Perhaps one of the biggest draws for reverse mortgages over other home equity loans is its lack of a monthly loan payment.
However, reverse mortgage borrowers must still remain current on their property charges, including taxes and insurance — often a source of stress for some low- to moderate-income seniors who are struggling to cover these expenses.
Enter: The California Reverse Mortgage Assistance Pilot Program (RevMAP).
RevMAP is the latest expansion of Keep Your Home California, a free, federally funded mortgage assistance program managed by the California Housing Finance Agency (CalHFA).
Keep Your Home California was established in 2011 after the state received nearly $2 billion from the U.S. Treasury’s Hardest Hit Fund. More than 49,000 homeowners have received a total of $920 million from the program.
But what started as a program designed to assist California homeowners with their conventional mortgages is now helping seniors who have home equity conversion mortgages (HECMs) remain in their homes — similar to the ELMORE program launched in Florida in 2013.
With $25 million allocated in funding, RevMAP’s goal is to prevent avoidable foreclosures by helping senior homeowners pay the required property charges associated with their HECMs.
It provides eligible homeowners with up to $25,000 to bring their property taxes, homeowner’s insurance, flood insurance and/or homeowners/condo association dues current.
These benefits are paid directly to the loan servicer to reimburse them for advances paid on behalf of the homeowner for their HECM. Through the program, reverse mortgage borrowers may also be eligible to have up to 12 months of future property charges paid on their behalf.
“The program is very important to help senior borrowers get the assistance they need to cure their default, prevent foreclosure and help prepare them financially for future property expenses,” says Shannon Ozanich, vice president of the tax and insurance group at Celink, a reverse mortgage servicer and participant in RevMAP.
An estimated 1,400 homeowners could benefit from RevMAP, which was officially launched in February, according to Keep Your Home California.
“This program is even more important with the new guidance released by [the Department of Housing and Urban Development] in Mortgagee Letter 2015-11, because borrowers will have limited loss mitigation options and will be moved through the due and payable process much quicker than before this guidance was released,” Ozanich says.
RevMAP assistance is provided to eligible homeowners as a non-interest-bearing loan secured by a junior lien against the property, according to the program. Homeowners are not required to make payments on the loan as it will be forgiven and the lien released after two years from the date assistance was provided.
However, if they sell or refinance the property prior to the loan forgiveness date, they may be required to pay back the assistance from the proceeds of the sale or refinance of the home, providing there is sufficient net equity to do so.
In addition to providing financial assistance to reverse mortgage borrowers, RevMAP is used in conjunction with special counseling that provides services to help homeowners assess their overall budgetary health.
“Celink believes that if this program can help senior borrowers prevent their reverse mortgage from going to foreclosure and provide them with resources to keep their mortgage out of default it is worth the effort,” Ozanich says.
Written by Emily Study