Federal Guarantees in a HECM Loan

In a HECM Loan there are two things that the federal government will guarantee:

• If the borrower chooses a monthly pay out: In the event of lender default, HUD will continue to make payments to the borrower based on the original terms of the loan.

• A HECM is a "non-recourse" loan, which means that a borrower can never
owe more than the value of the property at the time the loan is repaid.