Writing The Offer on HECM For Purchase

Using a reverse mortgage to buy a home is still a relatively new thing for Realtors and Buyers and there are some important things you can do upfront to help make things go smoother and easier.

Contact your buyers' reverse mortgage consultant to discuss how to write up the offer.  Here are some things to talk about.  

Since a reverse is an FHA transaction, structure your offer that way using the pre-printed FHA checkboxes, clauses and Addendum.  You will need to have all parties (buyer, seller and agent) sign the FHA Amendatory Clause.

Be sure that they have already completed their HUD HECM Counselingand submitted a complete loan application to the lender.  Unlike the forward world, reverse mortgage loan officers cannot pull a borrowers credit report with just a faxed signed request.  We have to have a signed "HECM Counseling Certificate" and completed a loan application.  It's okay for the certificate to designate the property as "TBD or To be determined" as that can be updated.  The credit report is important even though the credit score is not - some things can disqualify a buyer.  For instance, foreclosure within the last 3 years, tax defaults, judgment, or a CAIVRS "hit".  

On a Reverse for Purchase, the buyer is NOT allowed to contribute towards the cost of repairs in any manner, including physically doing the work themselves and the seller is NOT allowed to pay any of the buyers closing costs.  You will write the purchase contract with local customary splits for title, escrow, inspections and recording costs and the seller paying for all necessary repairs. Adjust the purchase price accordingly.

I would recommend a 30 to 45 day escrow and also that when you select your title and escrow provider that you utilized a company with reverse experience.