Do all reverse mortgages offer the same protections?
No, not all reverse mortgages offer the same protections. The protections most homeowners have in mind come with only one kind of reverse mortgage. A Home Equity Conversion Mortgage carries protections written into federal regulation. The FHA doesn’t insure proprietary reverse mortgages. Those are private loans, and their protections come from their own contract and from state law.
Ask if the FHA insures your particular loan.
What Federal Insurance Buys You
The rules for these loans are in a federal regulation, 24 CFR Part 206. They apply because the FHA insures the loan. There are four protections in that rule.
- No personal liability. Section 206.27 lets the lender enforce the debt only through sale of the property. The house still gets sold. What’s gone is any claim on the rest of the estate.
- HUD pays if the lender doesn’t. Section 206.117 carries the heading HUD Responsibility to Borrowers.
- Counseling, including the spouse who isn’t on the loan. Section 206.41 sends the borrower, any non-borrowing spouse and any non-borrowing owner to a counselor HUD approves.
- A deferral for a surviving spouse who qualifies. Section 206.27 makes the documents postpone repayment for an eligible non-borrowing spouse. Eligible does real work there. HUD sets conditions, and a spouse who misses them hears so at counseling.
That second one has no private equivalent. Federal regulation requires the Commissioner to get you any funds you’re owed and don’t receive because the lender defaulted. Your lender stops paying you, the federal government has to pay you instead. A company’s promise is worth what the company is worth, and this one defaulted on you.
Why the Private Loan Is on the Table
The proprietary version of the loan is there because the insured one stops counting your house at a certain value. For FHA case numbers assigned on or after January 1, 2026, that ceiling is $1,249,125. It caps the value FHA will credit, not the amount anyone can borrow. A house worth well above it holds equity a HECM can’t reach, and north of Boston that’s a lot of houses.
What the private loan leaves behind is Part 206. None of it touches a loan FHA doesn’t insure. Most proprietary lenders write these as non-recourse, and plenty build in terms close to the federal ones. Federal protections are in a regulation anyone can pull up. Contract protections are in your contract. Before either conversation, price the alternatives.
What Massachusetts Adds, and the Question to Ask First
The state has its own counseling rule. Under M.G.L. c.167E section 7A, a reverse mortgage executed with a borrower who hasn’t received counseling from a third party approved by the state’s executive office of aging and independence is unenforceable. Not a penalty on the lender. The terms don’t hold. And notice whose approval counts. The state keeps its own list, separate from HUD’s.
Massachusetts doesn’t assume non-recourse either. The same chapter, at section 7(d), bars the commissioner from approving a reverse mortgage program unless it says if the loan is recourse or non-recourse. A law doesn’t make you declare something that’s always true.
So ask one question before signing anything. Is this loan FHA-insured? A yes means everything above applies. A no earns two follow-ups, both in writing. Show me the non-recourse language in the loan documents. And tell me what happens to a spouse who isn’t on the loan. A broker who doesn’t place reverse mortgages has no stake in the answers. Ask anyway.