Reverse Mortgage Occupancy Requirements Explained

August 2, 2021

We live with my mother-in-law and were present throughout the process of her getting a reverse mortgage. The broker is fully aware that we live there with her, help keep up the property, and pay living expenses. He told us if she ever needed to go to a nursing home, if she was in the home at least once a month, they would not recall the loan. What I am reading here seems contradictory to what we were told. We were also told about having 12 months to sell or purchase the property upon death. I am just confused about the nursing home situation now after reading this. -Amy

Table of Contents

• Occupancy Requirements in Reverse Mortgage Loan Agreement

• Definition of Principal Residence

• Occupancy Requirements for Reverse Mortgages

• Temporary Absence and Owner-Occupancy

• Loan Repayment and Property Disposal Time Frame

• Heirs’ Responsibility and Lender’s Preference

• Foreclosure Timelines and Communication Importance

• Occupancy FAQs

Occupancy Requirements in Reverse Mortgage Loan Agreement

I cannot comment on what was said or not said by another originator and was not there for the conversation, but I have always been very honest with my borrowers and their families.

The loan documents make the legal agreement between the borrower and the lender. The home’s occupancy as the borrower’s principal residence is outlined as a requirement in the three main legal documents – the Note, the Deed of Trust or Mortgage (depending on which instrument your state uses), and the Security Agreement.

I am looking specifically at a Deed of Trust, but all the states have similar wording on their Deeds and Mortgages, and they define the property as no longer being the principal residence when:

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 for a period of longer than twelve (12) consecutive months, a Borrower fails to occupy the property because of physical or mental illness and the property is not the principal residence or at least one other borrower.

It sounds like the broker may have been counting entirely on the 12 consecutive months and not paying attention to the “Principal Residence” requirement. The Promissory Note contains similar language in that it states that the lender may require immediate repayment in full if:

The property ceases to be a Borrower’s principal residence for reasons other than death, and the property is not the principal of at least one other borrower.

So, what qualifies as the “Principal Residence”? That is defined explicitly in the Security Agreement. Item 1.8 states:

Principal residence means the dwelling where the borrower shall maintain his or her permanent place of abode and typically spends the majority of the calendar year. A person may have only one principal residence at a time. The property shall be considered the Principal Residence of any Borrower who is temporarily or permanently in a health care institution as long as the property is the Principal Residence of at least one other Borrower who is not in a health care institution. (emphasis added)

Definition of Principal Residence

A principal residence is the location where an individual spends most of the year. This includes considerations for periods spent in mental or physical health facilities. The specifics of what constitutes a principal residence are typically outlined in loan documents.

Occupancy Requirements for Reverse Mortgages

For a property to qualify for a reverse mortgage, it must be the borrower’s primary residence, not just occupied for one month out of the year. If advised otherwise, such information is erroneous.

Temporary Absence and Owner-Occupancy

In cases where an individual, such as a mother-in-law, temporarily moves into a nursing home, they can be absent for up to 12 months. Beyond this period, the absence may be considered permanent, and the home must be occupied most of the year to maintain its status as owner-occupied.

Loan Repayment and Property Disposal Time Frame

If a lender calls a loan due because the property is no longer owner-occupied, there is no specific hard time frame for repayment. The process often depends on various factors, including efforts to sell or refinance the home and the property’s condition. About 12 months are typically given to dispose of the property, though this can vary.

Heirs’ Responsibility and Lender’s Preference

The lender generally prefers this if the borrower’s heirs are actively trying to sell or refinance the property. However, if the heirs show no intention to sell and the property’s condition deteriorates, the lender may expedite their actions.

Foreclosure Timelines and Communication Importance

Foreclosure proceedings, if initiated, can take many months. The duration often depends on state laws and the specific circumstances, such as the period the borrower has been absent and the heirs’ intentions. Effective communication with the lender is crucial in these scenarios to potentially extend time frames and find agreeable solutions.

Occupancy FAQs

Do you have to live in a home with a reverse mortgage?

Yes. One of the requirements of a reverse mortgage loan is that the property must be your primary residence.

What happens if I move out of my home while I have a reverse mortgage?

If you move out of the home permanently, the reverse mortgage loan will be called due and payable as occupying the property as your primary residence is one of the requirements. If you have a reverse mortgage and want to move out of the property without selling it, you must first complete a refinance transaction to another type of loan or pay the reverse mortgage off in full.

How long can I be away from the property when I have a reverse mortgage?

The guidelines of a reverse mortgage stipulate that the loan can be called due and payable if the borrower has vacated the property for 12 consecutive months or is no longer their primary residence. Otherwise, it would no longer be your primary residence and could result in the loan being called due. For example, if you had to be away from home for 6 consecutive months to rehab a surgery, your loan would not be called due if you went back to the property as your primary residence. If you split time between two or more locations, you must spend most of your time at the property with the reverse mortgage.

How long can my heir live on the property after I die?

If a homeowner has a reverse mortgage, the loan becomes due upon their passing. If the heir to the home is living in the property, they cannot assume the loan. If the heir pays off the reverse mortgage in full, they can live in the property for as long as they choose to. If the heir cannot pay off the reverse mortgage and plans to sell the home, servicing guidelines will give them ample time to sell the property, and they can live there during that time frame. They will be given extensions of time in 90-day increments up to a full year to sell the property if they demonstrate that they are trying to sell the home.

How quickly do I move into the property after buying it with a reverse mortgage?

You must move into the property within 60 days after closing on the purchase transaction when you buy the property using a reverse mortgage loan.

If you have a reverse mortgage, can a relative live with you?

Yes! It is still your house, and you decide what you do with the home if you meet the loan terms. You must reside in the house as your primary residence and pay all property charges on time (taxes, insurance, any HOA dues you may have, etc.). You must reasonably maintain the home so as not to impair the loan’s security. After that, you can choose to have other family members move in with you if you wish, you can rent out a spare bedroom for some extra cash if that is your desire, or you can choose to sell the home and move to a new location. You still own the home, and the home’s equity is also yours. If you wish to have a relative move in with you, that is your decision and does not violate the loan terms.

