restrictions against having family members move into the house to care for the borrower or for any other reason.  It is very common for family members, especially children, of reverse mortgage borrowers to move back into the home for various reasons and often it’s the parent helping the child.  Borrowers are even free to rent out a room in their home if that is their desire.  The house just has to be the primary residence of the borrower and they cannot use the home for business purposes (i.e. a B&B, etc.).

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Question From Lauren W. on 1/14/2018

Can a reverse mortgage, Financial Freedom now require twice a year occupancy verification? They started foreclosure procedures because i didn't return the june occupancy verification two years ago. Cost me 1,700. I was never informed ,that they now wanted 2 times a year verification on occupancy. My dad has had a reverse mortgage with them since 2007. It is hud whatever. Also they have more than once suggest to me that i put dad in a nursing home and give them the house. They have also told me that if dad spends more than 30 days out of the home that they will call the loan due and payable. My dad is 92 and does go in and out of the hospital. I have cancer stage 3 and when i go into the hospital ,dad goes with me. He stays on a cot. I was told that dad had to be in his home 30 days out of a year. I got a call about 3 weeks ago from someone looking for dad. Dad had come home from an er and he doesn't handle his own financial affairs. The woman refused to tell me who was calling. When i wouldn't let her talk to dad - Financial Freedom requested that adult protective services do a safety check on dad to verify he lives here. Than last week my girlfriend, who gets my mail for us, called me at 8:30 at night as someone knocked on her door and left an envelope. Contained an occupancy verification. Our enjoyment of our home just isn't possible. Who polices reverse mortgages? Now they want a different insurance policy. The hoa insurance inst good enough for them. They bought insurance and want me to pay them 250$ for less coverage than i alreafy have. They also refuse to recognize the power of attorney that they were given back in 2010. If i could pay this off i would. The home is in a trust.

Expert Answer

Hi Lauren,

The loan documents do not state any provisions for home inspections.  They do however outline the occupancy requirements.  Dad has to live in the home as his primary residence and can be out of the property for temporary leaves for no longer than 12 months.  The primary residence means that dad lives in the home more than half of the year (6 months and a day) out of each year that is where he receives all of his mail, etc.  Borrowers are allowed temporary absences for up to 12 months before they are deemed permanently out of the house – but that would not be every year, they still have to live in the home more than 6 months out of other years.

The lender only has the rights your father granted them through the loan documents when he obtained the loan.  I would suggest to you that you review or better yet, have your attorney review, your Promissory Note, your Deed of Trust or Mortgage and your Loan Agreement.  If dad is still in compliance with all the terms of the loan and the lender is needlessly harassing you, the attorney can put a stop to that but the attorney can also tell you if you are misinterpreting any of the terms of the loan so that you will stay in compliance with the loan terms (like insurance requirements, amount of time dad has to occupy, etc).  From what you are saying, I think there is a combination of misinformation and misunderstanding going on and with a little bit of communication, you may be able to work thinks out amicably and if not, there are remedies if the lender is acting out of line.

If you cannot locate a copy of the documents, have the lender send you a copy (dad may have to sign a written request).   

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Question From Crystal C. on 1/09/2018

If you live with your parents and they have a reverse mortgage on their home, can they charge you rent?

Expert Answer

Hi Crystal,

The reverse mortgage does not allow or prevent a homeowner from renting a room to family or others.  The loan does not prohibit borrowers from renting a portion of the home as long as they are still the majority occupant and the home is not being used as a business (such as a B&B, etc).  So yes, they can rent rooms to family members and collect the rents.

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Question From Lauren W. on 1/05/2018

I am a fultime nurse/caretaker of my dad. 24/7 which i have done for the last 21 yrs. He is 93. I have stage 3 cancer. I was tolf by financial freedom that they will evict me from the home when dad dies. I am his daughter and heir. Can they lock me out? Do i have 6 months to fix up the home and sell and if i need get an extention before they foreclosure? There is 100,000 equity in the home. I have a care agreement that i was to inherit the home as payment for my work. I had to agree to do the reverse mortage in 2005 in order to keep dad in his home. I figure i will get 50,000. There is nothing left to inherit nor does dad have a buriel spot. I haven't worked in 35 yrs. Took care of my mom than my dad. I am 58. I really need something or i will be living in my car. Financial Freedom wants this home. They are now demanding occupency verification twice a year. They foreclosure last year . Can i be evicted when dad dies? Do i have enough time before foreclosure to fix and sell? Would like to get cancer treatment which isn't possible with dad now.

