AgentMortgage

What happens when reverse mortgage isn’t repaid?

Safety of borrower's assets a top concern

In a recent column, we addressed the possibility of using an Individual Retirement Account to purchase investment real estate. We pointed out that one of the challenges was that an IRA-leveraged loan is made to the IRA or plan, not to an individual, and that rules preclude an owner from using his or her personal credit to influence the loan. These IRA loans are known as "nonrecourse" loans, wherein the lender can seek relief from the secured property only in the event of default and foreclosure. The owner's other assets, such as stocks, bonds and insurance policies, cannot be claimed. Reverse mortgages also contain a "nonrecourse" component. The U.S. Department of Housing and Urban Development's Home Equity Conversion Mortgage (HECM) program, the nation's most popular reverse mortgage with a market share of at least 85-90 percent, often is marketed with the statement, "the senior can never owe more on her HECM loan than her house is worth at the tim...