Protections for reverse mortgage borrowers
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If the COVID-19 pandemic has made it harder for you to meet your reverse mortgage loan responsibilities, you're not alone. Fortunately, there are options and resources available to you.
The responsibilities for Home Equity Conversion Mortgages (HECMs), the most common type of reverse mortgages, include occupying your home as your primary residence, paying your property taxes or homeowners’ insurance on-time, and keeping your home in good condition.
Usually, if you are unable to meet these loan obligations your lender or loan servicer will notify you that your loan is “due and payable,” meaning it may be in default and foreclosed upon. The lender or loan servicer may also call a reverse mortgage loan due and payable when the reverse mortgage borrower dies.
If you are a reverse mortgage borrower affected directly or indirectly by COVID-19, the CARES Act and guidance from the US Department of Housing and Urban Development (HUD) can protect you from default and foreclosure if you have an HECM reverse mortgage.
Here’s what you need to know:
As a borrower, you may ask your lender for an extension
Ask your loan servicer to delay calling your loan due and payable. Upon your initial request, your lender or loan servicer must delay calling your loan due and payable for up to six months. You do not need to provide any documentation to your lender or loan servicer to receive an extension. During the extension period, your lender or loan servicer cannot charge any late fees and penalties. Interest will continue to accrue.
If you need more time, additional extensions may be available for up to a total of 12, 15, or 18 months, depending on when you got your initial extension. See HUD’s table on extension timelines for more details.
No extension period may extend beyond September 30, 2022 or six months after the end of the COVID-19 National Emergency, whichever is later.
As an eligible non-borrowing spouse or heir, you may ask for an extension
The eligible non-borrowing spouse or heirs may ask the lender or loan servicer to extend timelines when a reverse mortgage borrower dies. Timelines that the lender or loan servicer may extend include, for example, when the heirs pay-off the loan or sell the property.