Consumption and Real Estate
Why Does HUD Record A Second Mortgage On A Reverse Mortgage?
Question : Why Does HUD Record A Second Mortgage On A Reverse Mortgage?
hud reverse mortgage
Best answer:
Answer by the tax lady
Because it *is* a mortgage on the house. The difference is it’s growing not shrinking as time goes by.
The recording ensures that if you sell the house, the reverse mortgage gets paid off before you get any of the money.
I don’t think you worded your question properly. The last response may have helped you, but just in case it didn’t, this should answer your question.
HUD holds a second lien on your property (the first is held by the lender). The second lien that is held by HUD ensures that the borrower will not be adversely affected by a lender going bankrupt. I.e. If a lender starts to hit a rough patch, the borrower will continue to get whatever distributions the were promised (monthly distributions for the rest of their life?) through HUD for as long as they are living in their home.
I hope this helps.