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Are all reverse mortgages the same?

No, actually there are three basic types of reverse mortgages:

  1. Federally-insured reverse mortgages. Known as Home Equity Conversion Mortgages (HECM), they are insured by the U.S. Department of Housing and Urban Development (HUD). They are widely available, have no income requirements, and can be used for any purpose. (For more on HECM reverse mortgages, go to: http://www.hud.gov/offices/hsg/sfh/hecm/hecmabou.cfm

  2. Government-sponsored reverse mortgages. A “Home Keeper” is Fannie Mae’s conventional market alternative to the Home Equity Conversion Mortgage (HECM). It is government-sponsored enterprise program and works like a HECM loan in many ways. However, a “Home Keeper” reverse mortgage addresses a few needs that are not met by HECM loans, such as individuals with higher property values, condominium owners, and seniors wishing to use a reverse mortgage to purchase a new home. (For more on Fannie Mae “Home Keeper” reverse mortgages, go to: http://www.financialfreedom.com/ReverseMortgage/Products/#FMHK

  3. Proprietary reverse mortgages. These are private loans with unique features that appeal to certain kinds of borrowers. An example of such reverse mortgages, which are backed by the companies that develop them, is Financial Freedom’s Cash Account Plan. (For more on Cash Account Plan reverse mortgages, go to: http://www.financialfreedom.com/ReverseMortgage/Products/#FF_CASH_ACCOUNT

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