Government Guarantee

FHA reverse mortgages or Home Equity Conversion Mortgages (HECM) have a number of guarantees and protections that are a part of the FHA (Federal Housing Administration) insurance. The FHA insurance provides following protection and peace of mind to the borrower and heirs:

The consumers will not owe over the property’s fair market value
If the mortgage loan balance ever grows above the house value, FHA pays the lender the difference once the last homeowner passes away or leaves the property.
Payments received from the financial institution holding the reverse mortgage are guaranteed. In case the lender ever goes into default, the installments are guaranteed to be made by FHA.
Should the home loan balance grow beyond the home’s appraisal value, the mortgage lender can’t take title. FHA insures that you could reside in your property provided that the basic loan commitments are met (insurance and property taxes, etc. are paid).