Category: Counseling

The HECM Reverse Mortgage Maturity Event

When a conventional mortgage is taken out, there is always a maturity date. This date designates, if the borrower never defaults, the last payment (including all interest and principal) bringing closure to the loan.

With a HECM reverse mortgage there is a maturity event, that is, a designated event in the borrower’s life which makes the loan then due. Reverse mortgage loans do not require monthly payments which can be quite an advantage for a senior entering into a new phase of life – whether their looking to supplement their income, protect retirement assets and investments, or buy a new home. FHA insured reverse mortgages are offered to those 62 and older based on certain guidelines, such as the home the loan is on must be a primary residence and it must meet HUD’s required guidelines.

Maturity event will be a term the borrower will encounter  several times during the application process and required third party counseling.  It’s very important piece for both the borrower and loved ones to understand.

Here are some examples of maturity events:

• The borrower, (or last borrower if married) passes away.
• The property for which the reverse mortgage is taken is no longer in the borrower’s primary residence.
• The property is sold out of the borrower’s name
• The borrower moves out of the primary residence for more than twelve consecutive months, such as moving in with family or assisted living for care.
• The borrower defaults on property taxes, homeowners insurance, or other obligations to the home.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

What is Required Reverse Mortgage Counseling?

reverse mortgage advisor connecticutPrior to being approved for a reverse mortgage, HUD’s Federal Housing Administration (FHA) requires each borrow to participate in a counseling session with an approved agency. These not-for-profit agencies are funded by the federal government and work closely with both the FHA and lenders to ensure a smooth process.

The goal of this session is not to steer a potential borrower in one direction or another, but to make sure they clearly understand all aspects of a reverse mortgage.

Here is what you can expect at your counseling session:

The potential borrower will need to schedule an appointment directly with a counseling agency. The lender does not initiate or take part in the session, but can provide you with resources to seek out a counselor. The session will take place in person or over the phone – although the FHA recommends a face-to-face meeting whenever possible.

Prior to your appointment, the counseling agency will provide you with a packet of information to allow you to prepare for the session. During the session the counselor will discuss your immediate and long-term financial needs, your reasons for seeking out a reverse mortgage, address any questions or concerns you may have, and clearly educate you on the process as well as the pros and cons of a reverse mortgage. Again, they are not there to “sell” you on the product, but to educate instead.

Once you have completed the counseling session, you will be provided with a “Certificate of Completion”. This certificate verifies to your lender that you have completed the counseling session and that you understand the essentials of a reverse mortgage. Your counselor will also follow up with you to ensure you have no further needs, questions, or concerns.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.