HECM, the Home Equity Conversion Mortgage, for purchase allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.
The program was designed to allow seniors to purchase a new principal residence and obtain a reverse mortgage within a single transaction and still avoid having an ongoing mortgage payment. The owner would still be responsible for property taxes, insurance and maintaining the property.
Existing one-to-four unit properties where construction has been completed and the property is habitable. See ML 2007-06.
No. The lender may only take an application once the Certificate of Occupancy or its equivalent has been issued.
The following property types are considered ineligible: • Newly constructed residence where a Certificate of Occupancy or its equivalent has not been issued by the appropriate local authority • Cooperative units • Boarding houses • Bed and breakfast establishments • Existing manufactured homes built before June 15, 1976
No. Seller concessions are applicable to forward mortgages only.
Yes. Although one spouse will become the HECM mortgagor, the lender must obtain the credit report for a review of financial obligations, monetary judgments, and liens that could jeopardize the HECM lien status/clear and marketable title.
The senior may decide to cancel the purchase transaction at any time prior to the date of closing. If the senior decides to cancel the transaction, he/she must notify all parties in writing. Where earnest money has been provided, the senior should review the sales contract to determine if the earnest money is refundable. The Federal Reserve Board of Governors should be contacted for the right of rescission and Truth in Lending Act guidance.
The title company (settlement agent) is responsible for disbursing funds in accordance with State law.