Propritary vs HECM

Propritary vs HECM

Nov 3, 2025 |

Navigating your financial future as you plan for retirement often involves making informed decisions about your home equity. Understanding the differences between Home Equity Conversion Mortgages (HECMs) and Proprietary Reverse Mortgages is crucial. Let’s break down these options in a clear and simple way.

Mortgage Insurance in Home Equity Conversion Mortgages: A Foundation of Dual Security

Mortgage Insurance in Home Equity Conversion Mortgages: A Foundation of Dual Security

Aug 28, 2025 |

I. Executive Summary: The Dual Promise of HECM Mortgage Insurance The Home Equity Conversion Mortgage (HECM) program, administered by the U.S. Department of Housing and Urban Development (HUD) through its Federal Housing Administration (FHA), offers senior homeowners a unique way to access their home equity. A cornerstone of this program is its mandatory mortgage insurance, known as Mortgage Insurance Premiums (MIP). While often perceived as expensive, HECM mortgage insurance provides a critical two-fold layer of protection: it safeguards private lenders against potential losses, and, uniquely, it also insures the borrower against the rare but significant risk of lender insolvency, ensuring the uninterrupted flow of funds. This report will delve into the mechanics of HECM mortgage insurance, detailing its cost structure, the comprehensive protections it affords to both lenders and borrowers, and ultimately, justifying its value proposition as a foundation of security for senior homeowners. The mandatory nature of HECM mortgage insurance is not merely a programmatic rule; it indicates that this insurance is fundamental to the viability and widespread adoption of reverse mortgages. If the insurance were optional, private lenders would likely be unwilling to offer HECMs due to the inherent and substantial risks involved, such as the non-recourse nature […]