Key Triggers: When a Reverse Mortgage Becomes Due

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72 Comments on this Article

Patrick
September 4th, 2024

I currently own my home (small amount still owed on home equity but will be paid off before I retire). I am looking to retire shortly and wanted to know about a reverse mortgage, specifically regarding my spouse, who is not on the deed. If I pass away, can she remain in the house without worrying about paying anything until she either passes or sells the home? Also, my wife owns property in Colombia and would spend part of the year there, but her state of residence would remain Maine. Is there a limit to how many days she can be out of the country without causing issues with the reverse mortgage? I want to ensure she doesn't face any problems after my passing.
Reply to Patrick
- Michael Branson
  September 4th, 2024
  
  Hi Patrick,
  Yes, you can add your wife to the title when you do the loan, and she would be protected under the terms of the Deed of Trust (or Mortgage) and Note. This means she could remain in the property after you pass, as long as the home is her primary residence. To qualify, she would need to reside in the home for at least 6 months out of the year. If she leaves for more than 6 months in a year, it would no longer qualify as her principal residence, and the lender could call the loan due and payable. At that point, the loan would need to be paid off.
  Additionally, if she plans to be away from the home for more than 90 consecutive days, she should notify the lender. This ensures the lender knows the property is secure in her absence and prevents any occupancy inspections from being scheduled. If the lender mistakenly believes the property is abandoned, they could begin enforcement action.
  By keeping the lender informed and following these guidelines, your wife can remain in the home without any issues, even if she spends part of the year in Colombia.
  Reply to Michael
Rory
November 3rd, 2023

Can you have a rental on your property that you have a reverse mortgage on?
Reply to Rory
- Michael Branson
  November 3rd, 2023
  
  Hello Rory,
  
  No, you cannot rent the property while not living in it. That would be against the loan terms, and the lender can call the loan due and payable. You cannot use the property as a rental property.
  Yes, you can live in the home and rent a room. The terms allow you to rent a portion of the property if you live in the home and it is not used for commercial purposes (i.e., Air BnB but rental). Short-term or nightly rentals are commercial-type transactions, whereas if you rent a portion of your property (like a room) to someone for 30 days or longer at a time, that is a residential arrangement and is not prohibited if you are the primary occupant. The rental is secondary to your occupancy.
  If you have a second unit or Accessory Dwelling Unit (ADU) that you wish to rent, that will depend on your area's zoning laws. Your loan states that you would need to occupy the principal dwelling but could rent a legal ADU on your property if the zoning allows it. If you were to move into the secondary unit and rent the main dwelling, you would violate the occupancy requirements, and the lender could call the loan due and payable.
  Reply to Michael
  - Sandy S.
    March 19th, 2024
    
    I have an elderly relative who has a reverse mortgage on her home. She allowed her nephew to live in the home free of charge. She now has decided to go to a senior living facility (apartment not nursing home) and has moved. The nephew refuses to leave the home. What is her obligation at this point? Does she still have to provide homeowners insurance? He moved all the utilities out of her name and into his. Thank you.
    Reply to Sandy
    - Michael Branson
      March 25th, 2024
      
      Hello Sandy,
      
      Her obligation to the lender under the contract she signed is to inform them that she has vacated the premises and is no longer living in the home as her primary residence. She can choose to do whatever she wishes with the home. She still owns it, but the loan is now due and payable.
      
      If there is still equity in the home, she can sell the home and keep the proceeds to pay for her expenses at the senior living facility. If there is no equity in the home, she can contact the lender and let them know that she has moved and does not want to try to sell the home. They will do whatever they need to do, including initiate a foreclosure to take the home back, and that would relieve your relative from any financial liability on the home.
      
      I would encourage you to have her speak with her attorney. If she has no attorney or cannot afford one, many free senior legal aid services are available online. A long while back, we had a person write in who told us that they also had a relative of the original borrower who would not leave home, so the borrower allowed them to remain, and there was some accident or lawsuit involving the property that became a huge issue for the owner and his estate. I am not an attorney and cannot advise you, but you may want to find out if there is any liability for your senior relative or her estate if the nephew does anything on the property or if there are any other accidents, etc., while she is still the owner.
      
      I don't remember the exact issues from the last individual who contacted us (it was a while back), but they felt that the reverse mortgage company should have been more aggressive at removing the occupant. However, the borrower never notified the lender that he had moved, and either the borrower or the occupant, as the borrower, continued to sign the Annual Certification of Occupancy that the lender sends out every year. I have included a sample of a Certificate of Occupancy below (versions may vary depending on the servicer, but they all have similar wording and warnings).
      
      Please note that it is "...a criminal offense to make a willfully false or misleading statement or misrepresentation..." which means that if your relative is not living in the home and she or someone else returns this certification saying that she is living in the home as her primary residence, whoever returned the certificate is committing a criminal offense.
      
      The bottom line is if she is not living in the home, she should notify the lender and start the process of having them call the loan due and payable if she does not intend to sell the home. If she were to transfer the title of the home to the nephew, the change of title would also notify the lender of the event, and they would immediately call the loan due and payable, and it would then require the nephew to secure new financing on his own to refinance the loan, or the lender would foreclose. I advise you to contact an estate attorney and not just leave it alone. I hope things work out, as there may be other family/estate-related issues that I know nothing about that the attorney may wish to have you consider. Maybe he will advise you just to let the nephew stay in the home until the lender discovers the aunt's departure and starts their foreclosure at that time, but that would surprise me.
      
