Miami Reverse Mortgage Foreclosure Lawyer

How do Federally Backed Reverse Mortgages work?

Reverse mortgages are still a great way for retirees to get extra income. The only federally insured reverse mortgage is called a home equity conversion mortgage, or HECM for short. The HECM program is run by the Federal Housing Administration, which is part of the Department of Housing and Urban Development. HECMs are handled by private lenders and servicers who are approved by the FHA. The FHA guarantees these companies against any losses on the loans and charges borrowers a premium to cover any potential insurance claims. Sometimes, the Government National Mortgage Association (also known as Ginnie Mae) buys HECMs from lenders. Any lender that can make HUD loans can start reverse mortgage loans. 

Who qualifies?

For folks aged 62 and up, the FHA-insured reverse mortgages are a game-changer. They let you turn the equity in your home into a monthly income or a line of credit. But before you dive in, make sure you get the right counseling to understand how it works and explore other financial options. 

How are funds paid to a borrower?

Funds to the borrower can be paid as follows:

1. Tenure:  You’ll get monthly payments until you die or move out of the house.

2. Term:  You’ll get monthly payments for a fixed amount of time, like 15 or 30 years.

3. Line of Credit:  You can borrow money up to a certain amount whenever you need it, and you only pay interest on the amount you borrow.

4. Modified Tenure: This is like tenure, but you also have a line of credit.

5. Modified Term: This is like term, but you also have a line of credit.

When do FHA loans need to be repaid?

FHA loans don’t have to be repaid until the borrower moves, sells, or passes away. All federally insured RM are nonrecourse loans, which means if the loan is due and payable, and the loan amount is more than the property’s value, the borrower or their heirs only owe the property’s value.

HECMs also end when the borrower repays or refinances the loan, or when the loan becomes due and payable because the borrower died, moved, or defaulted. 

Foreclosures of Reverse Mortgages 

When borrowers don’t meet mortgage conditions, like paying property taxes and homeowners insurance, or don’t live in the house, they’re at risk of losing their homes. If they can’t pay the debt or fix the problem, they’ll have to give up their house.

Alternatives to Reverse Mortgage Foreclosures

The Home Equity Conversion Mortgage (HECM) program offers a solution to borrowers facing foreclosure. 

Here are some ways to prevent foreclosure:

1. Foreclosure Prevention Option: If a HECM servicer assigns the loan to FHA, an eligible nonborrowing spouse can stay in the home after the borrower passes away.

2. Repayment Plan: If a borrower defaults on their loan, they can repay the unpaid property charges over 60 months. The servicer asks FHA for an extension to delay foreclosure.

3. At-Risk Extension: This extension delays foreclosure for borrowers at least 80 years old who are in default due to unpaid property charges and are facing critical circumstances like terminal illness or long-term disability. The servicer requests an extension from FHA and updates supporting documentation every year.

4. Low-Balance Extension:  This extension skips calling a loan due when the borrower owes less than $2,000 for unpaid property taxes or hazard insurance.

Miami Florida Reverse Mortgage Foreclosure Defense Lawyer

If you’re facing reverse mortgage foreclosure complaint, contact Miami reverse mortgage foreclosure defense attorney Andrew J. Pascale today at 877-667-1211 to discuss your case. Please note that this blog does not provide legal advice and is intended for illustrative purposes only.