What Is A Reverse Mortgage Lender

A reverse mortgage lender is generally an agency, either non-profit or governmental, that offers reverse mortgages to senior Americans. People who have reached the age of 62 and own a house are eligible to apply for this special kind of mortgage.

A reverse mortgage lender generally offers their services under three types of reverse mortgages: single-purpose, federally insured and proprietary reverse mortgages. Reverse mortgage lenders vary according to these different types. In the first type of mortgage, the reverse mortgage lender is a non-profit organization or a state and local government agency. The US Department of Housing and Urban Development (HCD) provides the federally insured Home Equity Conversion Mortgage (HECM) .This represents the only reverse mortgage where the lender is the federal government. The third category of mortgage is private, and the reverse mortgage lender will mainly be a private company.

A reverse mortgage lender offers payment to the borrower either as a one-time lump sum or through regular monthly payments. Reverse mortgage lenders provide this payment based on the value of the applicant's home. This means that the repayment is expected when the owner moves from his home or sells the property. If the borrower passes away, the amount has to be paid by the heir, in order to avoid the lender selling the property to recover the loan amount and interest.

Non-federal loans can be provided by a number of organizations employed in lending. The best course of action is to consult a counselor and know about the most suitable reverse mortgage schemes available before applying.

For those thinking to apply for a reverse mortgage, it is useful to know that reverse mortgage lenders will only go after the house to pay off the mortgage. Therefore, the assets and estate of the borrower are safe from the reverse mortgage lender. This is commonly described as a non-recourse loan.

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