      In the meantime, in response to your last question, if your aunt were to stop paying all installments of insurance, taxes, or any other property charges, her nephew could step in and pay them, but if they remained unpaid, the lender would receive notice of non-payment which is also a breach of the loan which would be cause for the lender to call the loan due and payable.
      Reply to Michael
Darcy
September 20th, 2023

If I wanted to purchase another home and use it as a primary residence, would my spouse have to live in the other home I purchased as my primary residence? My spouse would keep my other home, but I would not live there.
Reply to Darcy
- Michael Branson
  September 20th, 2023
  
  Hello Darcy,
  Spouses live apart upon occasion, and when they do, the spouse not living in the home would not be on the loan and, therefore, would not be protected by the reverse mortgage. I will tell you, though, that if you already have a reverse mortgage with your spouse on one property, you would not be eligible to receive another on another property.
  Also, occupancy fraud is the single most significant fraud committed on reverse mortgages. If you plan to move out and buy a new home, live without the spouse, and call that your primary residence, it may be difficult to substantiate the living arrangements. Your challenge would be to support the change in lifestyle to the lender's satisfaction so that it was not deemed that the new home was a second home and that you were now going to live apart.
  Remember that loan underwriting is all about history and the likelihood of continuation. If you do not have a history of living separately, the lender would be looking for a reasonable set of circumstances to warrant a lifestyle change that was not a way to finance a second home with a loan that did not include monthly payments.
  Reply to Michael
P. Palmer
July 3rd, 2023

As an owner of a legal multifamily homeowner in residence, will I keep the rent from my tenants, or will the lender?
Reply to P.
- Michael Branson
  July 3rd, 2023
  
  Good Morning,
  The home belongs to you, not the lender. Any rents you receive as the property owner also belong to you, not the lender. Having said that, as is the case with nearly all Deed of Trust and Mortgages against real property, the security documents contain an assignment of rents that would allow the lender to step in and collect those rents should you default on the loan.
  An assignment of rents is seldom used in forward or reverse loans but is available, for instance, should an owner or their heirs stop paying all taxes and insurance on the property causing HUD or the lender to be required to advance the funds while tenants pay rent.
  Reply to Michael
Doug T.
June 23rd, 2023

Hi Arlo,

What if we bought the house and were gone for 18 months on a foreign work assignment? Some friends stayed for free (and my oldest daughter), so the friends took over the utility bills. The mortgage insurance company insisted on raising our insurance rates. Does all that disqualify us from doing a reverse mortgage now?
Reply to Doug
- Michael Branson
  June 23rd, 2023
  
  Hello Doug,
  As long as you live in the home as your primary residence now, all of your bank records and driver's license, etc., reflect the property address, and everything regarding the property is in your name now, so you should be fine. You may be called upon to explain the circumstances and provide some documentation, especially if your move was recent or there were any late payments of taxes or insurance made. You were gone, but you were not required to live in the home the entire time you owned it to be eligible.
  Reply to Michael
Joey D.
May 6th, 2023

Hi Arlo,

My spouse and I got a reverse mortgage ten years ago, and she wants to do some traveling on her own. She wants a lot of cash which I agreed to give her. If she signs a quit claim deed and I record it, will I have any problems with the lender if they are notified of the quit claim filing? I will still live in the house and will likely now put the house in a trust listing my daughter as beneficiary.
Reply to Joey
- Michael Branson
  May 6th, 2023
  
  Hello Joey,
  
  If your wife took out a reverse mortgage on the property by herself, she owned the property solely and separately at the time. A reverse mortgage becomes due and payable when the last original borrower on loan is no longer living in the property as their primary residence, sells the property, or otherwise holds title to the property other than an approved trust for which they are the beneficiary.
  If your wife quit claiming title to the property at this time or even decides to "go traveling" for an extended period that the lender determines makes the home no longer her primary residence, the lender would call the loan due and payable. If the full outstanding sum were not repaid, the lender would begin foreclosure proceedings.
  
  Your wife can add anyone she wishes to title at any time if she remains on title and continues to occupy the home as her primary residence. However, what you describe sounds more like a situation where she is selling her interest in the property and leaving.
  If the lender believed that was the case, they would call the loan due and payable. If whoever was on the title at that time could not repay the loan either with funds available to them or by refinancing the loan with a new loan, they would need to sell the home to avoid a foreclosure sale.
  Reply to Michael
Jeff K.
February 15th, 2023

Hi Arlo,

Is there a minimum month-per-year residence requirement for securing/'maintaining a reverse mortgage? Tim's article answered every conceivable question except this! Thanks in advance.
Reply to Jeff
- Michael Branson
  February 15th, 2023
  
  Hi Jeff,
  
  I am sorry you had trouble locating the answer to your question, we have covered the topic of occupancy many times but with all the many topics we have covered, it may be buried under the others on the site. I am only too happy to give you the requirement for your loan. You must be living in the home at the time you apply for a refinance reverse mortgage or move into the home within 60 days after the close in the case of a purchase reverse mortgage.
  As far as the occupancy on an ongoing basis is concerned, you are required to live in the home as your primary residence and that means more than half of the year. If you are to be gone for any extended absences (beyond 2 months), you just need to let your servicer know so that they can be assured that the home is secured in your absence.
  
  The loan allows you to be away from the property for up to 12 months for extenuating circumstances such as medical needs (i.e., required stay in a convalescent hospital after an illness or accident). After 12 months of being away from the home, the vacancy is considered permanent, and the lender can call the loan due and payable. This allows people who have second homes to spend just under half the year at one home while still spending most of the year at their main residence (the home against which the reverse mortgage is recorded).
  Reply to Michael
Gerald M.
December 15th, 2022

Hello Arlo,

I am currently living in a 2-unit condo free and clear and am interested in buying the second unit as a rental. I will continue living in my unit. I will need financing to do so. A thought that I had was to buy the second unit with conventional financing (using an empty line of credit that I have against my condo as a down), convert the building back to a two-family home (the condo rules and the law permit this), and then get a reverse mortgage to pay off all or most of the original loans.

