HUD Issues Clarification On "Nonrecourse" Component In Reverse Mortgages

Syndicated real estate columnist Tom Kelly writes:

• [T]he U.S. Department of Housing and Urban Development’s Home Equity Conversion Mortgage (HECM) program, the nation’s most popular reverse mortgage with a market share of at least 85 percent to 90 percent, often is marketed with the statement, “the senior can never owe more on her HECM loan than her house is worth at the time the loan is paid back.”

• FHA recently announced the nonrecourse(1) description in all its reverse mortgages may not be fully accurate in all circumstances.

For more, see ‘Nonrecourse’ loan clarification for reverse mortgages.

(1) According to HUD, nonrecourse means that although a borrower will always owe the entire loan balance, if the borrower (or estate) does not pay the balance when due, the mortgagee’s remedy is limited to foreclosure. The borrower will not be personally liable for any deficiency resulting from the foreclosure. While the home must be sold or foreclosed to satisfy the debt, no assets, other than the home, will be used to repay the debt. reverse mortgage yak