What happens if Home Equity Conversion Mortgage (HECM) Set-Aside funds are exhausted or insufficient to pay property charges?

If there are no funds or insufficient funds remaining in the Set-Aside, the borrower will be responsible for the payment of all property charges.  The Mortgagee (Lender) must ensure:

  • The borrower is notified, in writing, within 30 days of the Mortgagee receiving notification that a property charge payment is outstanding;
  •  Recommends the borrower speak with a HUD-Approved Housing Counselor; and
  •  HUD is informed within 30 days of the Mortgagee receiving notification that a property charge payment is outstanding. 

For additional information see Mortgagee Letter 2014-21 and 2015-11 at https://www.hud.gov/program_offices/housing/sfh/hecm/hecmml


All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-03005