Episode Summary

This episode provides a technical breakdown of Home Equity Conversion Mortgages (HECMs) for title professionals. Mo Choumil explains the dual mortgage structure, Life Expectancy Set Aside (LESA) requirements, non-borrowing spouse protections, and critical closing procedures. Learn why HECM loans require ALTA Endorsement 14.3, how the 150% recorded amount differs from title insurance coverage, why annual occupancy certifications freeze credit lines when missed, and what triggers loan maturity. Essential knowledge for anyone handling reverse mortgage closings or advising senior homeowners on estate planning.

About Mo Choumil

Mo Choumil is CEO of Alltech National Title and host of the Title Agents Podcast. He leads one of the industry’s most progressive independent title agencies, known for innovative sales support systems and agent development programs. Mo focuses on helping title professionals navigate regulatory complexity, operational efficiency, and business growth strategies. He regularly addresses industry topics ranging from technical closing requirements to agency M&A and talent recruitment.

Key Takeaways

• HECM loans historically require two mortgages: a first lien for the lender and a subordinate lien for HUD that secures insurance payments if the loan exceeds property value.
• Taking more than 60% of initial credit in year one increases the upfront mortgage insurance premium from 0.5% to 2.5% of appraised value—an $8,000 penalty on a $400,000 home.
• Life Expectancy Set Aside (LESA) funds are restricted solely for taxes and insurance, revert to the equity pool upon borrower death, and are never available to non-borrowing spouses.
• Missing the annual occupancy certification triggers immediate default and permanently freezes all remaining line of credit funds—even if $40,000 remains available.
• State law requires recording the mortgage at 150% of maximum claim amount to cover 30 years of interest accumulation, but title insurance only covers the actual maximum claim amount.
• Eligible non-borrowing spouses must complete counseling, be listed at closing, remain married, and continuously occupy the home—divorce or moving out triggers immediate loan maturity.
• Heirs can satisfy an underwater HECM by selling the property for 95% of appraised value regardless of loan balance, protected by FHA insurance the borrower funded.

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