Reverse Mortgages: Foreclosure Issues

BY SVIATLANA LIASHCHYNA
as seen in Issue-30 of a360inc's Compliance Newsletter

A reverse mortgage is a loan for older homeowners which allows them to borrow against the home equity and requires no monthly payments. Firms often receive referrals for completing reverse mortgage foreclosure actions, but what are the unique issues that firms should consider when proceeding with these actions and what laws and regulations apply?
 
The majority of reverse mortgages are insured by FHA under the Home Equity Conversion Mortgage (HECM) program, which provides maximum loan amounts, borrower eligibility requirements, and servicing standards. Some lenders offer proprietary mortgage products typically designed to offer borrowers the protections similar to those allowed by the FHA HECM program. In light of this, Fannie Mae implemented Reverse Mortgage Servicing Manuals to provide servicing guidelines with regards to this mortgage type.

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