There are many things we tell reverse mortgage prospects and referral partners that seem too good to be true. Then the audience asks the hard question: “Where does it say that?”
I often laugh and ask, “Who is this ‘it’ you’re referencing? The government? Your lender? Some disclosure?”
Most AI agents fumble this question. They often struggle to point to a source. So, let’s fix that. Here are three claims about the Home Equity Conversion Mortgage (HECM) for which loan originators want the exact citation behind it.
1. DO TENURE PAYMENTS CONTINUE PAST AGE 100?
Yes, and it’s spelled out in the Loan Agreement itself. Section 2.5.4 of the Loan Agreement, calculates tenure payments using a term based on “one hundred (100) minus the age of the youngest Borrower.” But the key line comes next: “payments shall continue until the HECM becomes due and payable as provided in the Loan Documents.”
Translation: age 100 isn’t a cutoff. The 100-minus-age formula (or a minimum of 5 years) is just how the payment amount gets calculated. Payments themselves run for as long as the loan stays active.
2. ARE REVERSE MORTGAGES “NON-RECOURSE LOANS?”
Yes, though you won’t find that exact phrasing anywhere in HUD’s disclosures to the client.
Federal regulations do define a reverse mortgage as a “nonrecourse transaction.” The CFPB puts it plainly: a nonrecourse reverse mortgage limits the homeowner’s liability to the sale proceeds of the home, or any lesser amount specified in the credit obligation.
Here’s the twist. Neither “nonrecourse” nor “non-recourse” appear anywhere in HUD’s Single-Family Handbook. None of the HUD-required loan documents use the term either. Instead, they use “no deficiency judgment,” which carries the same meaning. You’ll find it in Covenant #11 of the HECM Mortgage: “Borrower shall have no personal liability for payment of the debt secured by this Security Instrument. Lender may enforce the debt only through sale of the Property. Lender shall not be permitted to obtain a deficiency judgment against Borrower if the Security Instrument is foreclosed.”
Translation: same protection, different label. If a client searches the paperwork for “non-recourse” and comes up empty, this is why.
3. DOES THE LOC REALLY GROW AT THE SAME RATE AS THE LOAN BALANCE?
Yes, but this one is genuinely hard to pin down in plain language.
Unfortunately, this concept isn’t clearly explained in the loan documents or other resource materials clients typically see. Like a lot of our guidance, it’s tucked away across the Code of Federal Regulations, HECM handbooks, and other technical sources.
The cleanest citation is 24 CFR 206.25: “The line of credit amount increases at the same rate as the total principal limit increases under § 206.3.” The Loan Agreement, section 2.6.1, backs this up: “The line of credit amount increases at the same rate as the total Principal Limit under Section 1.20.”
Translation: the available credit grows automatically, at the same rate as the principal limit. And the principal limit itself grows monthly at a rate equal to one-twelfth of the current mortgage interest rate, plus one-twelfth of the MIP rate. That’s the mechanism behind the growth everyone talks about, but few can fully explain.
For more explanations and sourcing of regulations, check out REVERSE plus ANSWERS AI.