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What are my responsibilities as a reverse mortgage loan borrower?

There are several requirements that HECM reverse mortgage borrowers must follow. If you don’t meet these requirements, you could lose your home to foreclosure. 

As a reverse mortgage borrower, you have three main responsibilities:

  1. You are required to pay property charges such as property taxes and homeowners insurance on time. 
  2. Your home must be kept in good repair. 
  3. Your home must be your principal residence. 

Property taxes and homeowners insurance must be paid on time 

Before the loan closing your lender will do a financial assessment to determine how you will pay for your ongoing property taxes and homeowners insurance, and if applicable, flood insurance. Your options may include: 

  • You make direct payments to the insurance company and tax authority. 
  • You make direct payments, but have some of your loan set aside to help you with these payments. 
  • The lender takes care of the payments for you using your loan proceeds in a set-aside account. 

A property charge “set-aside” is a portion of your loan that is reserved to pay for taxes, homeowners and flood insurance. There are also other types of set-aside accounts, such as for repairs and servicing fees. 

Your home must be kept in good repair

After closing you must keep your home well maintained.

Caution: Beware of contractors who approach you about getting a reverse mortgage loan to pay for repairs to your home. Learn about all your options. Do not let yourself be pressured into borrowing money for home repairs.

Your home must be your principal residence 

Every year you must certify in writing that you occupy your home as your principal residence. You can lose your home to foreclosure if you have a reverse mortgage loan and:

  • Are absent from your home for a majority of a year for a non-medical reason, or
  • Are absent from your home more than twelve months in a row for healthcare purposes.

Note: This information only applies to Home Equity Conversion Mortgages (HECMs), which are the most common type of reverse mortgage loan.

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