Fannie Mae is encouraging all potential and current reverse mortgage borrowers to insist that proceeds from their loans, excluding the costs necessary to close the transaction, be paid directly to them.
The suggestion was one of several safety tips contained in a brochure distributed by Fannie Mae.
Other steps in the brochure, entitled, "Your Reverse Mortgage: Five Steps for Safety," include learning the basics of a reverse mortgage, deciding if it is right for you and how to use reverse mortgage funds.
Fannie Mae-authorized reverse mortgage lenders are obligated to make the check payable to the borrower and no other third party.
Reverse mortgages allow people 62 years of age or older, who own their own home outright or have a very low mortgage balance, to receive tax-free cash from the equity of the home.
They can receive the funds in a lump-sum payment, monthly installments or retain a line of credit.
The amount owed is not repaid until the senior chooses to sell the home or the home passes into an estate.
Pub Date: 12/20/98