Expert Answer

Hi Lauren,

I know that Financial Freedom had the HUD HECM program, FNMA Homekeeper and a proprietary or private program reverse mortgages available to them at that time and I am hesitant to answer too in-depth without knowing which program your father’s loan was done under.  What I can tell you though is that the lender has no more right or authority than what is granted to them in the loan documents signed by the borrower.  Hopefully, the original documents your father signed are still in a file somewhere and you can access them to review or have an attorney review for you to determine if the lender is acting in a manner not consistent with the original agreement.  You can always send the lender a request signed by your father and get another copy of those documents if you can’t find them.

I can also tell you that if you own the home, you can sell it and pay off the reverse mortgage once dad does pass but the concern I have from what you are telling me is that if you are not on title right now, it may take a while for the change of ownership to go through if you have to go through probate, etc. and that could present a problem if that takes long.  My suggestion (this is not legal advice) is that you check the current documents for the existing reverse mortgage loan.  If it is a HUD HECM loan, your father can add you to title at this time (he cannot not put you on title solely but can add you to title with him as a joint tenant with right of survivorship if your father is of sound mind) and then if something happens to dad later, you are already on title and you can immediately sell the home without having to go through probate or any other delays.  I strongly suggest you speak with an attorney now, especially if you have any siblings or if there are any other possible heirs, before you have to make any quick moves later though and make sure you have your plans in place before you are in a crunch.  This is just my suggestion as I cannot give you legal advice but I really think the money spent on the legal counsel now is well worth the investment.

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Question From Arnold C. on 1/05/2018

My Godmother did a reverse mortgage on her home 10yrs ago. She is currently 92 years old and her home , a tri level is becoming more difficult to navigate.she has a second smaller home she wishes to move into. What are her options, outside of paying the balance of the loan out in its entirety before her death, that will allow her to adhere to the reverse mortgage loan requirements, but will also allow to move into a smaller ,more manageable home.

Expert Answer

Hello Arnold,

The terms of the loan state the house has to be her primary residence or the loan will be called due and payable.  However, if she wishes to move, she can refinance the loan or sell the property and move into the smaller home but she does not have the option to just keep the reverse mortgage loan on a non-owner occupied home after she moves out of it.  

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Question From Chris on 12/19/2017

Can i Do a reverse mortgage at my existing property in Fl. And buy a condo in Ct with another reverse mortgage progrsm! I am age 72 and will put $80,000 into the second home????

Expert Answer

Hi Chris,

HUD allows just one reverse mortgage and it must be on your primary residence.

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Question From Lorraine E. on 12/10/2017

If one spouse leaves the home can the other spouse stay?

Expert Answer

Hi Lorraine,

As long as one of the original borrowers or qualified non-borrowing spouse’s remains in the home and you continue to meet the other conditions of the loan (paying the taxes and insurance and maintaining the home in a reasonable manner), one spouse is fine – it does not require both of the spouses to keep the mortgage on the home.

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Question From Ted on 11/28/2017

We own a home on a reverse mortgage. Can we rent out one bedroom as long as we occupy the residence?

Expert Answer

Hi Ted,

Yes you can.  HUD does not allow borrowers to use the property for a business like a bed and breakfast, etc. but you absolutely may rent out a room if you choose as long as you occupy the home as your primary residence.

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Question From David U. on 11/24/2017

Can the "primary residence" requirement for a reverse mortgage be waived after the loan is seasoned for a few years?

Expert Answer

Hi David,

This loan is meant to allow borrowers to live in the home for the rest of their lives and not have to make a payment for as long as they live in the home.  Once they no longer satisfy that condition, the loan becomes due and payable.  The home must be the property that the borrower lives in as their primary residence and if they ever leave the home for a period of 12 consecutive months or more, the loan is due and payable. 

