Reverse Mortgages (HECM)

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General

Section 255: Home Equity Conversion Mortgages (Reverse Mortgages, a.k.a. HECM) allows a borrower aged 62 and older to borrow against the equity in a property that has limited outstanding debt. A subject property under this program must be an existing one-to four-unit dwelling in which the mortgagor occupies one of the units. It may be a condo if in a FHA approved project. Manufactured homes are eligible if the home complies with outstanding FHA guidance.

Appraisal & Conditions

The appraiser must perform the appraisal with the same standards and forms expected in an FHA single-family appraisal.

The same deficiencies and repair items must be noted on the appraisal forms. In certain instance, the borrower is not required to treat any defective paint surfaces after closing for properties built before 1978.

See HUD Handbook 4235.1, Rev-1, Section 3 for requirements of appraisal and property.