The FHA Reverse Mortgage (also known as Home Equity Conversion Mortgages or HECM loans) is designed for those aged 62 and older who own their home outright or have few payments left on the mortgage. HECM loans/Reverse Mortgages offer the borrower cash or a line of credit (or a combination of the two) and feature no monthly mortgage payment. An FHA Reverse Mortgage is normally payable when the borrower dies or sells the property.
According to the FHA HECM Industry Factsheet HECM loans feature no monthly mortgage payment (as mentioned above) and only become due and payable under certain conditions. Those conditions include the death of the borrower, but there are conditions where the HECM loan can become due and payable in full if the borrower does not live up to certain obligations that are a condition of loan approval.
For example, if the borrower fails to pay property taxes/charges or stops using the home that secured the HECM as his or her primary residence, the HECM loan could be declared due in full. That is one reason why HECM loan counseling is required as a condition of loan approval---borrowers need to know these terms and conditions and make an informed choice about applying for their HECM loan.
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