Consumer Financial
Protection Bureau
You have a reverse
mortgage:
Know your rights and
responsibilities
About this guide
Your reverse mortgage basics .......................................................................................................... 3
Your reverse mortgage responsibilities .......................................................................................... 3
Requirement 1: Your home must be your principal residence.................... 3
Requirement 2: You must pay your property charges on-time................... 6
Requirement 3: You must keep your home in good condition ................... 9
If you cannot meet your loan requirements ................................................................................. 11
Default or foreclosure notices ....................................................................... 11
Natural disasters.............................................................................................. 11
Paying back your loan ...................................................................................................................... 11
Selling your house............................................................................................................................. 12
What happens to your loan after you die ..................................................................................... 13
If you have a co-borrower on your loan ........................................................ 13
If a “Non-Borrowing Spouse” lives in your home ........................................ 13
If you have heirs ............................................................................................... 16
How to get help................................................................................................................................. 17
Glossary.............................................................................................................................................. 19
1
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
Introduction
This guide is for reverse mortgage borrowers.
It provides information on:
§ Your reverse mortgage loan requirements
§ How to pay off your reverse mortgage loan
§ How moving out of your home or dying affects your reverse mortgage loan
§ What it means to default on your loan and where to nd help
§ What your heirs may need to know
Most reverse mortgages today are Home Equity Conversion
Mortgages (HECMs), which are federally insured by the U.S.
Department of Housing and Urban Development’s (HUD) Federal
Housing Administration (FHA). This guide covers typical features and
requirements for HECM reverse mortgage loans. Non-HECM reverse
mortgage loans may have different requirements and features.
Alert
At the back of this guide is a glossary with key reverse mortgage terms and
a list of organizations that provide help to reverse mortgage borrowers.
In the guide, the term “you” refers to you, the borrower, and any
other co-borrowers on the reverse mortgage loan.
2
Your reverse mortgage basics
Unlike a traditional mortgage, a reverse mortgage loan is repaid when the
borrowers no longer live in the home. Because interest and fees are added to
the loan balance each month, the amount you owe goes up—not down—over
time. As your loan balance increases, your home equity decreases.
Your reverse mortgage responsibilities
Although you do not make monthly mortgage payments with a reverse
mortgage, there are three main requirements you must meet:
1. Your home must be your principal (meaning primary) residence
2. You must pay your property charges, like property taxes and homeowners
insurance on-time
3. You must keep your home in good condition
Warning
Failure to meet these requirements may lead to default or foreclosure..
Requirement 1: Your home must be your principal
residence
Your home must be your principal residence, meaning it must be where you
spend the majority of the year. You can only have one principal residence at
a time. As Table 1 shows, with a reverse mortgage you can only be away from
your home for a certain period of time.
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YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
TABLE 1: HOW LONG YOU CAN BE AWAY FROM YOUR HOME WITH A REVERSE MORTGAGE
Length of time away Effects on your reverse mortgage
You are away for more
Notify your lender or servicer so that your lender knows you
than two months and
continue to occupy the home as your principal residence.
there is no co-borrower
living in the home
You are away for more
than 6 months for non-
medical reasons and
there is no co-borrower
living in the home
§ Your home is no longer your principal residence and your
loan must be paid back or satised through selling the
property or deed-in-lieu of foreclosure.
§ Anyone living with you will have to move out unless they are
able to pay back the loan.
You are away for more
than 12 consecutive
months in a healthcare
facility such as hospital,
rehabilitation center,
nursing home, or
assisted living facility
and there is no co-
borrower living in the
home
§ Your home is no longer your principal residence and your
loan must be paid back or satised through selling the
property or deed-in-lieu of foreclosure.
§ Anyone living with you will have to move out unless they are
able to pay back the loan.
There is a co-borrower
The co-borrower may continue to live in the home and receive
in the home and you
loan payments, so long as they continue to fulll the reverse
permanently move for
mortgage loan requirements.
any reason
4
I was asked to certify that I occupy my home. What is this? What if I
forgot to respond?
Your lender or servicer will require you to certify each year that your home is your
principal residence. Usually this is done through a postcard or other notice sent by
mail at the same time each year. If your spouse is designated as an “Eligible Non-
Borrowing Spouse” in the loan documents, you will also need to certify that you
are still married and that your spouse lives in the home as their principal residence.
