Reverse Mortgages

Background

A reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… is a loan secured by the value of a home and does not require payments as long as the borrower lives in the home. Borrowers can choose to receive their loan proceeds as:

  • a monthly payment over time;
  • a payment for a set period of years;
  • a line of credit, whose unused portion grows over time, that can be used as needed; or
  • a combination of these.

A reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… becomes due when the last borrower dies, sells the home, or moves out permanently. In some cases, eligible non-borrower spouses may remain in the home after the borrower dies, but to do so, they must act quickly to meet short Department of Housing and Urban Development deadlines. In addition, borrowers are protected when the amount they owe is more than the value of their home. (This is sometimes known as being a non-recourse loan.) When the loan is due, they owe the lesser of the loan amount or 95 percent of the appraised value of the home. The Department of Housing and Urban Development (HUD) administers the federally insured reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… program known as the Home Equity Conversion Mortgage A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… ( HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… ) program. Private lenders issue HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… loans, which are insured by the Federal Housing Administration (FHA). Borrowers pay mortgage insurance premiums at origination and on a monthly basis. This insurance protects the lender if the amount owed on the loan is more than the value of the home when the loan is due at loan termination. It also protects the borrower if the lender cannot make a scheduled payment. The number of HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… loans has fallen dramatically in recent years, from a high of nearly 115,000 loans in FY2009 to 48,359 in FY2018.

HECMs make up the vast majority of reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… loans. Very few lenders offer proprietary reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… , which are not insured by the Federal Housing Administration. Proprietary loans typically have served borrowers with home values exceeding the FHA home value limit ($726,525 in 2019). These loans are also riskier for consumers, as they lack the consumer protections that HECMs offer.

The HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… program has undergone many changes over the years. It was originally envisioned as a means to help older homeowners who were “house rich but cash poor” gain access to a portion of their home’s equity. More recently, reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… marketing materials have suggested that wealthy people take out HECMs as an investment strategy. Specifically, they are sometimes used as a type of investment portfolio hedge when investment values fall, or as a means to delay filing for Social Security benefits. The idea is that if investment values fall, borrowers can use their reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… line of credit to obtain funds, while not depleting their investment accounts when asset prices are low. When asset prices recover, they can repay the loan. The inherent risk in this strategy is that the asset price recovery must exceed the costs of the loan, which cannot be known in advance. Likewise, the suggestion that people should take out a loan on their house to obtain a higher Social Security benefit requires an analysis that is dependent on many factors and might not result in a net benefit after loan costs are taken into account. This trend is unfortunate and goes against the HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… program’s original mission to help borrowers use home equity to help with economic hardships. The use of reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… to hedge investment portfolios is a perversion of the original intent of the HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… Program and a misuse of FHA insurance that puts the FHA insurance fund—and ultimately, U.S. taxpayers—at risk of paying for these activities in the event of a future housing market downturn.

Another program challenge relates to borrowers who used HECMs as loans of last resort when there are no other options available. At one point, households who were facing potential foreclosure on a “forward” mortgage were able to use a HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… to tap into the equity in their home to pay off the forward mortgage and avoid foreclosure. With a forward mortgage, monthly payments often include escrows for property taxes and homeowner’s insurance. But most reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… borrowers are responsible for making those payments directly, as well as for paying homeowners association dues and assessments. This can prove difficult for borrowers who previously were accustomed to having their mortgage servicer make these payments. Today, many HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… borrowers appear to be having difficulty making required payments for taxes, insurance, and homeowners association dues and assessments. This puts them at risk of foreclosure. As of March 2016, 89,064 HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… loans were in technical default for failure to make one or more of these required payments.

In 2011, HUD provided loss-mitigation guidance and procedures for dealing with delinquent loans. In order to decrease the risk of foreclosure, HUD has allowed borrowers in technical default who have not made required tax or insurance payments to repay the money they owe over a five-year period. HUD now permits but does not require repayment plans to be offered to borrowers even after the loan has gone into foreclosure. Servicers differ on whether and how they offer loss mitigation plans. As a result, borrowers’ loss mitigation opportunities depend in part on the policies of their loan servicer.

