January 7, 2011
FHA Reverse Mortgage Loans, also known as Home Equity Conversion Mortgages or HECM, provide a way for seniors age 62 and older to borrow against the equity in their homes. Under HECM loan rules, the borrower does not make monthly mortgage payments–the home is paid off when it is sold or when the borrower dies. But that lack of monthly mortgage payments may lead some borrowers to assume there are no payments due on the home whatsoever. This is not true–property taxes are still due, as are hazard insurance premiums or other commitments.
HECM loans do not eliminate such responsibilities, but under the terms of the FHA HECM loan program, failure to pay taxes and other required expenses makes the borrower delinquent on the HECM loan.
In the first week of 2011, the FHA released new guidance to participating HECM lenders to deal with the issue of unpaid property taxes and insurance premiums. According to an FHA press release, “FHA
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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