My questions are: 1. Will my original lenders permit me to change the building to a two-family without paying them first? Is there a way to finance the purchase of the second unit directly with a reverse mortgage and convert the building, skipping the intermediate step? 2. What happens if the reverse mortgage does not cover all the money in the original loans? Does the reverse mortgage have to pay off all the existing purchase loans?
Reply to Gerald
- Michael Branson
  December 15th, 2022
  
  Hello Gerald,
  
  There is a lot to process here, and I honestly can't tell you too much. Firstly, with respect to the current loans on your property, that would be entirely up to the rules of the lender, and I would not be able to opine on that. There probably are prohibitions about changing the nature of the property in the legal documents but I could not say for sure. I can tell you that you cannot purchase the second unit with a reverse mortgage for several reasons. You don' t live there and I do not think any lender would accept a letter of explanation that you intended to move from one unit in the project to another.
  When it comes to occupancy, if you are selling your current residence lenders have no reason to doubt your intent to occupy but if you plan to keep your existing property, lenders must rely on history and likelihood of continuance. Reverse mortgages are only available for owner occupied properties and it is not likely based on your history that you would move from your existing home to the other unit. Finally, the project would need to be a HUD approved project and I would be surprised if it was since most 2-unit projects are not HUD approved.
  
  Reverse mortgages are not construction loans and if the property was already converted to a two-unit property (no longer a condominium), you could apply for a reverse mortgage on a two-unit home if that property met all HUD requirements. A two-unit property does not require a separate HUD approval. You could live in one unit and rent one of the units but the reverse mortgage would be the only financing allowed on the property at that point so it would need to be able to pay off any balances owed on any other loans, or you would need to bring in cash to pay those loans off to close the reverse mortgage.
  Reply to Michael
Chris R.
December 15th, 2022

Hi Arlo,

Once the sole primary resident passes away, or no longer is able to remain in the home, is the home then (potentially) sold (refinanced) to the heirs for the loan balance, or is the property appraised and sold to them for market value?
Reply to Chris
- Michael Branson
  December 16th, 2022
  
  Hello Chris,
  
  The home is not "sold" to the heirs, the lender doesn't own it and can't sell it to anyone. The deceased borrower owned the home, and the reverse mortgage was a lien against the property to secure the loan. When the borrower passes, that loan becomes due and payable. The person who owns the home after the borrower passes is entirely up to the original borrower if they made such arrangements through a trust, will or other written instructions or through the courts and probate based on heirship rights. The lender doesn't make that determination.
  
  If no one comes forward to repay the loan, the lender will foreclose on the outstanding lien and if no one outbids the lender at foreclosure auction, then and only then the lender would become the owner of the property because of the Trustee's Deed upon Sale. If there are heirs that want the home, they can pay the loan balance owed and keep the home, they can sell the home and pay the balance off through the sale proceeds or if they do not want the home they can simply walk away and owe nothing as the lender can only foreclose against the property and cannot look to the borrower's state or heirs for any other amounts to repay the loan.
  
  If the amount owed is greater than the value of the home, heirs also have the right to repay the loan in full at 95% of the current market value if that is less than the actual amount owed if they wish to keep the property. That means that if you would like to keep the home and it is worth $100,000 but the balance owed on the reverse mortgage is $125,000, the lender will accept payment in full of $95,000 from the heirs of the borrower.
  This would require an appraisal to be performed by a HUD-approved appraiser. But the home is not being "sold" to the heir because the lender doesn't own it and therefore cannot sell it. The owner either made the decision to leave the home to the heir, the court granted the title to the heir, or the other heirs stepped aside and allowed the heir to take title because of the probate action.
  Reply to Michael
Dawn B.
November 4th, 2022

Hi ARLO,

My 90-year-old mother has a reverse mortgage on a condo she has lived in since 1993. This year when her annual occupancy certification request letter came, she was in the hospital having major surgery & required recuperation. She missed the deadline for sending back the signed documentation (by 14 days) but resolved the entire matter with her mortgage company. They held back one month's check but said upon receiving her signed paperwork they would deposit the funds into her checking if she signed up for automatic deposit. She followed their direction but did not receive payment for that missed month. When she inquired, they denied ever telling her she could get the one missed payment back. I assisted with several calls and a manager said he would try to get her the check but never followed through and would not take our calls. Another rep said our only option would be to take money from her line of credit (not sure the exact name they used). I understand they only followed procedure by holding that one month's payment when she missed the due date, but would the mortgage company be required to send payment when the matter was promptly cleared up? or is the only way she can now receive the withheld funds through this special request method? and if so, would this cost her anything or affect her account in any way?
Reply to Dawn
- Michael Branson
  November 4th, 2022
  
  Hello Dawn,
  
  The terms are set out in her loan documents and the lender must adhere to the written agreement. However, some states do have laws that prevent lenders and others from saying one thing then doing something else when dealing with borrowers. Have you got anything in writing from them that they would make the back payment? If not, there is always the chance that there will be a "he said, she said" situation if the call is not recorded.
  If she does a draw from the line of credit, there is the slight chance that it could affect the Tenure payment but if the loan already has accommodations for a modified tenure (both payments and a line of credit), the only thing it would do is lower the amount available in the line by the amount she draws. The tenure payments would continue as scheduled. You should be able to verify all this with your current servicer by calling them at the number listed on the monthly statement.
  Reply to Michael
Roger B.
September 27th, 2022

I've been sent a foreclose notification for not sending in my occupancy certificate. I've been in my house every day so if I'm late on signing the certificate, I wasn't reminded. Why can't I sign now instead of being foreclosed? This is not fair!
Reply to Roger
- Michael Branson
  September 27th, 2022
  
  Hello Roger,
  
  The annual certification of occupancy is a requirement of the loan. Some servicers are much more stringent on the requirement of the borrower to return the document than others and still other servicers do more to try to follow up in other ways before they send anything mentioning default of foreclosure.
  I would suggest you send them a registered mail with return receipt required so you can verify that they received your letter but also send them copies of your ID showing your address, a current bank statement showing you do occupy the home and one other current mailing or evidence that you are in the property as your current residence.
  Explain to them that you did not receive their letter and that you have not defaulted on the occupancy requirement. Do not just rely on the registered letter. Follow up with constant calls until you reach someone in a management position with the servicer who can tell you if they have received your letter, reviewed it and are willing to reverse their position on the need to foreclose.
  I do not know how many attempts they have made to contact you at the property so I do not know how successful this will be but do not let this go. If you need to, seek legal aid immediately if you have always followed the terms of the loan but there has just been some miscommunication and the servicer will not budge on their demands now.
  
