The primary Reverse Mortgage provided by Direct Finance Corp. is called a Home Equity Conversion Mortgage (HECM). It is the only reverse mortgage insured by the federal government. HECM loans are insured by the FHA (Federal Housing Administration), which is part of the U.S. HUD (Department of
Housing and Urban Development).
The FHA tells HECM lenders how much they can lend you, based on your age and home value. The HECM program limits your loan costs, and the FHA guarantees that lenders will meet their obligations.
There are also other reverse mortgage programs available. HECM loans generally provide the largest loan advances of any available reverse mortgage. Often they provide substantially more cash than any other program. HECMs also provide the most flexibility in how the cash can be paid to you.
Deferred Payment Loans (DPLs)
Generally, the only reverse mortgages that cost less than HECMs are the ones offered by state or local governments. These loans typically must be used for one specific purpose only, for example, to repair your home, or pay your property taxes. They also generally are available only to homeowners with low to moderate incomes.
Property Tax Deferral (PTD)
Some state and local government agencies offer “property tax deferral” (PTD) loans. This type of public sector reverse mortgage generally provides annual loan advances that can be used only to pay your property taxes.
Proprietary Reverse Mortgages
“Proprietary” reverse mortgages are almost always the most expensive type of reverse mortgage. But if your home is worth more than HUD’s 203-b limit for your county, one of these loans might provide larger cash advances than a HECM.
