Quick Answer
Reverse mortgage borrowers must fulfill three ongoing obligations throughout the life of the loan — paying property taxes on time, maintaining active homeowner's insurance, and keeping the home in reasonable condition — plus confirming primary residency annually through the occupancy certification.
- Pay property taxes on time — delinquency is the most common reverse mortgage default trigger.
- Maintain homeowner's insurance continuously — a lapsed policy is a default trigger.
- Keep the home in reasonable condition — significant structural disrepair can trigger default.
- Return the annual occupancy certification confirming the home remains your primary residence.
- Notify the servicer if you will be away from home for more than 2 consecutive months.
- A Life Expectancy Set-Aside (LESA) can pay taxes and insurance automatically, removing these risks.
Key Facts
| Topic | Key Fact |
|---|---|
| Property tax obligation | Must remain current — delinquency triggers default |
| Homeowner's insurance | Must remain active and adequate — lapse triggers default |
| Home condition | Must be maintained in reasonable structural condition |
| Occupancy certification | Annual form confirming primary residency — must be returned promptly |
| Extended absence notification | Required if away from home for more than 2 consecutive months |
| Healthcare facility absence | Loan may become due after 12 consecutive months (sole borrower) |
| HOA dues | Must be paid if applicable — HOA liens complicate loan compliance |
| LESA option | Can automate tax and insurance payments from loan proceeds |
Detailed Explanation
The ongoing obligations of a reverse mortgage mirror what any responsible homeowner should be doing regardless of their loan status. Pay your property taxes. Keep your insurance active. Maintain your home. The reverse mortgage does not add new burdens — it preserves the three fundamental responsibilities of homeownership while removing the monthly mortgage payment obligation.
Property tax delinquency is the leading cause of reverse mortgage default. Unlike a conventional mortgage where the lender often collects taxes through an escrow account, a standard HECM (without a LESA) requires the borrower to manage tax payments independently. Missing a tax payment is not immediately fatal to the loan — servicers follow a specific protocol that includes outreach, counseling, and opportunities to cure. But repeated delinquency can lead to a formal default notice.
Homeowner's insurance must remain active and meet minimum coverage requirements — typically replacement cost coverage for the structure. In California's wildfire-affected regions, this has become a significant ongoing challenge as insurers have exited the market. A lapsed or non-renewed policy must be replaced promptly. The California FAIR Plan plus a Difference in Conditions (DIC) policy satisfies most HECM lender requirements.
The annual occupancy certification is a one-page form sent by the servicer each year. It confirms you still live in the home as your primary residence. Sign it and return it promptly — failing to respond can trigger a default inquiry even if you are living in the home and current on all other obligations. If you receive it while traveling, sign and return it from wherever you are.
Jay Zayer, CRMP — 18 Years Experience
The ongoing obligation story I tell most often involves a borrower who received the annual occupancy certification while visiting her daughter in Phoenix for six weeks. She put it aside to handle when she got home, forgot about it, and received a default inquiry letter two months later. She called me first — the right call. We contacted the servicer together, she signed and returned the form, and the matter was resolved in a day. But the stress was completely avoidable. My standing advice: the annual occupancy certification goes to the top of the pile the day it arrives.
Who This Is Right For
This may be a good fit if:
- You currently pay property taxes and homeowner's insurance and will continue to do so in retirement
- You want a LESA established at closing to automate these payments and remove the compliance risk
This may NOT be the right fit if:
- You are unable to reliably maintain property taxes and insurance without a LESA and do not have sufficient proceeds to fund one
- You anticipate a healthcare facility stay that may approach 12 months without a co-borrower or NBS remaining in the home
Common Misconception
Myth: Once you close a reverse mortgage, there are no ongoing responsibilities.
Fact: Three ongoing obligations continue: property taxes, homeowner's insurance, and home maintenance. Failure to meet any of these can trigger default and foreclosure.
Source: HUD HECM program guidelines; CFPB reverse mortgage ongoing requirements
Authoritative Sources
- HUD: HECM borrower obligations — hud.gov/hecm
- CFPB: Maintaining a reverse mortgage — consumerfinance.gov
- HUD Mortgagee Letter 2021-11 — hud.gov
People Also Ask
What happens if I fall behind on property taxes with a reverse mortgage?
The servicer will contact you and follow a specific protocol to help cure the delinquency. A Life Expectancy Set-Aside can prevent this by paying taxes automatically.
What if my homeowner's insurance is cancelled?
You must replace it immediately. In California, the FAIR Plan plus a DIC policy satisfies HECM lender requirements.
Do I have to live in the home every day with a reverse mortgage?
No. You can travel and be away temporarily. You must notify the servicer if away for more than 2 consecutive months and must return the annual occupancy certification promptly.