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Frequently Asked Questions – How is the Government Involved?
The reverse mortgage options that One Reverse Mortgage offers are federally insured by the Federal Housing Administration (FHA). The FHA insures the reverse mortgage but does not offer the loans directly to consumers. Reverse mortgage loans that are insured by the federal government have additional benefits that private reverse mortgage companies cannot provide.
One of the benefits of having a reverse mortgage insured by the FHA is having the peace of mind knowing that as a reverse mortgage borrower you will never owe more than what the home is worth. Essentially that means if you decide to sell your home and your home has lost value you are protected by the FHA. This is what is known as a non-recourse policy.
Borrowers are also protected by the regulations set by the FHA by making sure borrowers receive all the proceeds from their reverse mortgage. In the unlikely event that the reverse mortgage company goes out of business the FHA guarantees that you receive any remaining payments or money available from your reverse mortgage. Remember this is only a benefit if the reverse mortgage company is insured by the federal government which is not true with smaller private reverse mortgage companies.
While the government does not offer reverse mortgages (also known as a Home Equity Conversion Mortgage – HECM) directly the government is involved in areas of the loan to help protect consumers.
The government agency that is involved with the reverse mortgage program is
the Department of Housing and Urban Development (HUD). HUD manages the products and requirements of the program. HUD is the authority for the reverse mortgage products.
One of the biggest areas of the reverse mortgage loan that HUD is involved in is the requirement of counseling for reverse mortgage borrowers. Counseling with a reverse mortgage is done by a third party group that is approved by HUD. The counseling ensures that the consumer is receiving unbiased information.
In addition to managing counseling process HUD also oversees reverse mortgage lenders. HUD has many requirements and high standards that reverse mortgage lenders need to uphold. If a lender fails to follow these high standards the lender will not be allowed to off the reverse mortgage loans.
The government’s roll with the reverse mortgage loan is an important one. It helps to protect consumers and keeps lenders responsible to uphold high ethical standards. One Reverse Mortgage is an FHA approved reverse mortgage lender. One Reverse Mortgage is also a member of the National Reverse Mortgage Lenders Association (NRMLA) which sets the high standards that reverse mortgage companies need to uphold. One Reverse Mortgage is also accredited by the Better Business Bureau and has an A+ rating.
Kristen Curzytek is a writer for Retiring Wise. Give us a call at (800) 401-8114 to talk to one of our licensed professionals. They can discuss your financial situation with you and determine if a reverse mortgage makes sense for you and your financial goals.
Category: Reverse mortgage