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Reverse Mortgage Blog

What Happens When My Reverse Mortgage Becomes Due? Settling your Loan Account

November 4, 2020

The National Reverse Mortgage Lenders Association has launched a borrowing with confidence campaign for reverse mortgage borrowers. The association created a “Roadmap” for reverse mortgage borrowers and potential borrowers to guide them in the process. This month we will discuss what happens when your loan becomes due.

As a reverse mortgage borrower, you are not required to make any monthly payments on your loan. The loan is paid off when you or your surviving spouse no longer resides in their house as their principal residence.

The reverse mortgage is a non-recourse loan, which means your heirs are not responsible for any remaining loan balance if the balance exceeds the value of your home. The mortgage insurance you pay to FHA will pay off the debt for you. Any remaining equity in your home is retained by your estate if they sell the home.

When a person on the reverse mortgage passes, the remaining spouse is responsible for informing the loan servicer. In addition, the heirs must notify the servicer, of all the borrowers who have passed away within 30 days. Servicers do audit deaths of reverse mortgage borrowers. Any payments made to borrowers stop at this time. Interest on the reverse mortgage insurance premiums and homeowners insurance continue to whom tell after the reverse mortgage is settled. The servicer will notify the heirs that the reverse mortgage is now due and payable. The loan can be paid back of other resources or by selling the home. If there is a balance from the home sale after the reverse mortgage is paid it belongs to the estate.

If all reverse mortgage borrowers on title sell the property, passed away, or do not maintain the property as their principal residence for a period exceeding 12 months, this is called a maturity event. A maturity event means the loan is due and payable. It is very important that your estate communicates with the servicer to ensure the loan is paid in a timely manner.

The estate will have six months to satisfy the debt. If the debt is not satisfied within six months, they may request 90-day extensions. Again, it’s very important that your estate communicate with the servicer as to their intentions process of repaying the loan. If the estate is actively working to refinance your property or to sell it, they may be asked to provide documentation of the process.

You may want to print out a copy of this article and put it with your will or living trust. It might also be advisable to discuss it with the person or family member who will be in charge of settling your estate.

If you have any reverse mortgage questions, please call me, Angella 866-949-7030. Is my pleasure to be of service.

The National Reverse Mortgage Lenders Association has launched a borrowing with confidence campaign for reverse mortgage borrowers. The association created a “Roadmap” for reverse mortgage borrowers and potential borrowers to guide them in the process. This month we will discuss what happens when your loan becomes due.

As a reverse mortgage borrower, you are not required to make any monthly payments on your loan. The loan is paid off when you or your surviving spouse no longer resides in their house as their principal residence.

The reverse mortgage is a non-recourse loan, which means your heirs are not responsible for any remaining loan balance if the balance exceeds the value of your home. The mortgage insurance you pay to FHA will pay off the debt for you. Any remaining equity in your home is retained by your estate if they sell the home.

When a person on the reverse mortgage passes, the remaining spouse is responsible for informing the loan servicer. In addition, the heirs must notify the servicer, with all the borrowers who have passed away within 30 days. Servicers do audit deaths of reverse mortgage borrowers. Any payments made to borrowers stop at this time. Interest on the reverse mortgage insurance premiums and homeowners insurance continue to whom tell after the reverse mortgage is settled. The servicer will notify the heirs that the reverse mortgage is now due and payable. The loan can be paid back to other resources or by selling the home. If there is the balance from the home sale after the reverse mortgage is paid it belongs to the estate.

If all reverse mortgage borrowers on title sell the property, passed away, or do not maintain the property as their principal residence for a period exceeding 12 months, this is called a maturity event. A maturity event means the loan is due and payable. It is very important that your estate communicates with the servicer to ensure the loan is paid in a timely manner.

The estate will have six months to satisfy the debt. If the debt is not satisfied within six months, they may request to 90-day extensions. Again, it’s very important that your estate communicate with the servicer as to their intentions process of repaying the loan. If the estate is actively working to refinance your property or to sell it, they may be asked to provide documentation of the process.

You may want to print out a copy of this article and put it with your will or living trust. It might also be advisable to discuss it with the person or family member who will be in charge of settling your estate. The National Reverse Mortgage Lender's Association has created a series of consumer guides, including one called "What Do I Do When My Loan is Due?" Click Herehttps://www.nrmlaonline.org/category/consumer-guides 

If you have any reverse mortgage questions, please call me, Angella (949) 267-3409. Is my pleasure to be of service.

Angella Conrard profile picture
Angella Conrard
I am designated a Certified Reverse Mortgage Professional by the National Reverse Mortgage Lender's Association. I work exclusively with reverse mortgage loans in nine states. I have a passion for helping my clients. I think everyone can and should live their most comfortable life. I am the founder of the National Aging in Place Council- Orange County, California, emeritus. I've practiced yoga all my adult life and am strongly interested in health and well-being. I am a lifetime helper.
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I am designated a Certified Reverse Mortgage Professional by the National Reverse Mortgage Lender's Association. I work exclusively with reverse mortgage loans in nine states. I have a passion for hel...
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