Non-Recourse Protection on HECM Reverse Mortgages
What non-recourse means
When the loan is repaid (usually by selling the home), you or your heirs pay the lesser of the loan balance or 95% of appraised value (HECM rule). No personal liability for the difference.
Heir choices when borrower dies
- Sell the home and keep any remaining equity
- Pay off the loan and keep the home
- Deed in lieu of foreclosure
- Let the lender sell (non-recourse limits deficiency)
When this is NOT a good fit
- You cannot reliably pay property taxes, homeowners insurance, and maintenance
- You plan to move within a few years
- You need every dollar of home equity preserved for heirs
- Medicaid or SSI eligibility depends on keeping assets below program limits (consult an elder law attorney)
- You were pressured by a salesperson without time to research alternatives