Meeting Your Property Obligations
When you take out a HECM reverse mortgage, you're not making monthly mortgage payments — but you do have important ongoing obligations. Understanding and meeting these requirements is essential to keeping your reverse mortgage in good standing.
Property Taxes
You must continue paying your property taxes on time. Failure to pay property taxes is one of the most common reasons a reverse mortgage can be called due and payable. Your lender will monitor your tax payments, and delinquent taxes can trigger default proceedings.
Homeowners Insurance
Maintaining adequate homeowners insurance is required for the life of your HECM loan. Your policy must meet minimum coverage requirements set by your lender. If you live in a flood zone, flood insurance is also required. Keeping your insurance current protects both you and the lender.
Home Maintenance
You're required to maintain your home in good condition. This includes making necessary repairs, maintaining the roof, plumbing, electrical systems, and keeping the property in a habitable state. FHA may require periodic inspections to ensure the property meets minimum standards.
HOA Fees and Assessments
If your property is in a homeowners association, you must stay current on all HOA dues and special assessments. Delinquent HOA fees can also trigger a default on your reverse mortgage.
Life Expectancy Set Aside (LESA)
If the financial assessment determines you may have difficulty meeting property obligations, your lender may require a Life Expectancy Set Aside. A LESA sets aside a portion of your loan proceeds to pay property taxes and insurance over your expected lifetime. This reduces your available proceeds but ensures your obligations are met.
What Happens If You Fall Behind
If you fall behind on property charges, your loan servicer will work with you to resolve the issue. You may be given time to bring your accounts current. However, prolonged delinquency can result in the loan being called due and payable, potentially requiring you to sell the home or refinance.
