Understanding the Purpose of the Reverse Mortgage

The reverse mortgage product was created to help older homeowners achieve or maintain homeownership by
leveraging the savings already built into their home. This allows the homeowner to
borrow against their home’s equity without taking on a new monthly mortgage payment
like they would with a traditional mortgage or a home equity line of credit.

How Repayment Works

The borrower is not required to make monthly principal or interest payments for as long as they live in the home.
Repayment only becomes necessary when the borrower:

• Moves out of the home
• Sells the home
• Passes away

The loan may also become due if the borrower does not comply with the terms of the mortgage.

The Non-Recourse Protection

Reverse mortgages are designed with a non-recourse feature, which means:

• The borrower can never owe more than the value of the home at the time of repayment
• If the loan balance exceeds the home value, neither the borrower nor heirs are responsible for the difference

Your Ongoing Responsibilities

Even though no monthly mortgage payments are required, borrowers must continue to:

• Pay property taxes
• Maintain homeowners insurance
• Keep the home in good condition

As long as these obligations are met and the borrower continues to live in the home,
no monthly principal or interest payments are required, regardless of the outstanding loan balance or the home’s current market value.