It’s one of the most common questions that potential reverse mortgage borrowers have — and, as one recent New York Times piece illustrated, one of the more frequent sources of confusion and misinformation about Home Equity Conversion Mortgages.
The folks at mortgage rate comparison site LendingTree compiled an all-in-one walkthrough of what to expect at the close of the loan, including separate sections for the different types of people who can find themselves suddenly in charge of a reverse mortgage transition.
“Whatever you choose to do, keeping good communication between yourself and the loan servicer is imperative,” LendingTree writer Ralph Miller notes. “With the proper documentation, you may have up to a year to sell the home before it must be turned over. If you fail to provide the proper documentation, the loan servicer may begin foreclosure proceedings within six months.”
In addition to spouse- and heir-specific tips, LendingTree offers a 12-month timeline of what all surviving relatives can expect, along with information on how to request extensions, warnings that loans can still accrue interest during the decision-making period, and a list of requirements that both family and lender must meet during the difficult post-death period.
LendingTree joins the National Reverse Mortgage Lenders Association, which earlier this year rolled out a similar tool — based on a California legal disclosure — designed to explain the loan-maturity process. Demystifying the reverse mortgage remains a key challenge for HECM professionals, as potential borrowers frequently cite confusion or misinformation about the loans when asked why they hadn’t seriously considered the products — even if they could potentially benefit them in retirement. For instance, as a recent report from the Center for Retirement Research at Boston College noted, two-thirds of participants in a survey about HECMs didn’t realize they wouldn’t face foreclosure even if the loan balance exceeded the home’s value.
Pesky misconceptions about this topic even befall major news outlets: The New York Times, in an overall upbeat piece about American Advisors Group’s well-known Tom Selleck television advertisements, caused ire last month by describing HECMs as loans “In which the bank gives you money and takes your house when you die.”
Read the full resource at LendingTree.
Written by Alex SpankoPrint Article