If the borrower is currently delinquent on an FHA-insured mortgage on their principal residence, and the HECM will pay off the delinquent mortgage, the borrower may be eligible provided they meet all other HECM requirements.
However, in all cases where there is a delinquent mortgage on the principal residence, whether FHA-insured or not, mortgagees must evaluate the circumstances leading to the delinquency, and determine whether the HECM pay-off represents a sustainable solution to the issues that caused the delinquency.
If the borrower is currently delinquent on other FHA-insured mortgages that are not on the borrower’s principal residence, they are ineligible for a new FHA-insured mortgage and processing of the application must be suspended unless the delinquency is resolved.
For additional information see Mortgagee Letter 2016-10 and the attached revised HECM Financial Assessment and Property Charge Guide, Section 2.22 at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee