FHA reverse mortgage loan programs are reverse mortgage programs, which are backed by the FHA or the Federal Housing Administration. The Federal Housing Administration is a part of HUD or Housing and Urban Development.
Since the notion of reverse mortgage is fast catching up and has grown over the last couple of years, there are several reverse mortgage lenders who try their luck in this field. In an attempt to make quick money, there are many reverse mortgage lenders who have tricked the senior citizens into fraudulent activities.
FHA is the body, which monitors all activities pertaining to reverse mortgage in the United States of America. FHA or the Housing and Urban Development insures the reverse mortgage product- HECM or Home Equity Conversion Mortgage. Insurance guarantees that a borrower will get the payment he is entitled to. Conversely, the lending institution will also get reverse loan amount repaid after the expiry of the loan term.
A very prominent reverse mortgage product backed by FHA is the HECM(Home Equity Conversion Mortgage). FHA envisages that an individual opting for a FHA approved reverse mortgage loan ought to be 62 years old (at least). Should be staying in his house (the house, whose equity he is partly selling). Also mandatory (as envisaged by FHA) is the counseling session. The counseling session has been made mandatory due to the fact that the elderly person should actually know what he is opting for prior to applying for the reverse mortgage and the various terms and conditions associated with the same.
FHA also conceives that no borrower occupying his residence can be thrown out of the house for the period the loan is being served. Repayment of the FHA reverse mortgage loan is done usually after the borrower dies or shifts to some other locality. Interest rates, age of the applicant and price of the property are some of the factors, which determine as to how much money can be shelled out to the borrower as loan amount.