<Servicer Logo> Questions and answers about reverse Mortgages

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Questions and Answers
About Reverse Mortgages
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What is a reverse mortgage?
A reverse mortgage is a loan product that allows seniors to convert home equity into cash.
Most reverse mortgages are insured by the Federal Housing Administration (FHA).
How does a reverse mortgage work?
With a reverse mortgage, you receive money from your mortgage company (drawn against
the equity in your home). The money can be paid in a lump sum, through a line of credit,
or with monthly payments. Fees and interest are charged on the loan amount (or “loan
proceeds”); therefore, over time the loan balance increases and your home equity decreases.
What are my obligations?
Regardless of whether your reverse mortgage proceeds are still available, with a reverse
mortgage you are required to:
□□ Pay property-related expenses on time. Property-related expenses, also referred to as
“property charges,” include real estate (property) taxes, utilities, homeowner’s insurance
(also referred to as “hazard” insurance), homeowner’s association (HOA) fees, and flood
insurance premiums (if applicable).
□□ Maintain the property’s condition. Property must be maintained in the same condition as
when the reverse mortgage loan was originated.
□□ Live in the property as your primary residence. This must be certified on an annual basis.
Failure to meet any one of, or all the above noted requirements, can result in the loan going
into default and can result in foreclosure. In addition, if repairs were required when the loan
was originated, those repairs must be completed (and inspected) within 12 months.
Questions and Answers
About Reverse Mortgages
What if I can’t meet my obligations? What are my options?
Repayment Plan
Used to pay back property-related expenses, also called “property
charges,” paid on your behalf by your reverse mortgage servicer.
Typically, the amount due is spread out in equal payments for an
agreed upon time period.
Free Counseling From
a HUD-Approved
Housing Counseling
Your housing counselor will review your financial situation, may assist in
balancing your budget or finding resources to help you (i.e., finding you
sources of income or financial assistance), and will work with us to resolve
your situation.
If you have equity in your home, you may qualify for a new reverse
mortgage to pay off your existing reverse mortgage plus any past-due
property-related expenses.
Sell Your Home
You may sell your home to anyone, including your heirs, and use the sale
proceeds to pay off your reverse mortgage loan.
Pay Off Your
Reverse Mortgage
If you want to stay in your home, you or an heir may decide to pay off
the reverse mortgage by taking out a new loan or finding other financial
Deed-in-Lieu of
To avoid foreclosure and eviction, you may decide to complete a Deedin-Lieu of Foreclosure. This is a voluntary transfer of your property to
the owner of your reverse mortgage in exchange for a release from your
reverse mortgage obligations.
If your loan goes into default, it may become due and payable and the
servicer may begin foreclosure proceedings. A foreclosure is a legal
process where the owner of your reverse mortgage obtains ownership of
your property. Even if you’ve received a foreclosure notice, you may still be
able to avoid foreclosure by pursuing one of the options noted above.
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Questions and Answers
About Reverse Mortgages
What is the definition of “primary residence?”
For a reverse mortgage, the definition of your primary residence means:
□□ You have not sold the property or conveyed title to the property.
□□ All borrowers on the mortgage (if more than one) were not absent from the property due
to physical and/or mental illness for more than 12 months.
Remember, you must notify us of absences from the property in excess of two months to
avoid determinations that you are not living in the home as your primary residence.
What is the role of my reverse mortgage company/servicer?
After the loan closes, as your reverse mortgage company (also referred to as your “servicer”), we
will ask you to certify on an annual basis that you are living in the property and maintaining the
property. Additionally, we may send you reminders to pay your property-related expenses —
these are obligations like property taxes, insurance payments, and homeowner’s association
fees (if applicable). However, these expenses are your responsibility so be sure you’ve set aside
enough money to pay them on time.
What if I don’t pay my property-related expenses or don’t maintain my home?
Not meeting the conditions of your reverse mortgage puts the loan in default. This means the
mortgage company can demand the note be paid in full and may be required to foreclose and
sell the property.
Will I have to repay the loan?
As long as you live in the home as your primary residence, maintain the home, and pay
property-related expenses, the loan does not have to be repaid. If you move or sell the
property, the loan becomes due. In addition, when the last surviving borrower passes away,
the loan also becomes due.
Can I leave my home to my heirs?
Yes. Your estate or designated heirs may be able to retain the property and satisfy the reverse
mortgage debt by paying the lesser of the mortgage balance or 95% of the current appraised
value of the home.
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Questions and Answers
About Reverse Mortgages
Can I add a co-borrower?
Reverse mortgages do not allow co-borrowers to be added to the note after loan origination.
Contact us to discuss options such as refinancing to a new reverse mortgage (provided the
borrower meets eligibility requirements). By refinancing, you get a new loan that could include
your spouse or another co-borrower of your choosing.
What if the sale of my home is not enough to cover the debt?
As long as the property is sold for at least the lesser of the mortgage balance or 95% of
the current appraised value, the Federal Housing Administration (FHA) which insures most
reverse mortgages, will cover amounts owed that are not fully paid off by the sale. No debt is
passed to the estate or heirs.
Can my spouse or heirs contact a HUD-approved counseling agency or my mortgage
servicer on my behalf?
Yes, if you have signed a document authorizing them to do so.
Where can I get help if I am struggling to pay my property-related expenses?
If you are struggling to pay your property-related expenses (such as property taxes, insurance,
and homeowner’s and/or condo association fees), contact us immediately. In addition,
we strongly recommend and encourage you to work with a free HUD-approved housing
counseling agency. We can provide you with their contact information when you call us.
What if I am already in default?
Even if you are in default, options may still be available. First, contact us to explain your
situation. Depending on your circumstances, we may be able to help you with a repayment
plan or other option. You can also contact a free HUD-approved housing counseling agency
(see previous question) for assistance.
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Questions and Answers
About Reverse Mortgages
What if I’ve received a foreclosure notice?
It still may not be too late. Contact us to find out your options. If you can’t pay off the reverse
mortgage balance, you may be eligible for a Short Sale or Deed-in-Lieu of Foreclosure.
Who should I contact if I suspect fraud?
If you are contacted by anyone who is not your mortgage company offering to work on your
behalf for a fee or claiming you qualify for a loan modification or some other solution, you can
report the suspected fraud by calling:
□□ U.S. Department of Housing and Urban Development (HUD) Office of the Inspector
General Hotline: 800-347-3735 or email: [email protected]
□□ Federal Housing Finance Agency Office of the Inspector: 800-793-7724 or on the Internet
at: www.fhfaoig.gov/ReportFraud
What other trusted resources have information about reverse mortgages?
□□ Fannie Mae’s Know Your Options™ website: www.KnowYourOptions.com/reverse
□□ AARP’s website: www.AARP.org
□□ HUD’s website: www.HUD.gov
□□ Consumer Financial Protection Bureau’s website: www.ConsumerFinance.gov
Know Your Options is a trademark of Fannie Mae.
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