Annual occupancy check

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Annual occupancy check reverse mortgageHECM borrowers are required to permanently live in their homes to keep their reverse mortgages in good standing. Your servicer is in charge of making sure the occupancy requirements are met via the annual occupancy check.

A mortgage servicer is a company that handles long term customer service once a mortgage loan (whether it’s a reverse mortgage or traditional “forward” mortgage) is funded.  The servicer’s job is to handle ongoing account maintenance throughout the life of the loan.

The servicer handles inquiries and requests for funds, monitors property charge payments, distributes LESA payments, and facilitates the settling of the loan balance once it becomes due and payable. The mortgage servicer also handles numerous seen and unseen tasks to ensure compliance with FHA and HUD guidelines.

One of those tasks is the annual occupancy check. HUD wants to make sure HECM borrowers are living in their homes as required by the HECM program. The servicer will send out a form every year to fill out to confirm that your home is still your primary residence. It’s important to return this form promptly (usually within 30 days) or the servicer may assume you’re no longer living in the home. This could trigger a maturity event and make the reverse mortgage balance due and payable in full.

Though the HECM program requires you to live in your home, you don’t have to live in it full time. You can still be away for long periods traveling or getting medical care. You’re typically allowed to be absent from the home for up to twelve months without risking a maturity event (but check with your servicer to be sure). If you plan to be absent longer than that, you need to get permission from HUD.

Again, the annual occupancy check is a very important part of maintaining your obligations under the HECM program. Be sure to watch for the form every year around the anniversary of your loan and be sure to get it back to your servicer promptly.

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