If the borrowers no longer intend to live in the home as their primary residence, then you should consider other financing options or a sale of the property as the reverse mortgage is not intended to finance second homes or rental properties.  

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Question From Sam L. on 11/21/2017

I'm trying to find out who has my sisters reverse mortgage. So I can let them know she no longer lives there. She has dementia and will never be going back.My niece (POA) put her in a nursing and may be using it for her own personal use. This is not legal, I believe. I believe notifying the reverse mortgage company is the proper thing to do.

Expert Answer

Hi Sam,

I know that when we need to know who is servicing a loan, HUD directs us to call  Novad Management Consulting at 877-622-8525.  We typically have the FHA case number and I believe they would also be able to let you know based on the property address, but I don’t know that for certain.  If not, you would have to contact HUD directly at the Home Ownership Center that services your area and that number can be found on the internet for your location.

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Question From David U. on 10/31/2017

What happens if a person has a reverse mortgage and decides to live in a different house for the majority of the year?

Expert Answer

Hi David,

The terms of the reverse mortgage are that you must use the home as your principal residence.  If you plan to live in another location for the majority of the year, the lender can call the loan due and payable as you would not be abiding by the terms of the loan since the property would be a second home at that point.  If you no longer wish to live in the home full time, you might consider replacing the financing with a more conventional type of loan, not carrying a loan on the house or selling the house.  Once you move into the new home, you can apply for a reverse mortgage on your new primary residence as long as the existing reverse mortgage has been paid in full.  

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Question From Sissy on 10/19/2017

I rent a room in my friend "Joe's" home that was owned by his late father ("Jim") who got a reverse mortgage on the home almost 10 years ago. Joe's older sister, ("DJ") said she is trying to get a traditional loan to pay off the reverse mortgage so her brother Joe can have the house as his father Jim wanted. Joe found out last week that his sister had herself put on the title of the house, because, she said she had to in order to buy the house. Is that true? How does that affect the reverse mortgage - her, putting her name - and only her name - on the title of their late father's reverse mortgaged house while the reverse mortgage is still in effect? Joe hates to admit that his sister can't be trusted, but she can't. That's why I'm writing this - for Joe's piece of mind. Please note: DJ is barely 55 years old, has terrible credit, no steady income, except she has control of her disabled wife's and her wife's disabled sister's pension and SSI and she gets paid for taking care of them both (although someone else does the work in exchange for her floor to sleep on). Please let me know if you need more info. Thank you very much for your time and assistance.

Expert Answer

Hi Sissy,

I really can't comment on all of this but I can tell you that now that the reverse mortgage borrower has passed, the loan becomes due and payable.  It is now up to his heirs to decide what they want to do with the property and that could include selling the home or refinancing the loan with a new loan in one or both or their names in order to pay off the loan that is due.  To obtain financing in their names, they would have to first own the property or no lender would give them a loan and that may or may not have been the motive of your friend's sister, I honestly can't say. 

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Question From Carri D on 10/12/2017

What if your health is bad can you give your house up and leave under reverse mortgage - I was informed if your health status was severe and you could no longer maintain your home you could leave - would you have to pay anything back

Expert Answer

Hi Carri,

The reverse mortgage is a non-recourse loan, whether your health is bad or not.  If you can sell the home and keep any money then that would always be in your best interest but if you had to leave the home the lender can only look to the property for repayment of the obligation.  They cannot seek repayment from any other assets.  If you allow the loan to go into foreclosure and there is a deficit balance, you would not be eligible for another reverse mortgage after walking away and not paying the balance on the first one but the lender cannot require you to make any other payments.

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Question From Glennie Harney on 10/12/2017

If you have a reverse mortgage but want to purchase another home can you have another loan?

Expert Answer

Hi Glennie,

As long as you continue to reside in the home on which the reverse mortgage is placed as your primary residence, there is no restriction on other properties you may own or finance afterward.  Due to the fact that you can only have a reverse mortgage on your primary residence though, if you do choose to buy another property you may not finance it with another reverse mortgage, you may only have one reverse mortgage at a time.

