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54 U. Louisville L. Rev. 183 (2016)
What the HECM is a Reverse Mortgage: The Importance of the Home Equity Conversion Mortgage in an Aging America
Ben Jakubowicz*
Abstract
     Reverse mortgages differ from conventional mortgages in several ways but most significant is that under a reverse mortgage, the lender makes payments to the homeowner. The homeowner is allowed to remain in the residence over the course of the loan while repayment is usually not required so long as the borrower remains in the home. Moreover, because payments to the lender are not required, underwriting guidelines for reverse mortgages are more relaxed than conventional mortgage guidelines. Many seniors who are unable to qualify for conventional loans necessarily look to reverse mortgages to remedy chronic cash flow woes.
     Unlike the largely unregulated subprime loans of yesteryear, Congress, the FHA, and the Department of Housing and Urban Development (“HUD”) have been quick to respond to problems pertaining to reverse mortgages that repeatedly appear in the media or at the center of litigation. Despite these efforts, nearly 10% of all HECM loans are in default, thus jeopardizing the continued affordability and sustainability of the HECM program at the time it is needed most. In short, the HECM program in its current state does not adequately protect the interests of senior homeowners.
* J.D. Candidate, May 2016, Louis D. Brandeis School of Law, University of Louisville.