To be an “Eligible Non-Borrowing Spouse” means that your spouse is not a co-
borrower, but qualies under HUD’s rules to stay in the home after the borrower
dies.
It is important that your annual occupancy certication is signed and returned
immediately. Failure to do so may lead to default or foreclosure.
5
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
Requirement 2: You must pay your property charges on-
time
Property charges are fees the borrower must pay under the reverse mortgage
loan, which can include:
§ Property taxes and homeowners insurance
§ Flood insurance premiums
§ Ground rents, condominium fees, planned unit development fees, or
homeowners’ association fees
§ Any other special assessments
Paying your property charges
§ For loans made before April 27, 2015: the borrower could have requested
at the time the loan documents were signed, for the lender or servicer to pay
the property taxes and homeowners insurance from the reverse mortgage
loan funds, but was not required to do so. Generally, borrowers need to
budget each year to make sure the taxes and insurance are paid on-time.
§ For loans made after April 27, 2015: lenders evaluate your ability to pay
future property taxes and homeowners insurance when making the loan. As
shown in Table 2, your lender may require you to set aside loan proceeds to
pay future property taxes and homeowners insurance.
Warning
The money set aside to pay for your property taxes and homeowners
insurance will not cover other charges like condominium fees,
homeowners’ association fees, and ground rents. You are solely
responsible for paying these other property charges.
6
TABLE 2: PAYING PROPERTY CHARGES FOR LOANS AFTER APRIL 27, 2015
Lender's evaluation Who pays the property taxes & homeowners insurance
If your lender determined
You can choose to:
that you had enough
§ Pay your property charges directly, or
money to pay future
property taxes and
§ Have your servicer pay your charges by using money
homeowners insurance
from your reverse mortgage funds.
If your lender determined
Your lender will choose to:
that you need to “set
aside” a portion of your
§ Pay your property taxes and homeowners insurance
loan proceeds
directly from the reserve, or
as a reserve
to pay your property
§ Send you the money so that you can make these
taxes and homeowners
payments.
insurance
§ If you are unsure if loan money was set aside, check your monthly
account statement or contact your lender or servicer.
§ If the reserve can no longer cover your property taxes or homeowners
insurance, your lender will tell you.
Warning
Unpaid property charges could put your reverse mortgage loan in
default. If you miss a payment or know that you will miss a payment,
contact your lender or servicer immediately. They may pay your
property charges by using money from your monthly loan pay out or,
if you have one, your line of credit. If there is not enough money to
cover the missed charges, your lender or servicer may advance the
funds and you will be required to pay them back.
7
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
Managing your property taxes
Here are some ways you can manage your property taxes.
§ You may be eligible to lower your tax payments if your state offers a tax
relief program for older homeowners. If your state has a senior property
tax exemption, you may need to apply to receive the benet. Many
state programs require you to apply shortly after the tax bill is issued.
To learn more, contact your local tax collector.
§ It is important to tell your lender or servicer if you are paying your
property taxes in installments. You do not want them to mistakenly
believe that you missed a payment.
§ If your lender wrongly determines that your loan is in default for unpaid
property taxes, contact your lender or servicer immediately. Be ready
to show proof that you have paid your property taxes.
Failure to pay property taxes
If your loan falls into default due to unpaid property charges, immediately
talk to your lender or servicer. You can ask for help from a HUD-certied
housing counseling agency or an attorney.
After you default you may be able to rehabilitate the loan through a
repayment plan or an “at-risk extension.” To qualify for an at-risk
extension, you must be at least 80 years old and experiencing critical
circumstances, such as: a long-term disability, terminal illness, or a unique
need to stay in the property. You may request to renew the at-risk
extension every year with proof of your need.
8
Requirement 3: You must keep your home in good
condition
When you applied for your reverse mortgage loan, your lender evaluated
whether your home met HUD‘s property requirements.
Now that you have the reverse mortgage loan, you must keep your home in
good condition. Your lender or servicer may inspect your home’s condition if
they give you notice and specify the purpose of the inspection. They also may
tell you to make repairs.
How long do I have to make required repairs?
You generally have 60 days to start repairs from the day your lender or servicer
noties you. Failure to do so could lead to default or foreclosure.
