Reverse Mortgage Guide

Can you finance any property with a HUD reverse mortgage (HECM)?

It turns out that the answer is certainly no. What HUD wants are homes that exist — that are not under construction — as well as homes with equity where HUD can be the first lien holder.

What are the exact rules? Here’s what HUD has to say:

For the HECM program, FHA defines existing properties as those where construction has
been completed and the property is habitable. For example, if the prospective borrower
occupies a property that has been recently constructed, lenders can ensure that construction is complete and habitable by reviewing the Certificate of Occupancy, or its equivalent, that has been issued by the local jurisdiction. Therefore, lenders are required to ensure that the property, when used as collateral for the HECM, meets the following existing property requirements:

* Serves as the principal residence of the borrower;
* Construction is complete and the property is habitable;
* HECM proceeds are not used to acquire the property; and
* Any loan that financed the construction and/or purchase of the home is satisfied and the HECM assumes the first lien position.

This entry was posted on Monday, July 16th, 2007 at 2:33 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.