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Government Insured

Most reverse mortgages or Home Equity Conversion Mortgages (HECMs) are insured by the Federal Housing Administration (FHA). FHA requires a Mortgage Insurance Premium (MIP) to be collected at closing and during the life of the loan. This insurance provides the following protections and peace of mind for borrowers and their children:

  • The borrower(s) are not required to pay more than the home’s fair market value.
  • If the loan balance exceeds the value of the home, FHA reimburses the lender for the difference when the estate sells the home.
  • Payments made to the borrower by the lender are insured by FHA. If the lender is unable to continue making payments, the payments would be made by FHA.
  • If the loan balance grows and exceeds the home’s present market value, the lender cannot take title. FHA insures that borrowers can live in their home if basic loan obligations are met (homeowner’s insurance in force, property tax payments current and the home is maintained in good condition).