Laurie MacNaughton © 2020
Most people, whether they have a so-called “forward” mortgage or a reverse mortgage, can only retain so much about the nitty-gritty details. Factor in the aging process, and certain specifics may get foggier over time. As adult children move into caregiving roles, they often need servicing details regarding a parent’s reverse mortgage.
Here, in a nutshell, are some important things to remember:
- Each year the homeowner will receive by mail an Occupancy Certificate, which must be signed, dated, and returned within the time period specified on the certificate. This is federally-mandated, and it’s FHA’s way of making sure the homeowner is still living in the home.
- You MUST keep your property taxes paid and your homeowner’s insurance up to date. Many counties offer property tax waiver programs for older homeowners, and you can find out details by calling your county’s Commissioner of the Revenue. With any home – even if you don’t have a mortgage – when it comes to property taxes, “if you pay, you stay; if you don’t, you won’t.” Don’t let the taxes become delinquent before you reach out for help.
- Reverse mortgages are not assumable, which means the loan comes due when the last homeowner permanently leaves the home. This includes cases in which the homeowner has moved to alternate housing. If you are the heir, DO NOT run down the clock following the homeowner’s departure from the home. The servicer is required by federal law to give you 10 weeks to reach out regarding your plans for the property; thereafter they must start the process of selling the home.
Here are a few more details on questions I answer at least weekly:
Q: I get a lot of junk mail. How do I know the Annual Occupancy Certificate is legitimate?
A: The Annual Occupancy Certificate will clearly state on its header the following:
- “Annual Occupancy Certificate” or “Annual Occupancy Certification Form”
- Your servicer’s logo and contact information
- The borrower’s (or borrowers’) name/s
Generally speaking, the certificate will be mailed to you on or near the anniversary of your closing.
If you have questions about the form, contact your servicer as soon as possible.
Q: My loved one was healthy when s/he did a reverse mortgage, but now is completely incapacitated. Can I sign the Annual Occupancy Certificate?
A: Yes, if certain conditions are met. Some of the conditions include the following:
- The homeowner must still live in the home;
- You must have a Power of Attorney that was signed when the homeowner had capacity to do so;
- You must be named Agent in the Power of Attorney;
- You must provide the servicer a copy of your photo ID, such as a state-issued driver’s license;
- You must have a letter from the homeowner’s doctor, on physician letterhead. This letter must state the following information:
- When the homeowner signed the Power of Attorney, s/he had capacity to do so;
- The homeowner no longer has capacity;
- The nature of the homeowner’s incapacity;
- The date of diagnosis;
- The homeowner is not expected to regain capacity.
Contact your servicer as soon as possible for further guidance on this matter.
Q: My spouse and I married after s/he had done a reverse mortgage on the home. Now my spouse has died. Can I stay in the home?
A: It may be possible to stay in the home. HOWEVER, time is of the essence, and you must contact your servicer as soon as possible for further guidance. Per federal guidelines, the servicer must follow a strict timeline following a borrower’s death or permanent departure from the home.
Following are potential options if you wish to stay in the home:
- You may repay the loan balance;
- You may refinance the loan using a new traditional loan;
- You may refinance the loan using a new reverse mortgage, based upon your own age and eligibility.
Again – contact your servicer as soon as possible. Every day you wait to contact the servicer, the fewer options you eventually may have.
If you have questions, give me a call. I always love hearing from you.