HUD also created an exemption for at-risk borrowers who are age 80 or older. They must have a terminal illness or substantiated long-term physical disability, or they must be caring for someone with a terminal illness. But dementia is not considered a qualifying condition. Borrowers with dementia may have difficulty filing the required ongoing paperwork, such as occupancy certificates, and keeping up with tax and insurance payments.

To address the defaults in the HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… program, HUD added new underwriting requirements. Lenders must examine a borrower’s credit history, income, and expenses to determine whether the borrower can afford to pay taxes and insurance on an ongoing basis. Borrowers must have a specified amount of income left over after paying those expenses. If not, lenders must set aside part of the loan to pay for property taxes and homeowners insurance. The set-aside will be large enough to cover those costs over the life expectancy of the youngest borrower.

Over the past few years, HUD has taken several steps to strengthen the mortgage insurance fund. It lowered principal limits in 2009, 2010, 2013, and again in 2014, and raised both up-front and ongoing mortgage insurance premiums. In 2017, HUD increased the upfront mortgage insurance premium and lowered the ongoing mortgage insurance premium and the principal limits. These changes, together with the financial assessment, have led to a lower volume of reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… loan issuance.

To protect spouses, HECMs must be underwritten to the age of the youngest spouse, even if the spouse is not a borrower. The non-borrowing spouse may remain in the home if the borrowing spouse dies. But they do not have access to any additional reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… proceeds after the borrower dies. Other conditions must also be met. For example, the spouse must certify annually that he or she resides in the home. The spouse also must prove that he or she has met the loan obligations, such as paying property taxes and insurance.

This policy does not affect loans with non-borrowing spouses made prior to August 2014. For these loans, HUD gives the lender the discretion to allow an eligible non-borrowing spouse to stay in the home when certain requirements are met, including strict deadlines.

Housing counseling is a major consumer protection for reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… borrowers. Prospective HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… borrowers must receive counseling before they can take out a loan. This is essential, as reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… are complex financial loans. Even the most sophisticated borrowers may have difficulty understanding them. They are not suitable for all homeowners age 62 and older. HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… counselors report that they often require two or more hours to cover all topics required by the counseling protocol. In contrast, other housing counselors—and specifically many who conduct counseling via telephone—manage to conduct a session in less than one hour. Unlike lenders, housing counselors are prohibited from making recommendations to prospective borrowers. Their role is to educate, answer questions, and verify that the borrower understands the basics of the loan.

Although housing counselors cannot recommend a specific course of action, the Consumer Financial Protection Bureau An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. has the authority to develop suitability standards and regulations regarding lender responsibilities. Doing so would help ensure that borrowers take out the loans (or find other alternatives) that are best suited to their needs.

Older adults are often targets of fraud and financial exploitation, including through reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… . The Federal Bureau of Investigation and HUD’s Office of the Inspector General have warned about reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… scams, including fraudsters who target older adults by offering free homes, investment opportunities, and foreclosure or refinance assistance (see also Protecting Vulnerable Consumers section of this chapter.)

Another challenge relates to reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… servicers. They are not consistent in how they deal with borrowers who face foreclosure and other problems with their loans. Consumers would benefit from HUD enforcement of existing regulations, as well as from more emphasis on creating repayment plans to avoid unnecessary foreclosures thrrough loss mitigation.

REVERSE MORTGAGES: Policy

Availability of home equity conversion mortgages

In this policy: Federal

Congress should ensure the continuity of the home equity conversion mortgages A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… ( HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… ) program by removing the annual limit on the number of HECMs.

HECMs should be used to allow borrowers to remain in their homes as they age. They should not be used as an investment strategy through a portfolio hedge for wealthy individuals. HUD should eliminate the credit line growth feature of adjustable-rate HECMs.

The Department of Housing and Urban Development (HUD) should study whether consumers who seek reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… loans have adequate access to them. HUD should also study the income and asset profile of borrowers who received the loans.

Lower costs

In this policy: FederalState

The origination fee for HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… refinances should be lower than for the original loan.

States should limit fees and interest rates of proprietary reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… not insured by the federal government.

Consumer protections for proprietary products

In this policy: State

States should establish consumer protections for proprietary reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… not insured by the federal government.

States should require that proprietary reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… be non-recourse loans to borrowers and their heirs.

States should prohibit the reduction of payments on private reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… before borrowers sell, die, or permanently move from the home. They should also prohibit any requirement that borrowers repay reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… loans before borrowers sell, die, or move from the home.