What if I cannot afford to make required repairs?
Reach out to your local Area Agency on Aging (AAA) to nd assistance
programs that may be able to help you pay for repairs. To nd the nearest AAA,
call (800) 677-1116 or visit eldercare.acl.gov.
9
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
Warning
If you need to hire a contractor to perform repairs on your house, you
may want to:
§ Explore and compare your options. Get estimates from several
contractors on the costs of repairs.
§ Ask people you trust for referrals.
§ Check if a contractor is licensed through your state’s contractors’
licensing board.
§ Have a lawyer review the contract of work.
§ Read and understand the contract before you sign it. Make sure
written contracts match any verbal promises made.
§ Beware of contractors going door-to-door. Do not feel pressured
into making a decision right away.
10
If you cannot meet the loan
requirements
Default or foreclosure notices
If you receive a default or foreclosure notice, immediately contact your servicer
to learn why. Unless steps are taken to x the default, you may lose your
home to foreclosure. Seek help from an attorney or a HUD-approved default
housing counseling agency. Both can explain what options you have to prevent
foreclosure.
Natural disasters
After a natural disaster, you may experience damage to your home, unexpected
expenses, or a sudden loss of income. All these things may make it difcult for
you to meet your reverse mortgage loan obligations. To nd help, read the
Reverse mortgage borrowers guide to natural disasters at, cfpb.gov/prepare.
Paying back your loan
Unless there is a co-borrower living in the home, you must typically repay the
loan when you no longer live in the home. You may need to pay it back sooner
if you fail to meet the obligations of the loan.
11
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
Selling your house
If you decide to sell your home while you have a reverse mortgage loan, you
will have to pay back the money borrowed, plus interest and fees. As shown in
Table 3, the amount you receive from the sale of your home will determine how
the loan is paid back.
TABLE 3: HOW YOUR REVERSE MORTGAGE IS PAID IF YOU SELL YOUR HOME
Your home Money from the sale
You sell your home
§ The loan is fully paid back.
for at least the loan
§ You get to keep whatever money is left after paying back the loan.
balance
You sell your home
§ The money from the sale pays off the outstanding loan balance.
for at least the
§ Your mortgage insurance will pay any remaining balance if the
appraised market
sale does not cover the amount owed.
value
Your reverse
§ You may sell your home for 95 percent of its appraised value or
mortgage loan
the amount owed on the loan, whichever is less.
is in default and
§ The money from the sale will go towards paying the outstanding
you have received
loan balance.
a notice that the
loan is “due and
§ Your mortgage insurance will pay any remaining balance if the
payable”
sale does not cover the loan balance.
12
What happens to your loan after
you die
Unless there is a co-borrower living in the home, when, you die the loan
has to be paid back. As described below, when it must be paid back is
complicated.
If you have a co-borrower on your loan
After a borrower dies, any co-borrower on the loan may continue to
receive the benets of the reverse mortgage loan and may stay in the
home as long as they continue to fulll the loan obligations.
Tip
It is a good idea to check with your lender or servicer to make sure
your loan records are correct. Conrm your co-borrower is listed on
the loan.
If a “Non-Borrowing Spouse” lives in your home
Your Non-Borrowing Spouse may stay in the home if they pay off the
loan. They may also be able to stay in the home without paying off the
loan depending on when the loan was taken out and whether they qualify
under HUD’s rules. The process may be difcult. Your Non-Borrowing
Spouse may want to get help from an attorney or a HUD-certied housing
counseling agency.
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YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
If your loan case number was assigned on or after August 4, 2014
Your lender or servicer will determine if your Non-Borrowing Spouse
qualies to stay in the home after you die (called a "deferral period"). To
qualify your Non-Borrowing Spouse must:
§ Establish their ownership interest to the property or a legal right to
remain in the home for life. This must be provided to the lender or
servicer within 90 days of the borrower’s death.
§ Have been married to the borrower at the time the loan documents were
signed up until the borrower’s death. For couples who were unable to be
legally married based on gender at the time the reverse mortgage loan
was made, they must show that they were legally married by the time of
the borrower’s death.
§ Have been identied in the loan documents as a Non-Borrowing Spouse.
§ Have lived, and continue to live, in the home as their principal residence.