  If you truly were out of the property and not living in the home pursuant to the terms of the loan, then I would suggest you quickly look for ways to refinance the loan or sell the property. The lender does have the right to call the loan due and payable for non-occupancy and if you cannot pay the loan off at that time, their recourse is to commence foreclosure proceedings.
  But since you state that you have lived there every day, I would need to ask how many certificates and attempts to contact you did the lender send/attempt? This might be an important fact for an attorney later if the lender does not change their actions based on your initial registered letter and follow up calls.
  Reply to Michael
Natasha L.
August 17th, 2022

Two brothers on the deed, one lives in the home and the other does not. I was told that the brother who resides in the home cannot do a reverse mortgage because the other brother doesn't live there as his primary residence. In order to do the reverse mortgage the second brother would need to relinquish his rights to the home (ie sign over the deed) or the home put into a trust. This isn't an issue on a conventional mortgage where a deed has multiple owners and only one on the mortgage note. Can you elaborate?
Reply to Natasha
- Michael Branson
  August 28th, 2022
  
  Hello Natasha,
  
  That is not necessarily correct, but it also depends on where the property is located. If you live in a state like Texas, there are very strong heirship laws that would not allow one owner to do the reverse mortgage. However, with most states this would not be a problem and the non-occupant brother could remain on title.
  Because he does not live in the home, he is not eligible for the loan but since he is on the ownership of the property, he would need to sign some legal documents which allows the reverse mortgage on the property which he co-owns, lender documents that states that he is aware of the loan and its provisions and then the occupying brother could get the loan.
  The things he needs to know though are that the occupying brother can live in the home without making a payment for the rest of his life which causes the balance of the loan to rise so there could be no equity left in the home when the occupying brother finally leaves the home if that brother draws enough funds, the loan accrues sufficient interest and the occupying brother lives in the home a long time.
  The non-borrowing, non-occupant brother/owner would still need to attend a counseling session and as I stated, sign several loan documents indicating he is completely aware of the terms of the loan, even though he is not a borrower and is not responsible for its repayment.
  Reply to Michael
Judy L.
August 16th, 2022

Hello Arlo,

My father has had a reverse mortgage since 2014, he's getting up in age (92 years old now), and did send in his occupancy form due 1-1-22. As of today, they have charged him attorney fees, appraisal fees inspection fees, we received a letter from reverse mortgage saying he had until 8-20-22 to respond to owner occupancy.

Which we did today filled out form and requested all those charges be reversed, they said no. Should we get an attorney involved?
Reply to Judy
- Michael Branson
  August 16th, 2022
  
  Hello Judy,
  If you have evidence that he sent the first certificate, then I would certainly push back on their requirements or at least make them substantiate the need for the appraisal, fees, etc. Typically, the lender will make more of an attempt to contact the borrower before going to this extreme, are you certain that your father sent the occupancy form? And can you say for sure that there was no follow up by the lender that went unanswered by your dad?
  I would be certain that everything you send them you send registered with return receipt required or overnight delivery with signature required from this point as well but you need to determine how you can verify how you can prove that the other certificate was sent and if they have documentation on their end that they have made attempts to contact him did not go unanswered (which might include a third party service which went to the door). If they do have the documentation and you do not, you might be adding costs unnecessarily. Have you spoken with a manager at the lender to request information?
  Reply to Michael
Bob P.
June 13th, 2022

Hello Arlo,

I received my occupancy letter in April. This runs true to form with other years. I returned it promptly. In May I received a second letter of occupancy from a buyer of the above company. I called and asked the new company why I had received a 2nd letter of confirming occupancy when I returned my first letter. They said that their records showed I returned it to the prior owner of the reverse mortgage. I said that was who sent it to me. They had sent me a pre-addressed envelope. This new company is not in BBB and has the worse satisfaction rating I have ever seen. I sent them a certified occupancy letter. Something does not smell right to me.
Reply to Bob
- Michael Branson
  June 13th, 2022
  
  Hello Bob,
  
  I am not aware of any scams being perpetrated at this time with individuals claiming to be representing a company and asking for unnecessary occupancy information. And in all honesty, if it is the typical occupancy certification, there is no personal information required, just usually a certification on the part of the homeowner that they have not sold the property, were not absent from the home for more than 12 months due to illness and that if they were absent for more than 2 months for reasons other than illness that they will notify the servicer. They will usually contain the HUD warning about false statements that reads:
  
  "Warning: Section 1001 of Title 18 of the United States Code makes it a criminal offense to make a willfully false statement or misrepresentation to any department or agency of the United States government as to any matter within its jurisdiction."
  