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Question From Shelley L. on 10/11/2017

We have a reverse mortgage & have our house up for sale. If it is not sold by the end of month can we move & leave the sale with our realtor

Expert Answer

Hi Shelley,

I'm not sure I fully understand the question but I will answer what I think you are asking.  I think you are saying that you are not abandoning the sale or "giving" the home to a third party, just leaving it with the Realtor to complete the sale.  Is that correct?  The answer is that the terms of the loan are that you must live in the home as your primary residence.  You may be absent for temporary absences for up to 12 months and still be consistent with the terms of your reverse mortgage.  But what constitutes a temporary absence?

Vacations, temporary stays in hospitals and hospice, visiting family to help out for less than 12 months are all ok.  However, once you pack up and move all your personal belongings out of the home you have established that it is no longer your primary residence, even if it has not been 12 months.  But what would be the effect of allowing the property to remain vacant for a month or two while it sold?  Maybe nothing but you would have to realize that you would be outside of the terms of your contract and that the loan could be called due and payable.  And even then, even if the lender did call it due and payable, by then you might have it sold and ready to pay off by the time any real issues occur but I certainly would not recommend this as a plan of action if it could be avoided.  You need to consider what the ramifications could be if the home does not sell and the lender does call the loan and ultimately has to begin a foreclosure action.  If at all possible, my advice would be to stay in the home until it sold.

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Question From Neil P. on 10/09/2017

I have a reverse mortgaged home and am medically unable to live alone. my daughter and three grandchildren are living with me help care for me. how does this affect my loan and is it allowed?

Expert Answer

Hi Neil,

There is no prohibition or stipulations about family living with you at all so yes it is allowed and it does not affect the loan in any way whatsoever as long as you are living there as well.

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Question From Lyn Dalen on 10/09/2017

If I have a room can I rent out a room I only get $950. Is this allowed?

Expert Answer

Hi Lyn,

There is nothing in your reverse mortgage that forbids you from renting out a room.  Many people do it and we can even use income from renters when underwriting the loans as long as the income has been received for at least 2 years and is claimed by the borrower on their tax returns so you should have no problems if you want to rent out a room.

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Question From Dan on 10/08/2017

If I decide to leave the home can it be used as rental property?

Expert Answer

Hi Dan,

As soon as the home is no longer your primary residence, the provisions of the reverse mortgage would make the loan become due and payable.  You can pay off the loan and still retain the property and then rent it out, but you cannot rent it out without living in it if you intend to keep the loan in place.

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Question From Tari C. on 8/10/2017

Can I get a HECM Loan on my primary residence and rent out my house I vacated.

Expert Answer

Hi Tari,

As long as the reverse mortgage is on the home that you live in as your primary residence, you may own other property that you rent.  

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Question From Xavier on 5/28/2017

After getting reverse mortgage how often is house inspected by hud

Expert Answer

Good Afternoon Xavier,

HUD doesn't usually do any inspections.  The lender servicing the loan will typically do a certification once a year to verify that the borrower is occupying the home and reserves the right to do a physical inspection if it feels one is warranted to determine that occupancy requirements are still being met.  Other than that, there is no annual inspection of the interior of the home or anything like that if that is what you mean.

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Question From Nettie on 5/23/2017

A friend of mine mother has a reverse mortgage on her house the son has been there taking care of the mother and now she has to go to a nursing home. Can the son take over the mortgage or does he have the right to live there until his situation has changed? Thanks!

Expert Answer

Hi Nettie,

Under the terms of the mortgage, the borrower and her heirs still now the home but the mortgage is due and payable when the borrower is no longer living in the property as her primary residence.  If they are not sure if this is a permanent move for her yet, she can be absent up to 12 months on a temporary stay before the lender can deem that her departure is permanent.  Therefore, the son can still live there while mom and son make their decision if mom is going to be out of the home permanently and if so, he should begin making plans to sell the property as soon as possible and not wait until the last minute.  

Also See: Reverse Mortgage: What Happens When You Leave to a Nursing Home?