§ Continue to meet the loan requirements and make sure the loan does not
become due and payable for any other reason.
If your loan case number was assigned before August 4, 2014
After the borrower dies, the lender or servicer has two options. They can:
§ Foreclose on the home, or
§ Enter a process called “Mortgage Optional Election (MOE) Assignment”
that allows the Non-Borrowing Spouse to stay in the home.
14
Foreclosure
If your lender or servicer decides to foreclose on the home or nds that the
Non-Borrowing Spouse does not qualify for MOE Assignment, they must
begin foreclosure proceedings within six months of the borrower’s death. If
the Non-Borrowing spouse is actively trying to sell the property or satisfy the
debt in some other way, they may request a delay with the foreclosure for
up to 180 days.
Tip
If the Non-Borrowing Spouse receives a foreclosure notice, they should
take immediate action and not ignore it.
MOE Assignment
If the lender or servicer decides not to foreclose and to enter the MOE
Assignment process, to qualify your Non-Borrowing Spouse must:
§ Have been married to the borrower at the time the loan documents were
signed up until the borrower’s death. For couples who were unable to be
legally married based on gender at the time the reverse mortgage loan
was taken out, they must show that they were legally married by the time
of the borrower’s death.
§ Have lived since the beginning of the loan, and continue to live, in the
home as their principal residence.
§ Provide their Social Security number or Tax Identication Number.
§ Agree that they will no longer receive any payments from the reverse
mortgage loan.
§ Continue to meet all loan obligations, including paying property taxes and
homeowners insurance.
§ Ensure that the reverse mortgage loan does not become due and payable
for any other reason.
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YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
Tip
If you live with a Non-Borrowing Spouse, consider:
§ Gathering all documents that support your spouse's claim of being
an Eligible Non-Borrowing Spouse. These documents may include a
marriage certicate and property deed.
§ Seeking legal advice if you believe your spouse should be on
the loan. If your spouse is not on the loan, talk to a lawyer about
transferring the property to your spouse when you die.
If you have heirs
If your heirs want to keep your home after you and your spouse die, they
will have to repay either the full loan balance or 95 percent of the home’s
appraised value – whichever is less.
Talk to your heirs now. Prepare for any non-borrowing family members living
in the home by deciding what they will do after you die.
16
How to get help
If you’re having trouble with your reverse mortgage, here’s what you can do to
get help:
§ As a borrower you have a right to request information from or dispute any
errors with your lender or servicer. To learn more got to, consumernance.
gov/askcfpb/1855.
§ Consult an attorney. If you need help nding an attorney, visit your local or
state bar. You may qualify for free legal services. To nd a legal aid ofce, go
to lsc.gov.
§ Talk to a housing counselor. HUD-approved housing counseling agencies
offer free or low-cost expert assistance. You can nd a housing counseling
agency by going to hud.gov or calling (800) 569-4287.
§ Reach out to Area Agencies on Aging (AAA) to nd state and local assistance
programs that may be able to help you pay for property charges or needed
home repairs. To nd the nearest AAA, call (800) 677-1116 or visit eldercare.
acl.gov.
§ Submit a complaint with the CFPB if you are having problems with your
lender or servicer by going to consumernance.gov or by calling toll-free
(855) 411-CFPB (2372).
§ Find more information on reverse mortgage issues at consumernance.gov/
reversemortgage.
17
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES18
Glossary
DEFINED TERM DEFINITION
Appraisal A written document that shows an opinion of how
much a property is worth. It describes what makes the
property valuable and may show how it compares to
other properties in the neighborhood.
Co-borrower A person, usually your spouse or partner, who also signs
the reverse mortgage loan note and who is equally
responsible for fullling all the loan obligations and who
also receives the benets from the loan.
Deed-in-lieu of
foreclosure
An arrangement where you voluntarily turn over
ownership of your home to the lender to avoid the
foreclosure process.
Default The failure to meet the loan requirements included in
the reverse mortgage. For example, the requirements
of a Home Equity Conversion Mortgages (HECM) loan
include occupying the home as the principal residence,
keeping the home in good repair, and paying the
property charges on-time. A borrower’s failure to full
these obligations would cause the loan to default and
may lead to foreclosure.
Eligible Non-
Borrowing
Spouse
A borrower’s spouse who is not a co-borrower, but
qualies under HUD’s rules to stay in the home after the
borrower has died.
