A reverse mortgage borrower entering a nursing home still has a principal residence under 24 CFR 206.3 during a temporary health-care stay that does not exceed twelve consecutive months. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. After twelve consecutive months with no other borrower occupying, 24 CFR 206.27(c)(2)(ii) can make the loan due. Report absences longer than two months. See nursing home occupancy for the twelve-month rule. Stay here for what to do when the stay starts.
Consider what happens when Leta, 70, occupies a house in San Tan Valley, Arizona, and a fall sends her to skilled nursing “for a few weeks.” Those weeks are not a default. Silence into month six is how a medical stay becomes a servicing problem.
A HECM remains FHA-insured. A facility stay is not a public pause button.
What should a borrower do in the first two months of a facility stay?
Tell the servicer named on the welcome letter. Keep hazard insurance. Keep taxes current unless a LESA pays them. Jay confirmed a LESA cannot be added after closing as a facility patch. Do not rent the empty house. Do not assume a child’s occupancy continues 24 CFR 206.39 for Leta. Mortgagee Letter 2023-23 is the reporting overlay I will cite rather than inventing a day-count HUD did not put in 24 CFR 206.3.
Leta’s origination leftover sat in a mid-30s to low-50s percent of appraised value, depending on age and expected rate. That worksheet is not a facility subsidy. Do not use the calculator as a nursing-home quote.
Counseling cost $125–$175 at origination. She does not re-counsel to report a stay. Arizona has no Civil Code 1923.2(k) on this paper.
How does the twelve-month health-care clock actually run?
Consecutive months in a health-care institution. 24 CFR 206.3 keeps principal-residence status during that temporary stay if it does not exceed twelve consecutive months. 24 CFR 206.27(c)(2)(ii) then names a due-and-payable event if illness keeps the borrower out longer than twelve consecutive months and the property is not the principal residence of at least one other borrower. A weekend home visit that does not actually resume occupancy is not a reset I will invent. Ask the servicer, in writing, how they count a trial return.
A second geography: a 82-year-old in Redondo Beach whose California daughter wanted to “just not mention” a long stay. Same federal clock. Same ML 2023-23 reporting. Same leftover-cash irrelevance. Initial MIP was 2.00% of claim amount (Mortgagee Letter 2017-12). Annual MIP of 0.50% of outstanding balance still accrues. Origination was capped at $6,000 under 24 CFR 206.31.
A facility stay is a servicing calendar, not the month-ish close I mention on living refinances with a complete file.
What property-charge jobs continue from the facility?
Taxes. Insurance. HOA dues. 24 CFR 206.205 does not pause because Medicare is billing. An adjustable HECM still accrues at 1-month CMT plus lender margin. If Leta’s heirs later keep the San Tan Valley house after a due-and-payable event, 24 CFR 206.125(a)(2)(i) still names the outstanding balance.
If a coborrower or Eligible Non-Borrowing Spouse still occupies, that is a different file. See spouse in a nursing home when the person in the facility is not the occupying borrower.
Servicers are told in Mortgagee Letter 2023-23 to have borrowers report absences longer than two months. Waiting until month eleven is how a medical stay looks like a silent vacancy. 24 CFR 206.3 keeps principal-residence status during a temporary health-care stay that does not exceed twelve consecutive months. 24 CFR 206.27(c)(2)(ii) then names a due-and-payable event if illness keeps the borrower out longer than twelve consecutive months and the property is not the principal residence of at least one other borrower. A weekend home visit that does not actually resume occupancy is not a reset I will invent. Ask the servicer, in writing, how they count a trial return.
Arizona San Tan Valley has no Civil Code 1923.2(k) on this paper. California Redondo Beach still had that pause at origination; it does not pause the twelve-month clock. When Leta originated, the 2026 cap of $1,249,125 in Mortgagee Letter 2025-22 was already in force. Initial MIP was 2.00% of claim amount (Mortgagee Letter 2017-12). Origination was capped at $6,000 under 24 CFR 206.31. Annual MIP of 0.50% of outstanding balance still accrues. Expected rate had already rounded to 0.125% under 24 CFR 206.3 at origination; a facility stay does not reopen that cell. Drawn balance during a facility stay still accrues at 1-month CMT plus lender margin.
Taxes, insurance, and HOA dues under 24 CFR 206.205 do not pause because Medicare is billing. A LESA cannot be added after closing as a facility patch (Jay confirmed). Do not rent the empty house. A child who is not on the loan does not preserve occupancy. Do not originate a HECM on the way to a planned permanent move.
Who should not originate a HECM on the way to a planned permanent move?
This path does not help a household that wanted leftover cash for a facility deposit while already intending never to return. Occupancy is still 24 CFR 206.39. I work with multiple lenders. I will originate when the house is still the principal residence. I will turn away a last-month cash-out whose only thesis is a planned vacancy.
If leftover cash after 2.00% of claim amount is decorative, a facility stay will not make the origination wiser. Skip the HECM. When the math works, report the stay early. Then keep charges current.