Reverse Mortgage Maturity Events
A BIG Difference from Forward Loans
A reverse mortgage allows the borrowers to live in the home for as long as they want, or as long as they are able.
Forward mortgages have maturity dates, the date when the last payment is due at the end of the loan term. There is no maturity date with a reverse mortgage, but there are events which trigger the loan due and payable.
There are three events which cause the loan to be considered mature and due:
1) Home is no longer the primary residence of at least one of the borrowers.
Residency is the first reverse mortgage requirement. When all of the borrowers have left the home, the loan is due. This is the most common maturity event. (An acknowledged non-borrowing spouse would be an exception to this rule.)
2) Property is sold or title transferred.
When the home is sold, the reverse mortgage lien must be satisfied with the proceeds. All remaining equity belongs to the borrowers or their heirs.
Any change to title (such as putting a child on title) can trigger
the loan due and payable.
3) Loan covenants not kept (taxes, insurance, maintenance).
Borrowers are required to keep property tax and homeowner's insurance payments current.
The primary focus of the HECM Finanacial Assessment guidelines is the borrowers' capacity and willingness to keep their tax and insurance bills current.
Borrowers are also required to maintain the condition of the property and keep it in good repair.