Why is my HECM loan considered in default, and who can I contact for help?

Although regular monthly payments are not required to be paid on a Home Equity Conversion Mortgage (HECM or reverse mortgage), there is still a risk of the loan being called Due and Payable if: 

  • Title to the property is completely conveyed out of the borrower(s) name(s);  
  • The borrower fails to pay real estate taxes, property insurance, other property charges or special assessments such as Home Owners Association (HOA) dues; ground rents, or other assessments levied by municipalities or under state law; 
  • The borrower fails to occupy the property as their primary residence (which includes any situation in which the borrower lives somewhere else for a majority of the year, or for more than 12 consecutive months for medical reasons – including a nursing home or assisted living);
  • An ineligible non-borrowing spouse remains in the property after the borrower has died;
  • The borrower fails to maintain the property consistent with mortgage requirements. 

Please contact the servicing lender to determine if there are any options to resolve the issue.

Additional assistance may be available from HECM default counseling who can work with the borrower to:

  • Contact the loan servicer to determine if the delinquency can be resolved;
  • Determine options for additional financial assistance; 
  • Explore other housing options; or
  • Refer the borrowers to a local Area Agency on Aging (AAA) for additional guidance and counseling. 

This counseling is free of charge.   

Seniors that are at risk of or are currently in default may contact one of the below agencies to obtain HECM default counseling:

Greenpath                                                                   (888) 860-4167
http://www.greenpath.com/home.htm

Guidewell Financial Solutions                                     (800) 642-2227
https://www.cccsmd.org/    

Housing Options Provided for the Elderly (HOPE)     (844) 432-6467
https://hopeforseniorsstl.org/    

Money Management International                            (877) 908-2227
https://www.moneymanagement.org/

National Foundation for Credit Counseling               (866) 698-6322
https://www.nfcc.org/

NeighborWorks America                                            (888) 990-4326
http://www.neighborworks.org/Homes-Finances/Homeownership/Homebuyer-Tips

Counselors from these agencies provide HECM default counseling, but they may not be the only available resources.    To locate other HUD-approved housing counseling agencies in your area, call HUD’s interactive voice system at 1-800-569-4287 or visit:   https://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm  
 
For additional information see the HUD Exchange web page at: https://www.hudexchange.info/programs/housing-counseling/hecm/default/#agency-participation-in-hecm-default-counseling 
 


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-05289