Home Equity Conversion Mortgages

Jacob Said:

In a Home Equity Conversion Mortgage (HECM)...?

We Answered:

This is my actual business, so I know what I'm talking about here.

The same thing that happens when anyone with a mortgage dies. If he has a will or heirs, they will inherit the home. Just like a traditional mortgage, the heirs would pay the loan off with whatever money they have, sell the house and pay the loan with the proceeds (additional proceeds are theirs), or if someone wants to keep the house, they may be able to refinance into their own names as long as their income and credit are adequate to do so.

One thing to note is that a HECM or any type of reverse mortgage is a Non-Recourse Loan. That means that if the amount of money you owe us is more than you can get for the house, the fair market value, you don't owe the rest. So let's say that the balance, interest, fees financed, etc come up to $150k, but the most you can get in the current market is $100k, you give us the $100k and that's the end of it. In this situation, the mortgage insurance protects you as well as the lender. Your heirs don't have to liquidate the rest of the estate, and they're never responsible for loans they didn't make.

Discuss It!