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how hecms work

What Is a HECM?

Today most consumers who are looking for a reverse mortgage choose to apply for a Home Equity Conversion Mortgage or “HECM.” What is a HECM?

  1. A reverse mortgage that’s issued by the Federal government
  2. A reverse mortgage that’s issued by a State or local government
  3. A reverse mortgage that’s issued by a private lender and insured by the Federal Housing Administration (FHA)

“C” is correct. The FHA is part of the U.S. Department of Housing and Urban Development (HUD). There are other types of “proprietary” reverse mortgages, but most consumers choose HECMs, because they generally offer larger loan advances and have lower interest rates than privately insured reverse mortgages.