This is a good question. The term "maturity event" is any event that triggers repayment of the loan. With the FHA HECM (and also the jumbo), it happens when the following events occur:
1. a borrower passes away, and the property is no longer the principal residence of at least one surviving borrower,
2. the property is no longer the principal residence of the borrower for reasons due to the borrower permanently moving out of the residence via a sale of the property.
3. a borrower gives over title to the mortgaged property to another and no other borrower retains title to the mortgaged property,
4. the borrower no longer occupies the property for a period of more than 12 consecutive months due to physical or mental illness. In this case, the property is no longer the principal residence of at least one other borrower. Or the borrower, for non-medical reasons, is absent from the property for 6 months.
5. the borrower fails to perform any of the required obligations under the HECM mortgage such as the borrower failing to make certain repairs to the property or the borrower failing to pay property taxes and homeowner's insurance premiums.
The HECM loan does not become due in the borrower's lifetime except for failure to pay property taxes, maintain insurance on the home, death, sale of the property, change in title, or no HECM borrower occupies the property for more than 12 consecutive months.
When the last borrower passes away, heirs have a period of three months at a time (approved by the lender) and up to 12 months in which to sell the property. Communication is the key, and heirs must contact the lender within 30 days of the borrower's passing. Lenders need to know that the family is making attempts to sell the property or purchase the property in order to pay what is owed.
Please remember that the lender does not want your house. The key is staying in touch with your lender. Never ignore communications from a lender whether by phone or by mail.
Once you understand the ins and outs of the HECM program, your fears and apprehensions will be replaced by a solid confidence that the reverse mortgage is one of the most protected mortgages out there with many safeguards. Continue learning through this website, and be sure to write down any questions you may have.
Please call Advisors Mortgage with any questions you may have.
Advisors Mortgage: 888-843-9797 or 631-804-9044
The word foreclosure, though a scary word, is not an event any borrower or lender for that matter wants to happen. But a lender can foreclose on your home if the terms of the reverse mortgage are breached.
When an event such as failing to pay property taxes or keeping the home in obvious disrepair occurs, the lender can take possession of the home through a foreclosure action in order to repay the loan balance. You can choose to sell the home or give over the deed to the lender (deed in lieu) to repay the loan. Welcome changes on the HECM have occurred over the years, and HUD has made these changes to protect borrowers and their biggest asset, their home. With the advent of the financial assessment and LESA (Life Expectancy Set Aside), setting aside the needed funds for property taxes and home insurance, the risk of foreclosure due to unpaid taxes and unpaid insurance has been greatly diminished.
Although at first, many people wondered about the necessity of the LESA, we are happy about this change. Change is good. It's yet another safeguard that protects your home. In fact, it's long overdue.
Questions? Call Advisors Mortgage: 888-843-9797 or 631-804-9044
ADVISORS MORTGAGE GROUP, LLC., WE TAILOR LOANS TO MEET YOUR NEEDS -Branch NMLS 1833015, 3265 Merrick Road, Wantagh, NY 11793 - Phone: 888-843-9797 or direct: 631-804-9044 - Licensing: CA: Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act; FL; GA Residential Mortgage Licensee; NJ: Licensed by the New Jersey Department of Banking and Insurance; Licensed Mortgage Banker –OH; PA; TX. www.nmlsconsumeraccess.org