HUD HOC Reference Guide

Reverse Mortgages (HECM)

Chapter 1
Appraisal & Property Requirements
Page 1-12


Section 255: Home Equity Conversion Mortgages (Reverse Mortgages, a.k.a. HECM) allows a borrower aged 62 and older to borrow against the equity in a property that has limited outstanding debt. The subject property under this program must be an existing one-to four-unit dwelling in which the mortgagor occupies one of the units. It may be a condo if it is in a FHA approved project or it may be a manufactured home if the home complies with outstanding FHA guidelines for manufactured homes.

Appraisal & Conditions

The appraiser must perform the appraisal with the same standards and forms expected in an FHA single-family appraisal. This includes reporting the same deficiencies and repair items, and conditioning for their repair. In certain instances, the borrower is not required to treat any defective paint surfaces after closing for properties built before 1978, however, the appraisal must still be made subject to the defective paint surfaces. The lender may waive the repair requirement to correct the defective paint surface, provided the borrower provides a written certification that children under the age of seven years will not be residing in the property.

Please see: HUD Handbook 4235.1, Rev-1, Section 3 for requirements of appraisal and property.

Content Archived: October 25, 2012