Hello,

If you move out of your home and rent it out, you will violate the terms of your reverse mortgage. Once the lender becomes aware of this, they will call the loan due and payable.

If you do not repay the loan after receiving notice, the lender will begin foreclosure proceedings, which could impact your property ownership and credit standing.

Serious Consequences of Foreclosure

• If a foreclosure results in a delinquent balance and HUD incurs a loss by paying a claim, you may become ineligible for future government-insured lending programs until the balance is repaid.
• Due to a rise in HUD losses, lenders are becoming stricter about enforcing loan terms and cracking down on violations.

Selling May Be a Better Option

If you can no longer live in the home, selling the property is often a better choice than risking default and foreclosure.

Once none of the original borrowers reside in the home as their primary residence, the loan automatically becomes due and payable.

Rental Restrictions in Your Loan Agreement

The Deed of Trust includes an assignment of rent clause, which allows the lender to:

• Collect rental income from the property if they determine you have violated loan terms.
• Take action once they notify you of the breach.

Bottom Line

A reverse mortgage is for owner-occupied homes only. While you may rent out rooms if you still live in the home, you cannot rent out the entire property if none of the original borrowers reside there. Doing so violates the loan terms and could lead to foreclosure.