What if the borrower owes more than what the house is worth at the time the loan becomes due?
The borrower is only liable to pay back a maximum of the loan balance or the net proceeds of the sale of the house, whichever is less. If the loan balance is greater than property value, the deficit is paid by the mortgage insurance fund that is part of the HECM program and it’s called the non-recourse feature.
Related Questions
- Which parties in a loan syndication should perform due diligence with respect to the borrower or lenders at the time the loan is initially syndicated?
- How long does it take for a borrower to be pre-approved and what is the typical time frame for closing a loan?
- Can a borrower prepay the loan at any time?