 
 
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Question From Russ C. on 5/14/2017

Assume I buy a house under a reverse mortgage for purchase and in 10 years I want to move and rent it out. Can I rent out the house or must I sell it? Does it make a difference if it is a reverse mortgage or a reverse mortgage for purchase.

Expert Answer

Hi Russ,

With a reverse mortgage, purchase or redo, you must occupy the property as your primary residence and when you no longer do that, the loan becomes die and payable. If you want to later rent out a property on which you have a reverse mortgage, you would not necessarily have to sell the home but would have to replace the loan with other financing. 

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Question From Lisa on 5/03/2017

Someone I know has a reverse mortgage and rents out the house is that illegal and how do I turn them in?

Expert Answer

Hi Lisa,

It's not illegal, but it is against the terms of the loan. Since there is no law broken, the only entity that would be interested would be the lender.

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Question From Nancy D. on 4/26/2017

We have a reverse mortgage since 2007 but are aging and our children want us to move closer. My Daughter is willing to purchase a home with a mother -in law - cottage. She would need our income also to qualify and we would be would also be on the deed. How would this affect our current RM . What are the repercussions of purchasing another property and being on the deed while on an RM?

Expert Answer

Hi Nancy,

You can purchase any homes and as many homes as you like and it has no effect on your reverse mortgage whatsoever - as long as you continue to live in the property secured by the reverse mortgage as your primary residence.  If you move to be closer to your children they you no longer meet the terms of your reverse mortgage and so you would want to determine what you plan to do with the home first.  Would you want to sell it, refinance it with another loan or pay the loan off with other available funds?  Those would be your options if you plan to move because the loan would become due and payable if you no longer lived in the home. 

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Question From Tom C. on 4/25/2017

I have a reverse mortgage on a nice home which I have up for sale. There is still equity in the property. Can I move out of the house while it is up for sale?

Expert Answer

Once you move out of the home permanently, the loan can be called due and payable so you may want to keep this in mind.  

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Question From Nishan on 3/06/2017

Will Wells Fargo allow me to rent out rooms in my house if i have a reverse mortgage?

Expert Answer

Hi Nishan,

You cannot turn your home into a bed and breakfast or an Air B "n" B making it a full business, but you can rent out a portion of your home at your discretion to others.  If you have questions regarding the usage, I would suggest you contact your servicer (Wells Fargo) and discuss the intended use with them before you begin.  Chances are you are fine.

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Question From Desirae J. on 2/27/2017

My father is still alive and moving into adult assisted living. He wants me to take over the house which has a reverse mortgage attached to it. How do I go about finding out how much to borrow to pay this off?

Expert Answer

Hi Desirae,

He can be out of the home for up to 12 months before the move is considered permanent so you have plenty of time, but if you are certain this is a permanent situation, there is no sense in waiting and letting the interest accrue if you know he will not be moving back to the property.  He is allowed up to 12 months for a temporary absence before the lender can call the loan due and payable due to permanent move and then there is still some time even after the loan is called to settle things if needs be, but if you know this is the time to finalize things, I would advise you to do so as quickly as you are able to keep your costs as low as possible.

Aside from the interest that continues to accrue as long as the loan is open, if you let it go long enough and the lender has to begin foreclosure to protect their interest, then additional costs will accumulate and there just isn't any reason to let it happen if you know in advance where this is headed.

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Question From Ethel on 2/24/2017

My sister and my name are on the deed for the house. My name is on the loan. Could we qualify for reverse mortgage if she is the only one living in the house?

Expert Answer

Hello Ethel,

To qualify for a reverse mortgage, all owners of the property must live in the home and be eligible for the loan (62 or older) or be a qualified eligible spouse and live in a state that allows a non-borrowing spouse.

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Question From Kathi on 2/07/2017

My Husband and I jointly own a home in Michigan and Mississippi. We have a reverse mortgage on the Michigan house. We leave the Michigan house in the Winter, early January for the Mississippi house, then return to Michigan in May. Also go to Mississippi for two months in the fall. We claim Michigan as our Primary residence. Is it a violation of the Reverse Mortgage if my Husband gets his Mississippi residency and gives up his Michigan residency. I will still maintain the house in Michigan, and we will both live together traveling between homes. Obviously this would be for Senior property tax advantage in MS. As I am a 100% disabled Veteran in Michigan and don't pay property tax. Or claim a property tax credit. Is this allowable with the reverse mortgage?

