What Is a Maturity Event?

A maturity event is when something specific triggers the repayment of a reverse mortgage. These types of loans only become due and payable under certain circumstances, such as when the borrower dies, sells or moves out of the home, transfers the property’s title to someone else, doesn’t keep up with tax and insurance payments, or fails to keep the home in a decent condition.

How a Maturity Event Works

Eld🍷erly homeowners in ne♌ed of money have the option to convert part of their 澳洲幸运5开奖号码历史查询:home equity into cash. With a 澳洲幸运5开奖号码历史查询:reverse mortgage, the lender will advance you your home’s current value, minus any liens, as a lump sum, a 澳洲幸运5开奖号码历史查询:line of credit, or a series of regular payments, meaning you can essentially borrow an amount equal to the portion of your home that you currently own.

The maturity event on a reverse mortgage is when the money the recipient was lent is due and payable. This won’t be a f🌞ixed date, such as June 8, 2050. Instead, 🅠it will occur when a triggering event happens.

Maturity Event Triggers

Generally, the recipient of a reverse mortgage isn’t required to pay back the money for as long as they live 🧜in the home. Maturity events typically kick in on the fo🐲llowing occasions:

• The borrower dies
• The property is sold
• The title or the home is transferred to someone else
• The borrower doesn’t live in the home for at least 12 consecutive months
• The home is no longer the borrower’s 澳洲幸运5开奖号码历史查询:principal residence, meaning it’s not where they live for the majority of the year
• The borrower fails to keep up with 澳洲幸运5开奖号码历史查询:property taxes and/or 澳洲幸运5开奖号码历史查询:homeowners insurance payments
• The property is falling apart and the borrower is not getting it repaired
  

How to Respond to a Maturity Event

When the loan servicer is notified of a maturity event, it will send a letter to the borrower or their estate within 30 days. In this letter, the recipient will be informed that the loan balance must be repaid, be presented with options of how to do so, and be given a time frame within which to respond.

Theꦉre are essentially three ways to deal with a maturity event.

1. Find the money to pay off either the loan or 95% of the home’s 澳洲幸运5开奖号码历史查询:appraisal value, whichever is less, and keep the property.
2. Sell the property for at least 95% of its appraised value or the loan balance outstanding, with any excess funds yours to keep.
3. Provide a 澳洲幸运5开奖号码历史查询:deed in lieu of foreclosure, which basically gives the lender permission to sell the property, collect what’s owed, and, if applicable, distribute any excess funds to the borrower or their heirs.
   

Special Considerations for a Maturity Event

Once the maturity event letter is sent, the clock starts ticking. Payment is due immediately, although the borrower or their heirs generally hav❀e six months to get their affairs in ord🔴er and settle the debt.

Burying your head in the sand is not advisable. Interest, plus the mortgage and homeowners insurance premiums, will continue to accrue until the loan is paid, and missing the deadline means 澳洲幸运5开奖号码历史查询:foreclosure and a higher chance of exiting the transaction empty-handed.

To avoid any unnecessary headaches, it’s best to keep ⛎in regular contact with the loan servicer and inform it immediately of any difficulties you may be facing. Communication could buy you more time and a bit🍸 more leniency.

When the letter is ignored and the deadlines aren’t respected, the foreclosure process will be initiated as soon as possible to recoup the funds owed. If you speak up, you may be given some wiggle room. A 90-day extension can be granted to those who ask for it, and lenders are generally willing to show a little more patience if it’s clear that the recipient of the letter is actively seeking a solution.

The Bottom Line

A maturity event occurs when circumstances trigger the repayment of a reverse mortgage. A reverse mortgage is a type of mortgage that allows homeowners to convert some of their home equity into cash. They can do so by securing a loan up to the home's current value, minus any liens, as either a lump sum, a line of credit, or a series of payments. Examples of maturity events include the borrower dying, the property being sold, and the borrower failing to keep up with property taxes or homeowners insurance payments.