'Income & Credit Requirements' Category Archives

How Bankruptcy Can Affect Your Reverse Mortgage Eligibility

January 25, 2024     54 comments

We recently had several borrowers who had previously obtained a reverse mortgage call and asked us what the effect would be on those reverse mortgages if they had to begin a bankruptcy proceeding. While we are not attorneys and would always advise you to seek competent legal advice from an attorney in your state, we did want to contact an...
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Reverse Mortgage Life Expectancy Set Aside (LESA) Explained

January 22, 2024     55 comments

A key development in the overhaul of HECM guidelines was the introduction of the LESA.  This requirement is a response to past challenges where borrowers, after receiving a lump-sum equity payment, struggled to meet essential obligations such as homeowners insurance, property taxes, and home maintenance to FHA standards, leading to defaults. The LESA is designed to ensure that property charges...
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Who’s Responsible for Property Taxes on a Reverse Mortgage

August 27, 2022     44 comments

Who pays property taxes and insurance on a reverse mortgage? Reverse mortgages offer financial relief for homeowners aged 62 and up, but they don’t erase all responsibilities.  A common question is: Who pays property taxes and insurance? The short answer: You, the homeowner—unless a Life Expectancy Set-Aside (LESA) steps in. Here’s what you need to know to stay on track....
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Reverse Mortgage Seasoning Requirements Explained

July 25, 2022     14 comments

HUD has a new requirement that for borrowers to use reverse mortgage proceeds to pay off an existing lien on which the borrower received $500 or more, the loan must have been in effect for at least 12 months.  This includes any liens on which the borrower took out additional draws of $500 or more in the past 12 months,...
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This Little-Known LESA Growth Feature Is a Game Changer

April 21, 2022     2 comments

This Little-Known Reverse Mortgage Feature Could Be a Game Changer Qualifying for a reverse mortgage is tougher for some people today than it has been in the past. That’s because new underwriting standards have been developed in the past year to ensure that these loan products are safer for the borrowers who use them. As of April 27, 2015, all...
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How Reverse Mortgage Financial Assessment Works in 2025

September 15, 2021     6 comments

Updated March 13, 2025 When it comes to reverse mortgages, a crucial step in the process is the financial assessment – a set of guidelines developed by HUD (the U.S. Department of Housing and Urban Development).  This assessment is more than just a formality; it's a safeguard designed to protect both the borrower and the government, which insures most of...
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How Financial Assessment Made Reverse Mortgages Safer

August 31, 2021     no comments

This financial assessment process is conducive to making the Home Equity Conversion Mortgage (HECM) an even safer loan product. If a potential borrower can swallow such an absurdity he need not be concerned about who this financial assessment (FA) is making the product safer for! The FHA wants .50% insurance and will only allow 60% loan to value and now...
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HOA Payment History Can Affect Reverse Mortgage Eligibility

August 22, 2017     10 comments

We live in an area with an HOA we had a dispute with them that was settled but that has come back to bite us big time. We have excellent credit have paid our insurance, taxes, and mortgage on time but apparently it is not enough to satisfy HUD according to our mortgage dealer. They wanted $70,000 up front for...
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Can I Opt for a Voluntary Life Expectancy Set-Aside? (LESA)

February 10, 2017     2 comments

Just learned of this feature, LESA. Am a current Reverse Mortgage holder and received a solicitation from a mortgage co. There is a lot to absorb regarding RM's and unless you are an educated real estate professional, it is virtually impossible to understand all the ramifications of these deals. Even with the "counseling" as required, total understanding remains murky. I...
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Financial Assessment Update Takes Effect October 3, 2016

September 26, 2016     no comments

Reverse Mortgage Financial Assessment Update Purpose The intent of this article is to announce upcoming updates to the HECM Financial Assessment and Property Charge Guide guidelines. Implementation These changes are effective for case numbers assigned on or after October 3, 2016.   New Requirements  SECTION NO. SUBJECT REVISED REQUIREMENT 2.14 Payment History on Housing Obligations Requirements apply only to the borrower's...
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