Reverse Mortgages for Seniors

Consumer Credit Counseling Service of Orange County has been providing quality reverse mortgage housing counseling and education for the senior homeowner since 1997 as a HUD-certified counseling agency. Our staff is comprised of NFCC trained and HECM certified housing counselors.

Home Equity Conversion Mortgages (HECM)

The HECM FHA insured reverse mortgage can be used by senior homeowners age 62 and older to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the home. The loan, commonly known as HECM, is funded by a lending institution such as a mortgage lender, bank, credit union or savings and loan association. To assist the homeowner in making an informed decision of whether this program meets their needs, they are required to receive consumer education and counseling by a HUD-approved HECM counselor.

HECM counselors will discuss program eligibility requirements, financial implications and alternatives to obtaining a HECM and provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, the homeowner should be able to make an independent, informed decision of whether this product will meet their needs. You can also use this handy Reverse Mortgage Calculator to help you see if you qualify.

Homeowners who meet the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lending institution such as a bank, mortgage company, or savings and loan association. If you need assistance locating a FHA-approved lender, you can request a listing of FHA-approved lenders from the HECM counselor or use HUD's searchable listing.

Borrower Requirements:

Age 62 years of age or older
Own your property
Occupy your property as primary residence
Participation in a consumer information session given by an approved HECM counselor

Mortgage Amount Based On:

Age of the youngest borrower
Current interest rate
Lesser of appraised value or the FHA insurance limit

Financial Requirements:

No income or credit qualifications are required of the borrower
No repayment as long as the property is the primary residence
Closing costs may be financed in the mortgage

Property Requirements:

Single family home or 1-4 unit home with one unit occupied by the borrower
HUD-approved condominiums
Manufactured homes and leased land
Meet FHA property standards and flood requirements

How the Home Equity Conversion Mortgage Program Works

Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining, and are currently living in the home are eligible to participate in HUD's reverse mortgage program. The program allows homeowners to borrow against the equity in their homes. Homeowners can select from five payment plans:

Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of months selected.
Line of Credit - unscheduled payments or in installments, at times and in amount of borrower's choosing until the line of credit is exhausted.
Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.

Homeowners whose circumstances change can restructure their payment options for a nominal fee of $20.

Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the home is the borrower's principal residence. Lenders recover their principal, plus interest, when the home is sold. The remaining value of the home goes to the homeowner or to his or her survivors. You can never owe more than your home's value.

If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. HUD's Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage.

The amount a homeowner can borrow depends on their age, the current interest rate, other loan fees and the appraised value of their home or FHA 's mortgage limits for their area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

For example, based on a loan with an interest rates of approximately 9 percent, and a home qualifying for $100,000, a 65-year-old could borrow up to 22 percent of the home's value; a 75-year-old could borrow up to 41 percent of the home's value; and, an 85-year-old could borrow up to 58 percent of the home's value. The percentages do not include closing costs because these charges can vary.

There are no asset or income limitations on borrowers receiving HUD's reverse mortgages.

There are also no limits on the value of homes qualifying for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the amount that may be borrowed is derived from the lower of the appraisal amount or FHA mortgage limit for the area, which varies from $200,160 to $362,790. For Alaska, Guam, Hawaii and the Virgin Islands, the FHA mortgage limits may be adjusted up to 150 percent of the ceiling depending on the area. The FHA limits usually increase each year. As a result, owners of higher-priced homes can't borrow any more than owners of homes valued at the FHA limit.

HUD's reverse mortgage program collects funds from insurance premiums charged to the homeowners. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that may be borrowed plus a .5 percent annual premium.

Technical Guidance

This program is authorized by the Housing and Community Development Act of 1987, Section 417, Public law 100-242 (12 U.S.C. 1715z-20). Program regulations are in 24 CFR 206. This program is administered by the Office of Single Family Program Development in HUD's Office of Housing-Federal Housing Administration.

HECM Reverse Mortgage Counseling

The U.S. Department of Housing and Urban Development (HUD) requires homeowners to first complete a HECM counseling session. CCCS-OC is a fully approved housing counseling agency, offering quality reverse mortgage counseling and education. Our affordable HECM reverse mortgage Counseling can be requested in person at any one of our four convenient locations, or over the phone, or by faxing in the following reverse mortgage counseling request form.

Whether in person, or over the phone, you'll receive in depth HECM reverse mortgage counseling from a HECM certified and NFCC trained CCCS-OC housing counselor. We'll discuss the financial implication of the HECM reverse mortgage, review available financial options, and alternatives to the reverse mortgage. At the end of the session, you'll be issued a HECM counseling certificate of completion as required by HUD, which you'll need before you apply for the HECM reverse mortgage loan.

HECM Reverse Mortgage Counseling Cost

Payment for your HECM reverse mortgage counseling session, may be made by money order, cashier's check, or a debit card with a checking or savings account, MasterCard® or Visa® (fee may be waived in certain hardship cases). Fees may be prepaid at a reduced cost of $115. Billed or fees paid at closing are at full cost at $125:

	In-person	Phone
Individual/couple	$125	$125
*Prepaid	$115	$115

*Note: All parties on the grant deed must participate during the same counseling session in person or via telephone

The HECM reverse mortgage counseling fee can also be financed into the mortgage and this payment will be reflected in the 800 series on the HUD-1 settlement statement in accordance with HUD's Real Estate Settement Procedures Act regulations at 24 CFR part 3500 (see 24 CFR 3500.8).

You Can Schedule an Appointment to Complete Your HECM reverse mortgage Counseling In-Person or Via Telephone.

(In person counseling is only offered in Orange County, CA, and telephone counseling is available Nationwide as state laws allow)

Scheduling a Counseling Appointment

To schedule a face-to-face or telephone appointment for HECM reverse mortgage Counseling with a CCCS-OC housing counselor, please contact us at:

phone: (800) 715-2227
e-mail: cccsoc@cccsoc.org
or download the reverse mortgage counseling

request form and fax it to 714-782-6022

Our Promise to You

We respect your privacy. That's why we will never sell, distribute or allow any outside access to your information. The information you provide to us is confidential and will be used to help you and only you (Privacy Policy).

*CCCS-OC is HUD approved to issue HECM counseling certificates. Completing counseling does not obligate you to apply for a reverse mortgage loan.