The Reverse Mortgage Loan Process
This is the first - and most important - step in the reverse mortgage loan process, making sure you have enough knowledge to answer the question: Is a reverse mortgage right for me?
There is no time limit for this step - we take as much time as you need.
Reverse mortgage applicants are required to participate in a
consumer education session with a HUD-approved counselor. Family
members and trusted advisors are welcome and encouraged to accompany
The purpose of counseling is fourfold:
There is a list of Local and National Counseling Agencies included in your quote package. If there are not any local agencies within driving distance from your home, the National Agencies will counsel you over the phone. There may be a charge of up to $125 for the counseling session..
- The counselor explain the legal and financial obligations of the HECM program to ensure you understand the loan.
- The counselor will discuss other financial alternatives, such as utilizing a HELOC or selling your home, as alternatives to a HECM Reverse Mortgage.
- The counselor will check to make sure that you are not being coerced into applying for a reverse mortgage when it is not in your best interest.
- And finally, the counselor will go over your financial health to make sure that you have enough money to live in your home and meet your financial obligations (property taxes, homeowners insurance, and home maintenance) after the reverse mortgage is in place.
Counseling session attendees receive a Certificate of HECM Counseling,
which is valid for 180 days. When you have completed counseling, we can begin processing your HECM application.
3) Application/Disclosures/Borrower Documents
When the borrower has completed counseling, their application is completed and disclosures are produced and signed. This step is similar to a forward loan.
At the time you sign the initial disclosures, I will gather all borrower documentation necessary. The loan documentation requirements are generally not as comprehensive as they are for forward loans. The basic list is proof of birth date, Social Security number verification, and income documentation. Other documents may be necessary depending on your individual circumstances.
4) Order Out
The loan processor orders title, flood verification, and the appraisal.
The processor will also verify that there have not been any lapses in your homeowners insurance policy for the past 12 months, and that your property taxes have been kept current for the past 24 months.
If it has not been done yet, your credit report is also pulled at this time to to verify that you meet FHA's HECM Financial Assessment guidelines.
5) Submit to Underwriting
When all order outs have been received and the file is complete,
it is submitted for underwriting.
6) UW Conditions
Underwriting will provide conditional approval after reviewing the application.
Condtional approval means that your loan has been approved, but there is more documentation or explanation required before the loan can be cleared to close. These conditions might be directed to the appraiser, title, or the borrower.
Most of this process will be transparent to you other than I will keep you informed of progress. If there is any furhter documentation you must provide, I will expain it to you and assist in the process.
Once all conditions are cleared, the loan is cleared to close (CTC) and loan documents can be drawn and signed.
Reverse Mortgage refinances are subject to the same 3 day right of
rescission rules for forward refinances. Borrowers must wait 3 business
days after signing before their loan can fund.
Reverse Mortgage Purchases are not subject to the 3 day recission rules.
Please feel free to contact me. with any questions you have about the HECM loan process.