Foreclosure prevention

In this policy: FederalState

State and local policymakers should create or extend programs that would address reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… foreclosures. This includes property tax deferral programs and programs to increase the availability of affordable homeowner’s insurance.

State and local governments should develop property tax deferral programs that accept a secondary lien where a reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… is in effect. They should support programs to increase the availability of homeowners insurance, particularly in coastal areas, to help older homeowners obtain insurance at a reasonable price.

HUD’s at-risk extension for HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… loans should include dementia as a covered condition. Borrowers should not need to re-certify the underlying medical condition each year.

Disclosure of loan terms

In this policy: FederalState

State and federal policymakers should improve disclosures to help borrowers understand the complexities of reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… (for both HECMs and proprietary reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… ).

The Consumer Financial Protection Bureau An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. ( CFPB An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. ) should explore the potential of disclosures involving machine-readable technology that can help consumers compare various reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… products.

States should require full disclosure of

  • all projected proprietary reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… costs and benefits,
  • all loan documents and related information, and
  • the costs, benefits, and risks associated with using a reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… and whether it is appropriate to use loan proceeds to purchase investments or an annuity A contract that provides fixed payments for a lifetime or a specified number of years, usually after retirement. .

Lender responsibility

In this policy: Federal

The Consumer Financial Protection Bureau An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. ( CFPB An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. should require lenders to incorporate consumer protections. For example, lenders should present borrowers with all home equity conversion loan options even if they do not offer them.

The CFPB An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. should require lenders to assess whether a reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… is suitable for the applicant.

HUD should vigorously prosecute violations of the Real Estate Settlement Procedures Act of 1974 if lenders or others violate anti-kickback laws.

Loan counseling

In this policy: FederalState

The federal government should provide sufficient funding to pay for required HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… counseling. HUD should ensure that this counseling is high-quality. It should monitor and evaluate the housing counseling protocols.

Foreclosure mitigation counseling should be adequately funded and available to those who might benefit. HUD should consider extending the repayment plan timeframe for borrowers who can become current if given a longer repayment period.

States should require counseling for all proprietary reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… . HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… certified housing counselors should provide the counseling.

States should fund housing counseling programs to help older people plan for housing needs in later years. They should receive help to evaluate housing options, particularly with respect to home equity conversion.

Scams and fraud

In this policy: Federal

HUD should take enforcement action against and deter reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… fraud and scams. HUD should ensure that proper controls are in place to prevent HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… -for-purchase scams in which borrowers are persuaded to use HECM A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… proceeds to buy low-value and uninhabitable homes based on fraudulent appraisals.

Related benefits issues

In this policy: FederalLocalState

Proceeds from reverse mortgages A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… should not affect homeowners’ eligibility for public benefit programs. Reductions in state benefits should be prohibited when an older person has used a home equity conversion mortgage A federally-insured reverse mortgage that allows homeowners age 62 and older to tap into the equity in their home without having to make monthly mortgage payments while still living there. Borrowers can receive loan proceeds via a single lump-sum payment, tapping a credit line as needed… . The benefits from such arrangements should not be counted as income or in-kind contributions in determining eligibility for Medicaid or other benefit programs.

Truth in advertising

In this policy: Federal

Federal regulators should ensure that disclosures, sales practices, and advertising of reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… loans are not misleading or deceptive and do not give the impression that a reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… is a benefit rather than a loan. They should require advertisers to make it clear that celebrities appearing in the ads are paid spokespeople.

Servicing

In this policy: FederalState

Policymakers should ensure that reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… servicers are not engaging in unfair, deceptive, or abusive practices.

HUD should:

  • develop procedures to ensure that mortgage servicers follow its guidance and requirements. This includes requiring servicers to evaluate borrowers and their eligible spouses for loss mitigation regardless of whether a foreclosure has been initiated. HUD should require that servicers offer loss mitigation when a borrower or eligible non-borrower spouse would otherwise qualify.
  • create a reverse mortgage A loan that allows older homeowners to tap into the equity in their home without having to make monthly mortgage payments while still living there. Homeowners can receive a single lump-sum payment, tap a credit line as needed, or receive a monthly amount. The loan becomes due and must… servicing complaint-collection system and ensure that servicers respond to consumers and resolve complaints in a timely manner.