Even before the March directive to FHA-approved lenders, three large mortgage companies acted on their own to stop doing business with estate planners in issuing reverse mortgages. Despite the recent scams, HUD is still committed to its reverse mortgage program. This can make a dramatic difference in the lives of many senior citizens. Michael Licamele is Editor of the Almanac. Homeowners 62 or older can borrow against the value of their homes.
Homeowners receive payments from lenders on a monthly basis, in a lump sum, or as a line of credit.
No repayments are required while a borrower lives in the home. Lenders recover their loans plus interest from the sale of the home when owners die or move out. The size of reverse mortgage loans is determined by the borrower's age, the interest rate and the home's value. The older a borrower, the larger the percentage of a home's value that can be borrowed.