  I think the new servicer is just trying to start off by putting all the new loans they are new servicing on the same cycle that they have already established for other loans they service but if you feel that they ever do begin to request information that they should not be asking (such as personal information or account numbers, social security numbers, etc.), then I would suggest you follow up with further inquiries to the company, to state and federal regulators and to HUD if you feel it warranted.
  Reply to Michael
Tomottl
March 22nd, 2022

Hello Arlo,

If I own a property jointly with 2 other relatives, but do not live in/at the property, can I obtain a reverse mortgage on my share of the property?
Reply to Tomottl
- Michael Branson
  March 22nd, 2022
  
  No, that would not meet HUD requirements. Firstly, you can only get a reverse mortgage on a property in which you live as your primary residence. Next, you can have other people on title, but the loan would encumber the entire property and the other owners would need to agree to it and participate in the loan process.
  Reply to Michael
Joshua K.
September 1st, 2021

My Mother has a reverse mortgage and she is under the impression that the residency requirement is 60 days because the proof of residency letter that she signs instructs her to "inform" the lender if she's going to be gone for more than 60 days. She would like visit us for a longer period up to 90 days, but she is afraid she will run afoul of the rules. While she's been away, a family member has been looking after the house (picking up the mail, etc) but is not living there. Is there a possibility that the residency requirement is actually lost if she's gone for more than 60 days (but definitely less than 6 months)? What happens when she calls the lender to tell them she'll be gone for say 90 days? Thank you!
Reply to Joshua
- Michael Branson
  September 9th, 2021
  
  Hello Joshua,
  The requirement of the borrower is that during extended absences they must let the lender know for two reasons, firstly, it allows the lender to be sure they don't perform an occupancy inspection during this period and mistake their absence for a permanent abandonment of the property and secondly, the lender will verify the property is secure.
  Your mom has the right to take trips longer than 60 days but the lender also has the right under the terms of the loan to be sure the security for the loan (the property) is safe and protected. If mom has a family member watching the home and the house is secure, there would be no issues with a 90-day trip.
  Reply to Michael
Darlene H.
August 10th, 2021

I have a reverse mortgage, I would like to have an extended vacation of possibly up to three months. With a family member staying in my house to take care of it. Would this be permitted
Reply to Darlene
- Michael Branson
  August 10th, 2021
  
  Hello Darlene,
  
  Yes, this is permitted. You would want to let your mortgage loan servicer know that you will be gone from the residence for a couple months, but the home has a family member staying there to secure it in your absence and that you will not be gone for more than 3 months on your extended vacation, and all will be fine.
  You must keep occupying the home as your primary residence and you cannot rent the home out and since this does not violate those provisions, just letting the lender know of your plans ensures they do not conduct an occupancy inspection while you gone and think you no longer occupy the home.
  I also think it is a good idea to let any family members know that if a representative of the lender does come to the property while you are gone, they should emphasize that you are on a planned vacation and will be returning soon.
  Reply to Michael
Jerry M.
April 16th, 2021

I received annual occupancy certificate without a return envelope. Please send me one so I can return the certificate.
Reply to Jerry
- Michael Branson
  April 19th, 2021
  
  Hello Jerry,
  
  You need to contact your servicer to request this envelope or at least the address so you can use a different envelope. The information to contact your servicer can be found on each of the monthly statements you receive (if it is not on the occupancy certification itself).
  All certifications do not go to one central location for all lenders, and it is important that you return it to your lender/servicer.
  Reply to Michael
Sandy
April 13th, 2021

Hello ARLO,
Over the last year a woman moved in with my elderly mother in Arizona. She lives in my mother's house, does not pay rent, and has a house with reverse mortgage in another state. We have asked her to leave she will not. Doesn't she have to live full time in her reverse mortgage home to honor that contract? She has lived 13 continual months in my mother's home.
Reply to Sandy
- Michael Branson
  April 13th, 2021
  
  Hello Sandy,
  
  If she has a home with a reverse mortgage and there is no other original borrower still living in the home, she is violating the terms of the loan by not living in the home as her primary residence.
  If the lender becomes aware of the fact that she has left the home and there is no other borrower who is also on the loan who still lives in the property, they can call the loan due and payable.
  If, however, she is on that loan with someone else who still lives there, they are still within the terms of the loan and have not violated the provisions of the reverse mortgage.
  Reply to Michael
Yve
January 25th, 2021

Hi ARLO, I am 65, I still owe a small amount on my mortgage and I am unemployed. Would it be possible to get a reverse mortgage loan to pay off mortgage and also to get a camper van to travel and rent my home for periods if 6 months? Thank you.
Reply to Yve
- Michael Branson
  January 25th, 2021
  
  Hello Yve,
  
  The reverse mortgage requires you to live in the home for more than half the year as your primary residence and it would allow you to rent a room or rooms while you also occupy the home, but it does not allow for the complete rental of the home for periods you suggest.
  This would be a non-allowable use of the home and the lender could call the Note due and payable under such circumstances.
  If this is your plan, a reverse mortgage would not be the right loan for you.
  Reply to Michael
Rod T.
December 15th, 2020

My mother has never rented her home and does not ever plan to rent it. Occupancy is not as obvious, as she currently resides at a local Board and Care on a month-to-month basis. As long as my mom is not collecting rent on the residence, and as long as I, her son, live in it and maintain it, and my mom receives all Marilyn at her residence, do we qualify for HUD? If not, is there such a thing as a non-HUD reverse mortgage for seniors who need Board-and-Care living assistance?
Reply to Rod
- Michael Branson
  December 15th, 2020
  
  Hello Rod,
  
  Your mom would not be eligible under this scenario.
  She must physically occupy the home as her primary residence and if she lives in a board and care facility, she does not satisfy this requirement.
  I am not aware of any reverse mortgage programs that would allow family members to occupy the home and the owner to be absent.
  Reply to Michael
Charleen
October 7th, 2020

How do you turn someone in for abandoning a reverse mortgage loan and letting kids stay in home for free. Police are there at least once a week while parents are in Arizona.
Reply to Charleen
- Michael Branson
  October 7th, 2020
  
