My father currently has a reverse mortage (FHA). Can the lender require him to pay the loan back if they collapse during these difficult times?
NO, the 2% MIP he paid at the beginning of his loan and the ongoing .50% interest rate he pays each month insures that the home remains in your father’s name as well as insures that upon your father moving or his death, that no one will owe a penny more than the market value of the home. The lender may have been XYZ bank but the loan was probably sold to Fannie Mae, and is now being serviced by a servicing company. The Fed propped up Fannie, so you will continue to see support of this product. A reverse mortgage is a strong program not tied to the credit market and is not taxpayer funded, its funded by those folks that took out reverse mortgages in the past. Last year 107,000 took out a reverse, this year they are on pace to outnumber last year. That’s alot of money thats been poured into the MIP fund over the last 2 years! Great question.
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