Since the first FHA-insured reverse mortgage was issued in 1989, many safeguards have been put in place to protect senior homeowners against unscrupulous practices. It begins with a requirement that seniors be counseled by an independent third party, usually by phone, to make sure they fully understand the terms of the loan.
There is a “senior-friendly” financial assessment that is also required, to determine whether the borrower can meet all the qualifying criteria. They must live in the home as a primary residence, keep up with the loan obligations of keeping the home well maintained, and stay current on their property taxes and homeowners’ insurance.
There are also safeguards for eligible spouses of senior borrowers who are either not 62 at the time of the signing or not named on the title. Once a borrower passes or is moved to a care facility, the non-signatory spouse can remain in the home without any principal and interest payment obligation until they pass away or move out.
To find out more about the strong consumer safeguards built into reverse mortgages, contact us today.