Kiplinger: Underwater on Reverse Mortgage? No Problem

A Kiplinger magazine Q&A column addressed the question last week of what happens in the case of a reverse mortgage borrower who owes more on the home than the home is worth. For those who find themselves in this “underwater” scenario, Kiplinger’s columnist answers, there’s no need to worry.

The Kiplinger reader writes:

“My aunt, who lives in Las Vegas, has a reverse mortgage that she took out in 2006, when her home was valued at more than $250,000. The home is now worth just $85,000. If she dies while the home’s value is still so low, can the bank take money from her estate to cover its loss?

Kiplinger responds: 

If your aunt’s reverse mortgage is a home equity conversion mortgage, as most of them are, she doesn’t have to worry. “HECMs are nonrecourse loans, meaning that the borrower will never owe more than the value of the house when the loan is due, which is either when the owner moves out, sells or passes on,” says Peter Bell, CEO of the National Reverse Mortgage Lenders Association….

Read the full Q&A at

Written by Elizabeth Ecker

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