Federally Insured Reverse Mortgages Offer Seniors Peace of Mind
Features of a Reverse Mortgage
Most reverse mortgage options are insured by the Federal Housing Administration (FHA). These insured reverse mortgages are called a Home Equity Conversion Mortgage or HECM, and they are only available through an FHA-approved lender. These federally-insured reverse mortgage loans offer added security over private reverse mortgage loan options. Borrowers of government-backed HECMs can enjoy the following protections:
- Borrowers are not required to pay more than the home’s fair market value due to the non-recourse provision of the HECM loan. Under the non-recourse provision, if the homeowner sells their home and the home has lost value, the homeowner is protected by the FHA.
- If the loan balance exceeds the value of the home, the FHA reimburses the lender for the difference when the estate sells the home.
- Payments made to the borrower by the lender are insured by the FHA. If the lender is unable to continue making payments, the payments would be made by the FHA.
- Borrowers receive all the proceeds from their reverse mortgage. If the reverse mortgage company were to go out of business, the FHA guarantees the homeowner receives any remaining money available from the reverse mortgage.
- If the loan balance grows and exceeds the home’s present market value, the lender cannot take title for this reason. FHA insures that borrowers can live in their home as long as basic loan obligations are met (homeowner’s insurance in force, property tax payments current and the home is maintained in good condition)
Though the government isn’t in the reverse mortgage lending business itself, it is absolutely involved in helping consumers protect their assets and interests when it comes to reverse mortgages. Part of this protection process includes a required counseling session with an FHA-approved counselor. A major part of the counselor’s responsibility is to make sure the borrowers understand their options and have all the information they need to make an informed, educated decision on whether or not a reverse mortgage loan is the best option.
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You’ve worked hard all your life. Make sure you protect yourself, your home and your future by working with a responsible, ethical reverse mortgage lender. Alpha Mortgage’s HECM reverse mortgage program is backed by the Department of Housing and Urban Development (HUD) and insured by the FHA. Explore our Learning Centerto read more about reverse mortgages, or give us a call to speak with one of our knowledgeable bankers, toll free at (855) 367-4326.