Reverse Mortgage

Home Equity Conversion Mortgage (HECM)

Definition and benefits of Home Equity Conversion Mortgage (HECM)

To provide additional housing finance options for senior homeowners, the US Department of Housing and Urban Development (HUD) provides reverse mortgages under the Home Equity Conversion Mortgage (HECM) program. These mortgages are available from HUD-approved lending institutions, like SCME Mortgage Bankers, Inc., and are insured under the government's Federal Housing Administration (FHA) insurance program.

To help you learn more, we have provided the following answers to some of the most commonly asked questions about the program.

Q: What are the benefits of a reverse mortgage?

A:· Get tax-free funds for as long as you live in your home.

· No loan repayment for as long as you live in your home.

· No income, medical or credit requirements.

· Retain ownership of your home for life; this is guaranteed as long as you maintain your home, use it as your primary residence, and make timely homeowner's insurance and property tax payments.

· Choose a cash flow plan tailored to your needs.

· Retain your personal and financial independence.

Q: What is a HECM?

A: A HECM is a special type of mortgage that enables you, as a mature homeowner, to tap the equity you have in your home. It can provide the maximum amount of flexibility to address your particular financial needs -whether it is a lump sum to pay an unexpected hospital bill or a stream of regular payments to supplement your monthly income. Unlike traditional home equity loans, no repayment of the HECM loan is required until you no longer occupy the home as your principal residence. At that time, the lender, with HUD's permission, will declare the mortgage due and payable.

With a HECM, you borrow against the value of your home, and receive loan proceeds according to the payment plan that you select. These plans are described on the following pages. As a borrower, you are permitted to change payment plans at any time after origination. You may change payment plans as many times as you wish.

When you sell your home or vacate it for other reasons, the loan balance, which includes the total amount you borrowed plus accrued interest and mortgage insurance premiums, is due and payable, usually from the proceeds from the sale of your home. Any proceeds in excess of the amount owed the lender belong to you or to your estate.

Source: Fannie Mae HECM Consumer Fact Sheet

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Eligibility and amount for Home Equity Conversion Mortgage (HECM)

Loan information on Home Equity Conversion Mortgage (HECM)