Hello Wilda, This is a wide-open question. When you say, "this borrower", which one do you mean? Every borrower's case is different, and every person is different. We do not "sell" reverse mortgages here. We have no paid national spokesperson and we do not engage in the countless mail pieces many of you receive constantly from companies urging you to get a reverse mortgage or refinance your existing reverse mortgage. We do not engage in the practice of live calls so you will never receive a call from a solicitor from our company trying to sell you anything. Our sole marketing effort is online and then we seek to educate borrowers and their families as much as possible. Often, this talks as many people out of the loan as it encourages to apply but we are ok with that. We started the company about 16 years ago with the philosophy that we would rather you do not get the loan for the right reason than get it for the wrong reason. Does that mean we have always done everything perfectly? Sadly, no. There are many things out of our control, and we cannot change things like HUD rules, appraisal laws and values, periods of extreme volume when everything slows down and secondary marketing changes when programs disappear, or rates rapidly change. We all need to live with those factors and then yes, we too make errors upon occasion. We can fix our company's issues, but we cannot fix HUD or the market. Those things we live with. But we tell borrowers what is happening and keep them informed. Another common expression around here is that bad news does not get better with age! If something comes up that a borrower needs to know (i.e. their appraised value comes in much lower than expected), we tell them immediately and don't go silent on them as we hear from borrowers writing in happens far too often. We are a finalist for the Better Business Bureau Torch award for Ethics in 2020 and we are extremely proud of this fact. We believe in doing the right thing, even when no one is looking. That is not always easy to relay to borrowers when what they want you to do is something that is beyond your ability to do. We cannot make the appraisal higher than it is, that is illegal. We cannot alter HUD's guidelines to allow for some thing's borrowers would like. We do not control the market for programs and rate availability. We have no control over old liens on the borrower's property and cannot ignore them -but we can always be open and honest with people when there are changes. And of course, when the loan is not right for them or will not help them, we can tell them honestly. And that we do. So, do we help our borrower with this loan? I helped my own mother with hers - a lot. It gave her financial independence and allowed her to live in her home for many years happily. I would honestly not have done anything any differently with her as she was able to fix the home up enough to be much more comfortable and had the extra income to do the activities she loved so much.

Hello Linda, If you are still living in the home as your primary residence, yes you may rent out rooms in the house as long as it is not on a transient basis (nightly). Many reverse mortgage borrowers do have renters who live in a portion of the home to generate additional income.

Hello Mamie, No, it does not but HUD does have rules about the seasoning of the loans it will allow you to pay off with the reverse mortgage and all existing loans must be paid in full to close a reverse mortgage. The reverse mortgage can pay off existing financing without any limitations on seasoning of the loan if the amount of the loan to be repaid does not require the reverse mortgage to exceed 60% of the eligible Principal Limit or loan available. If paying off the existing loan would exceed 60% of the Principal limit, then the loan must be seasoned for no less than 12 months. If the existing liens on the property are over 12 months old, you would be able to use up to 100% of your Principal Limit to retire existing liens.

If there are other owners, they would have to also go through the required counseling and agree to the loan. They would not be borrowers though and when you no longer occupy the home as your primary residence, the loan would become due and payable. The other owners would have to refinance the loan at that time or sell the property.

Hello Pamela, Ordinarily, any delinquencies from the past 24 months on the property obligations (mortgage, taxes, insurance, HOA if any), would require you to have a Life Expectancy Set Aside (LESA) to pay the taxes and insurance. If there was just one late and it can be well-documented that the circumstances for the late were beyond your control and your other credit is all as agreed, we can often get an exception to this requirement. If you are very close to being over 2 years for that late, I would advise waiting to apply so that it is over 2 years ago. The underwriter will still look at your credit, but it is not mandatory for the LESA for a late over 24 months ago. Also, a LESA is not the end of the world and many borrowers like them. Funds are "set aside" from your proceeds to pay for taxes and insurance but are not considered borrowed until they are sent to the taxing authority or to your insurance company. Therefore, you do not accrue interest on the funds until you use them to pay for the expense. You never have to worry about paying taxes or insurance again, so you're not caught short during those times of the year. And there is no additional cost for the lender performing these functions. So, if you do have to get a LESA, you may find that you like it!

Hi Rodney, I'm not sure what you mean. Typically, shortfall on a reverse mortgage refers to the amount of money that the loan will not cover that would be needed to pay off an existing mortgage on the property. For example, your reverse mortgage benefit is $150,000 and you owe $175,000 on the existing loan on your property and therefore there is a shortfall on the reverse mortgage that you would have to cover by bringing the $25,000 difference (plus any costs) in to closing if you wanted to still get the loan to eliminate your monthly payment. Since there isn't even enough money in the reverse mortgage to pay off your existing loan, there would not be any money to deduct from the loan to achieve some goal -if I am reading your question correctly. The reverse mortgage must be in first lien position with no other loans on the property so any shortfall would have to be paid by you with other funds available to you. Those funds could not be borrowed; however, you could get a gift from a family member if that is a possibility for you.

Hello Nanette, Loan draws are supposed to be taken while the borrower is in the home, and not during absences. And the 12-month time period you cite is for an absence that is due to a medical necessity that is not yet known if it will be permanent. If the borrower is still out of the property after 12 months, the HUD no longer deems the absence temporary, even if the original plan was for a temporary absence (such as would be the case with a broken hip or other medical issue that required a stint in a skilled nursing facility to recuperate before the borrower could return home). However, if you know from the start that the move is permanent, it is considered a permanent move, there would not be a 12-month period where she would be considered temporary. If you moved her into a permanent assisted living arrangement now, that would be considered a permanent move and enough for the lender to call the loan immediately due and payable. If you are aware that this is a permanent situation, rather than having the loan remain open and continue to accrue interest, it would probably be to mom's benefit to sell the home now and stop accruing interest on the loan so that she will retain as much equity in the sale as possible. You can take the sale proceeds and put them in an account for her use rather than falsely attesting to her occupancy to obtain additional funds from the lender and HUD which is never a good idea.