Expert Answer

Hi Kathi,

As long as one of the original borrowers remains living in the property as their primary residence, you meet the requirements of the reverse mortgage.  So if you are also on the Michigan reverse mortgage and you maintain this home as your principal residence, you live in the home at least 6 months or more each year and you do not leave for more than 12 months at a single time, you are meeting the requirements of the loan.

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Question From Dan on 11/28/2016

I invested $100,000 in purchasing a home with my sister. My share of the purchase price is 23% however I am not on the Deed because my sister wants to take out a reverse mortgage. Can the reverse mortgage be designed so that it only recognizes her 77% share and there for would curtail the amount she could borrow. I am concerned about protecting my investment in case of her or her husbands death or illness.

Expert Answer

Hi Dan,

All owners of the property must be living in the home and must be eligible to get a reverse mortgage loan - and that is because they very well could exhaust the equity depending on the funds they draw, interest rates, future property values, etc.  There is no way to do a reverse mortgage on a fraction of the ownership.

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Question From Doris W. on 11/27/2016

My sister took out a reverse mortgage in 2014 and now her health is failing, can she come live with me and just let the house go?

Expert Answer

Hi Doris,

2014 is not that long ago and there may well be equity still in the property.  If there is equity in the home, I would suggest that you make arrangements with a local realtor to sell the home and keep the funds before you just give it back to the lender.  However, the loan is a non-recourse loan and if your sister leaves, the lender will foreclose and take the property back and there will be no other money owed to the lender.

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Question From Barbara L. on 10/17/2016

I can no longer afford to stay in my home. my wife died & I don't have the finances to do repairs or pay taxes. Can just leave the house as is to reverse mortgage? Can I be evicted?

Expert Answer

Good Afternoon.

If there is any equity in the home, I would suggest that you sell the home and keep the equity.  If not, the mortgage company will eventually foreclose and you would have to move if you cannot make the taxes and insurance payments.  However, I would suggest you check with family, see about taking in a tenant or other options before I let that happen if I were you.  I would think that the cost of even rental housing would be more expensive than your existing taxes and insurance depending on where you live.  You will always have water, electric, etc. no matter where you go and I guess it all depends on how expensive your maintenance is on the home.

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Question From Audrey on 9/16/2016

After I have a Reverse Mortgage; can I get another regular FHA loan in 1 or 2 years? Thanks

Expert Answer

Hello Audrey,

As long as you pay off your reverse mortgage in full you would be eligible to take on another FHA loan the reason for this is a FHA insures both regular home purchase loans as well as the federally insured HECM home equity conversion mortgage. Both of these programs are intended to be utilized for your primary residence only and because of such you may only have one of these loans at a single time. 

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Question From Pat on 9/09/2016

If I vacate my primary "Reverse Mortgage" home (due to personal reasons), and subsequently relocate to another state, can I be eligible to "Reverse Mortgage" my new home & new primary location?

Expert Answer

Hello Pat,

You may take out another reverse mortgage only after the current reverse mortgage you have is paid off in full. You can never have two simultaneous reverse mortgages as the reverse requires that you own or occupy the property you are taking it on. This is one of the three maturity events that you agreed to.

If you would like to list your home for sale and use the reverse mortgage to purchase a new home we can close these transactions concurrently for you utilizing the HECM for purchase program.

To learn more try out our reverse for purchase calculator https://reverse.mortgage/purchase-calculator or call us toll-free 1-800-565-1722

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Question From Sidney S. on 9/08/2016

My wife is 70 and I am 62. We are considering a reverse mortgage on our condominium. Both of us are in good health now but what we would like to know is if one of us becomes too ill to live in the condo but the other one is still living there do we have to pay off the mortgage?

Expert Answer

Hello Mr. Schipper,

That's a great question and fortunately for you a reverse mortgage would not become due and payable should one person leave to a nursing home. It would require both applicants to leave the home permanently for the reverse mortgage to become due and payable so as long as one of you is still living in the home is your primary residence you would not have to worry about any maturity events.

