The reverse mortgage process is long and often emotional for our borrowers. By the time the senior has completed the numerous steps involved and it’s time for the signing, all parties are often breathing a sigh of relief that the loan is soon to close. It’s at that time when many questions arise. With more than 15 years of reverse mortgage closing experience, PRC has compiled a list of the most frequently asked questions at a closing to help prepare your borrower for the closing table.

Q: Why is the loan amount on the deed of trust more than the maximum claim amount for that county?

A: Due to the fact that there is no maturity date on a HECM loan, HUD has designed a calculation by increasing the amount on the deed of trust by one and one-half times the national lending limit or appraised value, whichever is less.

Q: Why are there two deeds of trust recorded on the property for the HECM loan?

A: The first deed of trust secures the lender’s position and HUD assumes the second position since it is insuring that the homeowner will continue to receive loan payments in the event that the lender becomes incapable of making said payments.

Q: What is the amount of title insurance required for a HECM loan?

A: In order to calculate the amount of title insurance required, PRC refers to the amount stated on the lender’s instructions, which is usually the national lending limit or appraised value, whichever is less.

Q: Why is Mortgage Insurance Premium collected on a HECM loan?

A: Mortgage Insurance Premium is collected and paid to HUD because HUD is insuring the loan in case the lien surpasses the home value or if the lending institution can no longer make loan payments to the borrower.

Q: Can the borrower add or remove persons from title after the closing?

A: On a HECM loan, the borrower’s age is a factor in determining the loan amount. Therefore, altering title can make the loan become due and payable because you are changing the terms of the loan.

Q: When will the borrower receive their monies?

A: After the three-day right of rescission, if all conditions have been met, the loan will fund and monies will be sent via check (overnight) or wire, depending on the method the borrower has chosen. Note: The Federal Reserve closes at 5 p.m. Eastern Standard Time. If the wire has not been sent by that time, the borrower will receive their monies the next day.