Equity
The amount your property is currently worth, less the amount
owed on any existing mortgages on your property.
19
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
DEFINED TERM DEFINITION
Federal Housing
The federal agency that insures HECMs, the most
Administration
common type of reverse mortgage loan. FHA is a
(FHA)
part of the U.S. Department of Housing and Urban
Development (HUD).
The process where the lender takes back property
because the borrower no longer fullls the obligations
Foreclosure
of the reverse mortgage loan. Foreclosure processes
differ by state.
Home Equity
The most common type of reverse mortgage today.
Conversion
One way they differ from private reverse mortgages
Mortgage
(sometimes called “proprietary” reverse mortgages) is
(HECM)
that HECMs are federally insured by the FHA.
Pays for losses and damage to your property if
something unexpected happens, like a re or burglary.
Standard homeowners insurance doesn’t cover damage
from earthquakes or oods, but it may be possible
Homeowners
to add this coverage. Homeowners insurance is also
Insurance
sometimes referred to as "hazard insurance." Borrowers
with a HECM loan are required to maintain homeowners
insurance in addition to, the mortgage insurance also
required with a reverse mortgage loan.
HUD-Approved
An organization with housing counselors that are
Housing
approved by HUD. Borrowers taking out a HECM
Counseling
reverse mortgage loan must receive counseling from a
Agency
HUD-approved reverse mortgage counseling agency
before receiving the loan.
20
DEFINED TERM DEFINITION
The nancial institution that loaned the borrower
Lender
money.
Loss Mitigation
The steps mortgage servicers take to work with a
borrower to avoid foreclosure. Loss mitigation refers
to a servicer’s responsibility to reduce or “mitigate” the
loss to the investor that can come from a foreclosure.
Certain loss mitigation options may help you stay
in your home. Other options may help you leave
your home without going through foreclosure. Loss
mitigation options for reverse mortgage borrowers
may include deed-in-lieu of foreclosure or a
repayment plan.
The lesser of the appraised value of the home, the
sales price of the home being purchased, or the
Maximum Claim
maximum limit HUD will insure. The maximum claim
Amount
amount is one factor used to calculate how much a
homeowner can borrow with a reverse mortgage loan.
Mortgage
Insurance Premium
An initial and annual amount charged by the lender
and paid to the Federal Housing Administration.
Mortgage insurance is in addition to the homeowners
insurance the borrower must maintain.
A one-time upfront fee that the lender charges the
borrower for making the loan. These fees are limited
Origination Fees
by the maximum claim amount and may not exceed
$6,000.
21
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
DEFINED TERM DEFINITION
Principal Limit
The amount of money the borrower can borrow with a
reverse mortgage loan. The principal limit for a HECM
is calculated using the age of the youngest borrower or
Eligible Non-Borrowing Spouse, the interest rate on the
loan, and the maximum claim amount. The principal
limit generally will increase each month, possibly making
additional funds available for borrowers with adjustable
rate HECMs, but not xed-rate HECMs. In general, loans
with older borrowers, higher-priced homes, and lower
interest rates will have higher principal limits than loans
with younger borrowers, lower-priced homes, and
higher interest rates.
Principal
Residence
The dwelling where the borrower, and if applicable,
the Non-Borrowing Spouse, maintains their permanent
home and where they typically spend the majority
of the year. A borrower may only have one principal
residence at a time. If the borrower moves someplace
else for a majority of the year, or to a nursing or assisted
living facility for more than 12 consecutive months, the
borrower must pay back the reverse mortgage loan.
Reverse mortgage loans that are not insured by the
Proprietary
federal government and are typically designed for
Reverse
borrowers with higher home values than those insured
Mortgage
by HUD.
22
Notes
23
YOU HAVE A REVERSE MORTGAGE: KNOW YOUR RESPONSIBILITIES
Notes
24
W ebsite
consumernance.gov/reversemortgage
General inquiries
Consumer Financial Protection Bureau
1700 G Street NW
Washington DC 20552
S ubmit a complaint by phone
855-411-CFPB (2372);
TTY/TDD 855-729-CFPB (2372)
Submit a complaint online
consumernance.gov/complaint
Consumer Financial
Protection Bureau
March 2020