Reverse Mortgage And Nursing Homes
A move into a nursing home does not end a HECM right away. Here is how HUD’s 12-month rule, a co-borrower at home and a spouse who is not on the loan change what happens next.
What the 12-month rule means
HUD still counts the home as a borrower’s principal residence during a temporary stay in a health care institution, up to a limit.
- The home stays the principal residence of a borrower who is temporarily in a health care institution, as long as the stay does not exceed 12 consecutive months.
- HUD can approve calling the loan due when a borrower is out of the home for more than 12 consecutive months because of physical or mental illness and no other borrower lives there.
- If another borrower on the loan still lives in the home as a principal residence, that illness trigger does not apply.
- Each year the servicer must get a certification that the home is still the principal residence of the borrower and any eligible non-borrowing spouse.
- The borrower should tell the servicer about any absence longer than two months, so the servicer does not decide the principal residence has changed.
- A HECM is non-recourse, so the borrower or the estate never owes more than the loan balance or the home’s value, whichever is less.
Time to plan a care move
A co-borrower keeps it open
Protection for an eligible spouse
Family can sign with authority
The debt stays non-recourse
Residents get the rules up front
When A Borrower Moves Into Care
HUD ties every HECM to the borrower’s principal residence, and a long stay in care can change that.
HUD requires the home to be the principal residence of each borrower. HUD defines it as the place where the borrower keeps a permanent home and typically spends the majority of the calendar year. A borrower who is temporarily in a health care institution still counts as living there, as long as the stay does not exceed 12 consecutive months.
If the stay goes past 12 consecutive months because of physical or mental illness, and no other borrower lives in the home as a principal residence, the loan becomes eligible to be called due and payable with HUD’s approval. If a co-borrower still lives there, that trigger does not apply. The loan is also eligible to be called due when no surviving borrower keeps the home as a principal residence.
When a loan is called due for a reason other than death, the servicer must send a notice that names the obligation that was not met and tells the borrower housing counseling is available. The borrower then has 30 days to say whether they will pay off the loan, sell the home, give the servicer a deed in lieu of foreclosure, or correct the problem.
Why choose Saxton for a reverse mortgage when care needs change
This page is for borrowers planning ahead for long-term care, spouses who will stay in the home, and adult children helping a parent.
We Ask About Your Spouse
At application, the lender must verify the name and age of any non-borrowing spouse and decide whether that spouse is eligible or ineligible. To qualify for later protection, a spouse must be named as a non-borrowing spouse in the loan documents.
Your Spouse Attends Counseling
In our reverse mortgage program, a non-borrowing spouse, eligible or not, must attend the HECM counseling session with the borrower and sign the counseling certificate.
Family Can Sign With Authority
A durable power of attorney built to survive incapacity can be used, if the attorney-in-fact has specific authority and has completed HECM counseling. For a borrower lacking legal competency, a court-appointed conservator or guardian can sign.
No Self-Serving Transfers
A self-serving transfer is when someone with power of attorney or guardianship uses that authority to move the property to themselves. Our reverse mortgage program does not allow it.
Non-Occupant Co-Borrowers Are Ineligible
Our reverse mortgage program lists non-occupant co-borrowers as ineligible. An adult child who does not live in the home cannot join the loan as a borrower.
Adult Children Hear The Rules
If an adult child lives in the home or is on title but does not qualify for the loan, we talk with them about what it means not to be on it. Every non-borrowing resident signs a Notice to Non-Borrowing Resident disclosure.
Hear From Homeowners Like You
Frequently Asked Questions
These are the questions borrowers, spouses and adult children ask most when a move into care is on the table.
No. HUD still treats the home as the principal residence of a borrower who is temporarily in a health care institution, as long as the stay does not exceed 12 consecutive months. After more than 12 consecutive months away because of physical or mental illness, with no other borrower living there, HUD can approve calling the loan due.
If your spouse is a co-borrower and keeps living in the home as a principal residence, HUD’s 12-month illness rule does not make the loan eligible to be called due. That rule applies only when the home is not the principal residence of at least one other borrower.
An eligible non-borrowing spouse was married to the borrower at closing and stayed married, was named in the loan documents, and keeps living in the home. After the last borrower dies, that spouse may get a deferral period that puts the due and payable status on hold. HUD says the spouse can stay eligible for that deferral even if the borrower lives in a health care facility for more than 12 consecutive months. If the borrower is still living and has been in care that long, talk with us about how the rules apply to your home.
HUD’s reverse mortgage rules speak of a health care institution or health care facility and do not name assisted living. Whatever the setting, HUD says the borrower should tell the servicer about any absence longer than two months. Ask us how your parent’s setting is treated.
The loan servicer. HUD requires the servicer to get an annual occupancy certification, by hard copy, electronically or verbally. A borrower with an eligible non-borrowing spouse also certifies each year that the spouse still qualifies.
Yes, with the right authority. A borrower can name an attorney-in-fact under a power of attorney to sign at closing, and a court-appointed conservator or guardian can sign for a borrower lacking legal competency. Under our reverse mortgage program, a power of attorney cannot be used to transfer the home to the agent.
The home must be the principal residence of each borrower. For a refinance, our reverse mortgage program also requires the borrower to live in the home at least 6 months of the year, and at least one homeowner must be living in the home at closing.
Find out what you qualify for
Tell us about the care move your family is planning and who lives in the home, and we will check how it fits our program.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.