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HECMs are Non-Recourse Loans

FHA Insurance provides HECM Safeguard

All HECM reverse mortgage loans, whether fixed or adjustable rate, are non-recourse loans.

Non-recourse means that the borrower (or their heirs) have no personal responsibility for the loan. The loan is secured by the property alone.

The lender can never require loan repayment of more than the fair market value of the home.

Why is FHA Mortgage Insurance Required?

THe FHA Mortgage Insurance Fund is funded by the mortgage insurance required with all HECM loans (0.5% on loan amounts of 60% or less, 2.5% on loan amounts greater than 60%).

In cases where the value of the home is less than the loan amount, the FHA Insurance fund reimburses the lender when the home is sold.

The flip side of the coin is that should the lender become insolvent, any monies still due the borrower would be paid out of the Mortgage Insurance fund.

Nobody likes to pay mortgage insurance, but without the FHA Mortgage Insurance fund the HECM program would not exist - and it
protects the borrower as well as the lender.

95% of Value

The non-recourse clause also comes into play in cases where home value is less than the HECM loan amount (property is upside down), and a family member wishes to purchase the property.

In these situations, the home may be purchased for as little as 95% of current appraised value. Again, the FHA Mortgage Insurance fund makes up the difference.
 
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HECM Basics
12 Facts
Borrower Qualifications
The Loan Process
Financial Assessment
Who Owns the Home?
Who Owns the Equity?
When is the Loan Due?
A Non-Recourse Loan
It's Your Money
HECM for Purchase

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First Federal
Savings Bank
NMLS 402963
1880 S Eagle Rd
Meridian, ID 83642

dcook@bankfirstfed.com
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Home | HECM Basics | 12 Facts | Borrower Qualifications | Loan Process | Financial Assessment
Who Owns the Home? | Who Owns the Equity? | When is the Loan Due? | A Non-Recourse Loan | It's Your Money
| HECM for Purchase |
Copyright© 2019 Doug Cook FDIC & Equal Housing Lender Logo
HECM borrowers are responsible for the payment of property taxes, homeowners insurance, and the maintenance of their home. Rates and fees vary by lender. All credit products subject to approval. Information presented was not created or approved by HUD/FHA.
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First Federal Savings Bank | 1880 S Eagle Rd | Meridian, ID 83642
Institution NMLS: 402963

www.MortgageFirstFed.com/dcook
www.BankFirstFed.com

First Federal Savings Bank provides HECM Reverse Mortgage lending in the states of
Idaho, Oregon, Washington, Montana, Wyoming, Utah and Nevada.
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