Reverse Mortgage Myths
The Bank DOES NOT own your home!
Sorting through the myriad of myths that plague the reverse
mortgage program is an integral part of the education process.
You may have heard some of these widespread misconceptions that are often spread by "sidewalk counselors".
Let's start with the
Myth #1 - The Bank Owns the Home
The most prevalent myth you will encounter is that a reverse mortgage gives the bank
title to the home.
This myth is persistent because at one time it was true. Before we
had HECMs (pre-1989), there were some proprietary products that exchanged
ownership of the home for a cash payout. Some of these loans had time
limits for tenure specified - one day somebody from the bank would knock on the
door and tell you that is was time to move out of the "bank's house".
This is not the case with HECMs!
As with forward loans, HECM Reverse Mortgage loans place a lien on the property to
protect the lender's interest. As with forward loans, the borrower
is on title and retains control of the home.
Should the borrower decide to sell the home, or the heirs sell the
home after the borrowers have passed away, the lien must be satisfied
with the proceeds. All remaining equity belongs to the borrower or