I wanted to explain an important term that you might have seen if you’re seeking a reverse mortgage and researching how they work called a maturity event.
What a maturity event is, is this is referring to any event which may cause a reverse mortgage to be due and payable. This’ll happen in certain circumstances. I’m going to give you those examples.
The first one is if all borrowers have passed away. If all borrowers on the reverse mortgage pass away, then the reverse mortgage would become due and payable. Now there’s exceptions to this and this is why it’s a may become due and payable. Let’s say that you’re a married couple and only your spouse is on the reverse mortgage and they pass away. In that circumstance, this is an important change that was made in 2015 with reverse mortgages. They’re not going to kick you out of the house. They’re not going to call the note due, kick you out of the house, make you move. The reverse mortgage will stay in place, but you’ll no longer be able to access the line of credit.
For example, you won’t be able to utilize the reverse mortgage in the same way. So that’s an important change.
But if all borrowers pass away and you’re not a married couple, then with a non borrowing spouse, then the note will be due and payable in that circumstance. All borrowers have sold or conveyed the property to a third party. So if you sell the house, you have to pay off the reverse mortgage. It’s not assumable. The property is no longer the principle residence of at least one borrower for reasons other than death. So one of the agreements that you sign when you get the reverse mortgage, that you’re going to continue to live in the property as your primary residence. If that ceases to be the case, the note will become due and payable.
The next one is, if you do not maintain the property as a principal residence for a period exceeding 12 months because of physical or mental illness. The reason why this is a little bit different than the previous one and why they put that in there is if you have a prolonged hospital stay, let’s say or a reason why you’re not able to live in the house for a period of time because of medical reasons, they’re going to allow that to be an exception to where as long as you move back into the house within a reasonable amount of time, they’re not going to call the note due.
The next one is if you fail to pay taxes or insurance, you have to pay those two bills. If you’re not set up with a what’s called a LISA account, which is a set aside account so that the reverse mortgage lender can pay your taxes and insurance for you, then you have to pay your taxes and insurance. If you don’t, the note can become due and payable.
Then the last one is if the property is in disrepair. If you fail to maintain the property to keep it in reasonable upkeep, keep the yard reasonably nice, then that’s a reason why they could call the note due and payable. So I hope that helps you guys out with what maturity event means.
If you have questions about a reverse mortgage or would like to discuss your circumstance, I’d be happy to talk to you about that and answer your questions. Just give me a call, text or email. 303-670-0137 or firstname.lastname@example.org