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Is There a Risk to Persons Living With the Senior Who Are Not Part of the Reverse Mortgage Contract?
Is There a Risk to Persons Living With the Senior Who Are Not Part of the Reverse Mortgage Contract?

Yes, when the senior dies or moves out of the house permanently, the house will be sold to repay the loan. This means that anyone living in the house at the time, whether related to the senior or not, will be required to leave.

This is an unavoidable requirement of financial viability. All calculations of the amounts that can be paid to seniors assume that the balance owed on the HECM will be repaid shortly after the senior dies or moves out permanently. If third parties living in the house were allowed to delay the process indefinitely, insurance premiums would have to be increased, the amounts that seniors could draw would have to be reduced, or both. If the requirement was not enforced, furthermore, more and more seniors would realize they could offer boarders or younger spouses a free ride, and the rising costs could eventually kill the program.

Yet seniors taking HECMs on their own who have others living with them should make those persons aware of the risk.