Hello Celeste,If you remain on title, you can add anyone else in addition to yourself that you desire. There is no problem with your reverse mortgage if you still occupy the property as your primary residence, pay the taxes and insurance as well as any other property charges, and you are also on title.

Hello Stan, No mystery to it. An "FHA" simply refers to one of the loan programs that is insured by the Federal Housing Administration (FHA) a division of HUD. An FHA reverse mortgage carries with it insurance that the borrower pays for that insures the lender from the risk of default and in the case of the HECM reverse mortgage, also insures the borrower and the borrowers heirs against the risk of the lender becoming insolvent or the property not being worth enough to repay the loan. There is never any recourse other than the property and heirs can pay off the loan at the lower of the amount owed or 95% of the current value after the borrower passes if the property is not worth enough to repay the outstanding balance on the FHA-insured reverse mortgage. By the borrower paying for mortgage insurance, they can usually get a higher loan to value on a forward or traditional mortgage or obtain a reverse mortgage on which they make no monthly payments which might otherwise not be available for them.

Hi Pete,If you have the HUD HECM loan, the loan is a non-recourse loan and there would not be any fees to leave the home. You should contact the servicing agent and let them know that you plan to move out and that you want to work with them to make the transfer to them smooth and easy and I am sure they will work with you to do so. they would rather not take the house, and would rather the house be sold, but if that can't be done, it is much easier for them to work with you on obtaining a Deed than to go through a lengthy foreclosure. I wish you the best.

Good Afternoon Jack,Reverse mortgages are just like most forward or traditional loans in this regard. Very few loans these days are made from a lenders' own funds to remain outstanding for the term of the loan.Lenders fund loans with a warehouse line of credit and then sell that loan in the secondary market, reverse mortgages included. The loans are sold in securities which in turn replaces the lenders' funds and allows them to remain liquid and to keep making loans. The securities are sold with the lender retaining the servicing rights since the investors who ultimately purchase the securities do not collect payments on forward loans, or make disbursements on reverse mortgages (in addition to all the other duties of a servicer that I won't go into here). Without having an avenue to sell the loans into the secondary market, lenders would not have a flow of cash available to continue to keep making loans.

Hi Phil,The reverse mortgage for purchase program may be exactly what you need. If you can still qualify conventionally then you would not have to put as much money down, but then you would also have a monthly mortgage payment. If you do choose to go the route of the reverse mortgage, just remember that if you wish to buy a condominium, the project must be approved by HUD and many are not. In fact, many do not meet HUD's requirements and not only are not approved but CANNOT be approved.Getting a project approved can take many weeks and then you may find out that it does not meet the requirements and if that is the determination, you would not be able to even place a reverse mortgage within that project. Sellers do not like to wait for 6 -8 weeks only to find out that your financing cannot be approved and most borrowers do not have a clause in their contract that allows them to get their deposit back after waiting so long to find out that the financing cannot be approved. Therefore, it's important to know that it will work before you make the offer.

Hi Terry,Yes, a trust is acceptable. The lender will review the trust to be certain that it meets HUD guidelines, but most do. The things they check for are in the borrower's interests and most attorneys make certain they are included. Depending on the current value of the home, there is no problem with an existing mortgage. Your existing mortgage would have to be paid in full of the reverse mortgage proceeds.Terry, I'm glad you asked the question about the repayment. The lender and HUD work with families as long as they see that the family member is taking adequate steps to either pay off the mortgage or sell the home. This is very important when you have family who are still living in the property. HUD and lenders have seen circumstances in the past where remaining family members really didn't want to leave the home and therefore, made no efforts to repay the mortgage or sell the home. In these cases, the properties may not have been listed in a timely manner, listed at prices above current market or when inspected, were not in "show condition" which meant that no buyer would probably be interested in purchasing the property the way it was being represented.If the family members are doing everything the lender or HUD could do to sell the home, then the lender and HUD have no desire to step in, incur the costs and labor to do the exact same things already being done. If the house is being priced competitively, and marketed well, nothing is gained by taking the home through foreclosure and having it off the market or falling into decay while that happens. Remember, foreclosure itself takes many months in most states so if there is nothing to be gained, the lender and HUD do not desire this route. Communication is key and if your heir works with the lender, they will continue to work with him unless it got to a point where after that 12-month period they felt a price reduction was in order and your heir refused. At that, if they deemed they needed to begin foreclosure, you still have the time frame needed to complete that process and as stated, this alone can take many months.He should have a plan going in as to what he wants to do when the time comes. If he plans to pay the loan off, then he will need to have financing available so he would need to know he can qualify for a mortgage of his own at the time (or a reverse mortgage if he is 62 or older and there is still sufficient equity in the home). His advance planning will be his biggest advantage so that he is not left unaware at the time when he has to start making decisions.

Heirs can be all of the above. If your surviving spouse is also on the reverse mortgage, they may be your heir for some other parts of your estate, but they are still the owner of the property. The reverse mortgage would remain intact so long as any of the original borrowers remain living in the property. For purposes of the reverse mortgage, a surviving spouse is not an "heir", they are an original borrower/owner if they were on the title and loan when it was originally done.