Click here to download a helpful .pdf brochure written by our servicing company Celink in regards to occupancy requirements.

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Question From Mel P. on 9/06/2016

We own a condo in N. H. which is our primary residence and is not FHA approved. We live here approx. 6 months a year. We also own a home in Arizona where we reside the other 6 months . Both owned free and clear with no mortgage. As we have learned, we cannot take a reverse mort. on our condo in N.H. The question is " can we do a reverse mortgage on our stand alone home in AZ. , even though it is NOT our primary residence"?

Expert Answer

I am not aware of a reverse mortgage program at this time that allows for a second home.  There have been programs in the past that did allow for an owner occupied residence or a bona fide second residence (not a rental) but those programs all disappeared in about 2009/2010 with the collapse of the secondary mortgage market.  There may be a time when they are once again allowed, but have you tried to work with a condo approval company to see if there is any way to have your primary location approved?  You may have better luck obtaining approval on your primary residence than waiting for a program that may or may not ever be reinstituted.  

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Question From Joe C. on 7/06/2016

We own a second home, vacation home, valued at about $225,000 and would love me a reverse mortgage. Is this possible?

Expert Answer

Hi Joe,

Currently, reverse mortgages are available only on primary residences.  In the past, there were some proprietary programs that did allow bona fide second homes (not rentals) but those programs disappeared when the secondary market took such a turn for the worse in 2009 - 2010.  To date, nothing has come out to replace the programs that allowed a second home to participate and I honestly have not heard of one on the horizon...but you never know!  I would advise you to continue to watch the internet for news of changes in this area, I'm sure if a product does emerge there will be an announcement. 

At this time though, there are very few proprietary programs even for owner-occupied, primary residences and so I would expect that the market would have to fill up with willing investors before they will begin to expand their product offerings to things like loans on second homes and to borrowers down to 60 years of age instead of 62 once again.

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Question From Dayna P. on 6/19/2016

I have a reverse mortgage. My adult daughter is getting a divorce and she and her children will be moving in with us for awhile. Can I charge her rent?

Expert Answer

Hi Dayna,

Yes you can.  You are still occupying the home as your primary residence and the fact that you have family members move in with you at some point, paying rent or not, does not violate the terms of your agreement on the loan.  As long as you meet the terms of the Note, the Deed of Trust and the Security Agreement (live there, pay the taxes and insurance on time and reasonably maintain the property), you are complying with those documents and that is your agreement with the lender.

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Question From Diane C. on 6/02/2016

Can one person have a reverse mortgage on two different properties

Expert Answer

Hello Diane,

Currently, only one reverse mortgage is allowed per borrower and it must be done on the borrower's primary residence.  There were programs available many years ago for bona fide second homes, but they were offered by private lenders and not HUD.  Those programs are not currently available.

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Question From John H. on 5/18/2016

Am 80 yrs. old. HECM balance is 300K. Expects say house is worth $290K. Tried to sell thru realtor past 2 years. Should I advise HUD' s manager I am leaving house in July to move in with famiy? My exposure?

Expert Answer

Hi John,

Have you contacted the lender yet to inform them that you cannot remain in the property?  If you leave, the loan will become due and payable and they would eventually initiate a foreclosure proceeding even if you just left the home.  The loan is non-recourse and so the lender has only the property to look to for repayment.

You would not be eligible for another HUD loan since you chose to move away from this house and a loss would be suffered unless you chose to pay the loss on the loan but I would suspect that you do not plan to purchase another home and use another FHA/HUD loan so this is probably not an issue for you.  

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Question From Don on 3/20/2016

What if I have residency in another state; but live five months in a home in another state that I wish to have a reverse mortgage on. Is that possible?

Expert Answer

Hi Don,

The home you live in 5 months a year is considered a secondary residence and is not eligible for a reverse mortgage. 

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Question From Edward on 9/09/2015

We are interested in a reverse mortgage in order to buy a 2nd property in Florida with the cash. Our plan, if allowed, would be to keep the subject property as our primary residence, but we'd like to be able to rent it out short-term when we're gone about 150-175 days/year in the winter, still living in it the majority of each and every year. Is this allowed?