  Hello Charleen,
  It is very difficult to know for sure who you would need to contact since the loan may or may not still be with the lender who first closed the loan.
  It only takes a matter of minutes to look up the recorded information if the country has online recorded information, you just look up the Deed that have recorded for that property and the last Deed will be the reverse mortgage.
  You can contact the lender on the last Deed, and they may still own the loan or can forward the information to the investor to whom they sold it.
  You can also note the FHA Case number that is usually on the documents as well and contact the HUD office that is responsible for the area where the property is located and let them know of the infraction.
  You can find the HUD offices on their website here.
  When borrowers do things like this, it only increases the loss to HUD so HUD should be interested in performing or having the lender perform an occupancy inspection but I cannot promise they will move very quickly on it.
  This is one of the areas about which we have written many times that we believe HUD should enforce more fully.
  By not enforcing the owner occupancy requirements more diligently and instantly when things like this are discovered, they allow losses to mount more on existing loans and this hurts the program and other borrowers as well when they need to cut back on program benefits to those who really need them.
  I hope they put your information to good use.
  Reply to Michael
Jeanie
September 1st, 2020

If you already have a reverse mortgage but want to buy a secondary home with a regular mortgage not a reverse can your daughter lives in it even though I bought it. When my daughter turns 62 not for a few years yet can I quick claim deed to her so she can get a reverse mortgage?
Reply to Jeanie
- Michael Branson
  September 1st, 2020
  
  Hello Jeanie,
  
  I am not sure how to keep answering questions about sons and daughters and Quit Claim Deeds that you keep sending in.
  The answer is the same for your daughter as it was for your sons. If your daughter is on title to the property and lives in the home, she can apply for a reverse mortgage.
  There are no seasoning requirements for length of time owing or occupancy but the underwriter will underwrite the loan and it must be reasonable that she is living in the home as her primary residence and will continue to do so after the loan closes.
  Failure to do so would result in the lender either declining the loan application or if they discovered after the loan closed that she did not live in the property, they would call the loan due and payable and possibly initiate a foreclosure action if she or you are unable to repay the loan balance or sell the home in time to avoid the foreclosure.
  Reply to Michael
Joseph G.
August 10th, 2020

My father's friend has a reverse mortgage and he just went to the hospital and they diagnosed him with dementia and his older son took over as his conservator. Now my friend lives in the house too and the Bank foreclosed on the house. Now they are trying to sell the house, but they told her that she has until Sunday the 9th to move, but she did not receive any eviction notice or any paperwork. Can she stay until they serve her with papers, or will she need to leave now?
Reply to Joseph
- Michael Branson
  August 10th, 2020
  
  Hello Joseph,
  This is a question pertaining to legal rights under foreclosure laws in the state in which the property is located and therefore, I would need to refer you to a licensed attorney. I can tell you that from the standpoint of the loan, that is not how it works though.
  Borrowers have up to 12 months for a temporary leave for medical reasons and the lender would not be able to foreclose under the terms of the legal documents until the leave was determined to be permanent. Even then, foreclosures take months to complete and there are notices required by law for that process including advertising notices.
  If the lender truly violated the terms of the loan and the foreclosure laws, then your friend should speak with an attorney as soon as possible. I suspect that you have not been given 100% of the story though and there may be more to it than you have heard but if not, she needs to protect her rights if she now has rights to the property and those of her father if not as soon as possible.
  Reply to Michael
Barry
June 23rd, 2020

Do you have to live in your home or can you rent it?
Reply to Barry
- Michael Branson
  June 23rd, 2020
  
  Hello Barry,
  You must live in the property as your primary residence to be eligible for a reverse mortgage.
  Reply to Michael
Sherry
June 8th, 2020

How long to we must live in our home before we can apply for a reverse mortgage?
Reply to Sherry
- Michael Branson
  June 8th, 2020
  
  Hello Sherry,
  
  There is no minimum time you must own or occupy the home. If you do occupy the home as your primary residence, you are not required to wait any set length of time to apply for the loan.
  Some people even use reverse mortgages to purchase their home and they obviously do not own them or even occupy them at the time they apply. There are different rules for reverse mortgage purchase transactions and those borrowers must move into the home within 60 days of closing.
  But the purchase reverse helps borrowers who are going to get a new home from having to pay for two sets of closing costs on two different transactions (a purchase and then a refinance).
  So not knowing if you are referring to a home you already own or one you are considering, if you do not own the home as of this time, you may wish to look into a purchase reverse mortgage and save some money.
  Reply to Michael
Mike
February 10th, 2020

I'm a renter who has been with the person who acquired the loan since the loan was acquired. I'm not related to the person who got the reverse mortgage, but I've been living with them since the reverse mortgage was put in place. That person has recently died. What rights do I have as a tenant?
Reply to Mike
- Michael Branson
  February 10th, 2020
  
  Hello Mike,
  Unfortunately, mortgage licensing laws forbid me from giving legal or accounting advice. And quite frankly, you wouldn't want it from me anyway! Tenants' rights are a legal question that are not determined by the type of loan on the property and vary based on where the property is located.
  You should speak with an attorney to determine your rights as a tenant based on local laws, the terms of your rental agreement and the new owners.
  What I can tell you is that the heirs will have first right to the home and they will have to decide what they want to do with it (keep it and live there, rent it out or sell it).
  They would be the first ones you would want to discuss occupancy with. If no one accepts the home, the lender will have to foreclose on the loan and then again, local laws will determine what the lender could do and what your rights would be.
  Reply to Michael
Rich B.
January 16th, 2020

I messed up and did not get my letter of occupancy in on my reverse mortgage, and novad wants the money or short sale or deed in lieu, or foreclosure. I have not been absent from the home. How do I keep the house and clear this up?
Reply to Rich
- Michael Branson
  January 16th, 2020
  
  Hello Rich,
  
  I cannot advise you specifically because it is not my call. My suggestion is to send them a copy of your bank statements for the year, your cable bill and your water bill to verify that you occupied the home for the entire year. Let them know that you receive virtually 5 or more pieces of mail every single month with ads for reverse mortgages and you inadvertently threw away their request for occupancy certification. Tell them that you are living in the property and always have been and can verify this with the items I mentioned above or anything else they would like to see but that you have never left the home.
  
  I believe if you supply them the proof, I have mentioned they will reconsider their call. However, if they do not or if it begins to drag, I suggest that you not delay, that you hire the services of a real estate attorney without delay. Do not wait until after the home has gone into foreclosure to resolve the issue. If possible, resolve it with the lender before they file a notice of default.
  Reply to Michael
Wayne F.
November 13th, 2019

Do you have to live in the house to get a reverse mortgage on it?
Reply to Wayne
- Michael Branson
  November 13th, 2019
  
  Hello Wayne,
  
  Yes, you must live in the home as your principal residence for it to be eligible for a reverse mortgage. Rental properties and second homes are not eligible under the program currently.
  However, many years back there were some proprietary or private programs that did allow 2nd homes (never rentals) and so it is not inconceivable that a second home program may be available again at some time in the future.
  Reply to Michael
Antoneya G.
September 18th, 2019

Can you live out of state and rent your home with a reverse mortgage?
Reply to Antoneya
- Michael Branson
  September 18th, 2019
  
  Hello Antoneya,
  
  The reverse mortgage requires you to be a full time resident of the property or the lender will call the loan due and payable. The terms of the loan state that the property must be owner-occupied and not a rental.
  Reply to Michael
Al
September 4th, 2019

I've been sentenced to 3 years in prison. Will HUD inform my reverse mortgage company of my sentence? What happens next?
Reply to Al
- Michael Branson
  September 4th, 2019
  
  Hello Al,
  I don't know if HUD receives that information, but I would not want to risk it if I was you. Do you have someone who can act as your advocate if need be during this time?
  If the lender calls the loan due and payable as they would if they learn you are no longer living in the home, they will call the loan due and payable.
  If you have a relative or trusted advocate who can sell the home and have title place the funds in a trust account for you, you may even be able to use a reverse mortgage to purchase upon your return.
  Reply to Michael
Richard A.
June 29th, 2019

How does the reverse mortgage company know I live in the house 6 months and 1 day?
Reply to Richard
- Michael Branson
  June 29th, 2019
  
  Hello Rick,
  
  Great question. This is one of the areas that is the most difficult for reverse mortgage lending and for HUD to monitor. Unfortunately, it is also one of the biggest areas of fraud concerning the loan. As long as the home is not a rental, the mail is not returned and the lender does not perform one or more occupancy inspections that show the borrower absent the property, the lender may not know if you are gone from the property more than 6 months a year.
  I tell borrowers though that if this is your intention as a permanent situation, it's not worth the risk. The loan will be called due and payable if the lender does determine that you are not there, and no one needs the hassle or expense (not to mention credit problems) of a foreclosure if it is entirely avoidable. If you are not planning on living in the home as your permanent residence pursuant to the terms of the loan, look for another loan program or consider selling the home and renting elsewhere.
  Lenders hire companies to make calls, they will knock on doors and they have other methods to determine occupancy. Borrowers also have to sign an annual occupancy affidavit and to knowingly make a false statement to induce a lender to make a lending decision is a felony. I have not heard of anyone being prosecuted for falsely attesting to occupancy on a reverse mortgage to date, but like any mortgage fraud, if the lender or HUD felt the loss was great enough, they may decide to do so at some point in the future. They may never know if you are not occupying but if they do, is it worth the risk?
  Reply to Michael
Amy
April 23rd, 2019

Who can confirm continued residency? 83-year-old aunt received letter to certify. Does anyone (attorney, etc.) need to sign, as well? (She has always lived there- no break in residency). Thank you
Reply to Amy
- Michael Branson
  April 23rd, 2019
  
  Hello Amy,
  
  She can just sign and return the form. If there is any question as to the form's authenticity, the lender may schedule a personal visit. In fact, lenders do have services that conduct occupancy inspections as a matter of both random and flagged reasons from time to time. For the time being though, your aunt should be able to just sign the form and return it and they will let her know if there is any further action needed.
  Reply to Michael
Pat C.
March 26th, 2019

Can I rent out my home if I have a reverse mortgage?
Reply to Pat
- Michael Branson
  March 26th, 2019
  
  Hello Pat,
  
  Your reverse mortgage allows you to rent a portion of the home if you are still living in the property as your primary residence. If you are talking about one or two rooms, yes you may.
  However, if you were to move out of the property entirely, the loan becomes due and payable and if you did not have the means to repay the loan or if you did not sell the property to repay the loan, the lender would begin foreclosure proceedings which could affect both your ability to ever get HUD financing as well as your credit.
  If you wish to permanently leave the property and make it a rental unit, you need to investigate other financing first and pay off the reverse mortgage. Otherwise, consider selling the home to avoid the foreclosure (unless of course you have the resources to repay the loan otherwise and that is always your right at any time without penalty).
  Reply to Michael
sholom fine
June 19th, 2017

Do the lenders ever give right of assumption to the wife if the husband dies? or does that remove their incentive? Just looking at the "altruism" of your fellow lenders.
Also what certification should they have for ethical conduct? or is it the arbitration clause at last resort?.
Reply to sholom
- Michael Branson
  June 19th, 2017
  
  Hello Sholom,
  Married borrowers are considered on the reverse mortgage at the time the loan is created and even though this was not always the case, now even spouses of borrowers who are not yet 62 are considered "eligible non-borrowing spouses" and they too are taken into consideration and allowed to remain in the home for life. They don't "assume" the loan but are not required to leave when the borrowing spouse passes (but they do have some conditions that must be met). With regard to ethical conduct, the National Reverse Mortgage Lenders Association (NRMLA) has a very strict code of conduct to which all members must adhere. To be certain that your reverse mortgage professional adheres to a strong set of rules and ethics as well as the laws, then look for a NRMLA member.
  Reply to Michael

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