Expert Answer

HUD allows you to rent out a portion of the home while you're in it, but once you rent out the entire home the property is no longer your primary residence, it is theirs.  If they refused to vacate it could cause all kinds of legal entanglements and I would have to say that if you rent out the entire property it is not your primary residence and could be a problem.  When all else fails, you go to the terms of the legal documents themselves.  Here is what the Deed of Trust the borrower must sign states regarding occupancy and the right of the lender to call the loan due and payable:

UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:

4. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application;

Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal residence after the

execution of this Security Instrument and Borrower (or at least one Borrower, if initially more than one person are

Borrowers) shall continue to occupy the Property as Borrower's principal residence for the term of the Security

Instrument. "Principal residence" shall have the same meaning as in the Loan Agreement.

9. Grounds for Acceleration of Debt.

(b) Due and Payable with Secretary Approval. Lender may require immediate payment in full of all sums

secured by this Security Instrument, upon approval by an authorized representative of the Secretary, if:

(i) The Property ceases to be the principal residence of a Borrower for reasons other than death and the

Property is not the principal residence of at least one other Borrower; or

(ii) For a period of longer than twelve (12) consecutive months, a Borrower fails to physically occupy the

Property because of physical or mental illness and the Property is not the principal residence of at least

one other Borrower; or

(iii) An obligation of the Borrower under this Security Instrument is not performed.

There is no provision for "temporary rental or release of primary residence".  So I would have to say that if you move from the home and rent it out for the winter (presumably 3 months or more at a time) you could run the risk of having the home declared as being other than your primary residence at that time and subject to being called due and payable since this does not have to run 12 months to be effective based on the terms of the Deed of Trust (you notice the right to call the loan is 12 months OR no longer living in the home, not AND).

Also See: Can You Leave Home With a Reverse Mortgage?

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Question From Frank M. on 2/28/2013

I am in the process of selling a home (in NM) that has a reverse mortgage on it. My question is ....1) can I go back to my 'second' home in another state (in NC), which previously was my permanent residence prior to the receiving the current permanent home thru an estate deal & choosing to live in it for the past several years, but has an existing conventional mortgage and qualify for a new reverse mortgage on that 'second' home (in NC) which has sufficient equity, which will become my new permanent residence 'again'????OR2) upon selling my current permanent home with the reverse mortgage ( & paying off the loan, etc.) , can I immediately (?) locate a new/different residence to purchase & acquire that with a new reverse mortgage in another state (in CO.)???

Expert Answer

Hi Frank,

Once you pay off your existing reverse mortgage, you can apply for another reverse mortgage on another primary residence, whether that is on a property you already own or one you wish to purchase.  The lender would look at the circumstances behind the occupancy though and it would have to make sense as all reverse mortgages currently must be placed on primary residences.  On the property you already own you may want to check with the lender prior to application to determine if there are any seasoning requirements, or a set period of time, that you must be in your home and what documentation they will require at application as verification of occupancy.

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Question From Sandra on 3/07/2011

If a widow gets a HECM loan and in a couple of years it admitted to a nursing home for over a year does the loan come due at that time. What will she owe at this time. Balance of loan and interest? What if the sale of house does not cover what is owed plus interest?

Expert Answer

All good questions. Once the last reverse mortgage borrower permanently leaves the home (and in this case, since there is only one) then the loan does become due and payable. The lender or the lender's servicer will work with the borrower or the borrower's heirs to give them ample time to sell the home, refinance it or pay the loan off with other proceeds. The amount owed would be the outstanding balance plus interest and any fees owed plus any amounts the lender was forced to advance, if any.

The reverse mortgage is a non recourse loan. What this means is that if the borrower lived in the home long enough so that the sale of the home was not sufficient to pay off the entire amount owed, the lender can look nowhere else for the repayment of the debt. At a time when either the interest over a long period with no payments and the falling property values combined can easily leave a home with no equity (many borrowers who make monthly payments are finding themselves upside down on property values), borrowers and their heirs are protected in that the only security the lender can look to is the property itself.

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