REO and Distressed Property Loans
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HCS Equity has been providing capital to trusts and estates for over 20 years, and we are well versed in working with trustees, court appointed conservators, fiduciaries, attorneys, or other family members that may be involved in this transaction.
Yes, your property can be in an irrevocable or revocable living trust for Reverse Relief.
No, your heirs are not liable for this debt in any way.
A credit report is run to confirm borrower information, but there are no credit score requirements for Reverse Relief.
Income documentation is not required for a Reverse Relief loan.
You may have an existing mortgage on your property, and Reverse Relief will retire the existing debt as part of the new transaction. This is a great way to relieve your monthly debt, plus obtain funds for any other purpose.
Yes, the borrower is still responsible for paying all normal property taxes and hazard insurance on the property. Reverse Relief does NOT require an “escrow” or “impound” account. Similar to traditional reverse mortgages, if property taxes or hazard insurance become delinquent the lender has the right to call the loan due or “force-place” insurance coverage.
Reverse Relief is a fixed-rate loan program, and the interest rate will not change during the term of your loan.
The foreclosure process may only be initiated during the loan term in the event of death, non-payment of taxes/insurance, severe disrepair of the home, or a change of the owner-occupied use of the property. Following the Maturity Date, a foreclosure could be initiated if the outstanding balance is not repaid. It is important to read the loan documents provided and fully understand the terms of the Reverse Relief mortgage, as well as ask questions of both HCS Equity and the HUD-Approved counselor.
The estate will have 6 months from the date of death to pay-off the loan through the sale of the property, a refinance, or other means.
At the maturity date the loan is considered due and payable in full, including all accrued interest, principal, and servicing fees. The borrower will receive a notice at least 90 days in advance of this day as a reminder to refinance into another loan, sell the property, or make other arrangements.
Reverse Relief is secured as a normal trust deed on your property, and the lender does not have any ownership in your home. You are free to sell your property at any time.
A typical loan will take about 21 business days to complete due to the counseling session and government mandated wait times. Please see the attached chart XXXXXXXXX.com to gain a better understanding of the process and timeline. By streamlining many of the extraneous rules and difficult guidelines that delay traditional reverse mortgages by months, HCS Equity can provide funding in a fraction of the time.
Unlike FHA and other traditional reverse mortgages, Reverse Relief does NOT feature an Up-Front Mortgage Insurance Premium nor any monthly mortgage insurance. This can provide a significant savings to the borrower.
The minimum loan amount HCS Equity will provide is $150,000. The maximum loan amount is determined by the value of the property with no program limit.
Unlike most reverse mortgage programs, Reverse Relief does not have any age requirement and you do not need to be 62 years old to apply.
The monthly servicing fee is $30 per month and is added to the outstanding loan balance each statement period.
You will only receive a 1098 for accrued interest on the loan upon repayment, full or partial. All payments that are made are first applied to interest due.
You can always welcome to contact HCS Equity to review your situation during the term of the loan to determine if there is enough equity to provide additional capital.
Reverse Relief is unique in that our loan has a maturity term of 5 years, with the principal balance and all accrued interest/servicing fees due that that time. As with all reverse mortgages, the loan also becomes due upon death of the borrower. There are several other potential maturity events such as sale of the property, death of the borrower, a change in the owner-occupied use of the property, non-payment of property taxes or insurance, or allowing the property to fall into disrepair. Please see our Note and Deed of Trust for further details.
The Reverse Relief program is only offered as a lump sum, fixed rate loan. Mortgage Interest and monthly servicing fee. We do not offer an equity line program or monthly tenure payments.
The funds from a Reverse Relief loan can be used by the borrower for any purpose they deem necessary. Home improvement, debt consolidation, living expenses, medical bills, family assistance, or payoff of a traditional forward mortgage relief are typical uses.
Property condition will be factored into the value of the home, but HCS Equity is not governed by the same strict guidelines that traditional reverse mortgages must follow. Items such as peeling paint, leaky roofs, broken windows, missing flooring, empty pools, debris around the property, red tags on title, and other items that normally cause issues with traditional lenders will not hamper HCS Equity’s ability to provide a new mortgage.
In most cases an appraisal and termite report will NOT be required, which saves time and expense. A requirement for either inspection will be determined by HCS Equity underwriting upon application.
Yes, a HUD-Approved reverse mortgage counseling session is required to be completed 8 days before HCS can process the loan. A typical session will last less than 30 minutes and can be completed via phone or in-person. You will receive a list of providers to choose from, and the estimated $125 cost is paid via credit card or e-check at the start.
Absolutely not, the Reverse Relief loan can be paid off at any time before the due date. There is never any sort of prepayment penalty or minimum months of interest due. You may also pay down any amount you like towards the principal, but there is no option to draw those funds back out.
Reverse Relief is a private reverse mortgage that is not provided by the Federal Housing Administration or a Wall Street bank. Capital for this loan program comes from private sources, which eliminates much of the red tape and delays that are typically found on traditional reverse mortgage programs. These private funds allow HCS Equity the flexibility and speed to complete unusual transactions that normal lenders can not complete.
A reverse mortgage payoff is usually required during difficult times. In most cases, it involves a single beneficiary or multiple beneficiaries of an elderly parent’s estate after they pass on. When the executor of the estate begins the process of sorting through paperwork and getting all affairs in order, some may discover a reverse mortgage was taken against the property and that the full repayment of the loan is required within a fairly short time frame. Typically, there is a six-month grace period.
Reverse mortgage payoff loans are private loans used to pay off reverse mortgage loans. These loans come from private equity firms like HCS Equity to provide flexibility for the heir or responsible party to manage the property and assets without being forced to sell them in order to meet the expenses of the estate.
HCS Equity does not provide inheritance advances.
No, our loans are not personally guaranteed, and as such do not require an individual’s financial or credit information. However, credit scores may have an impact on a beneficiary’s ability to refinance out of our private loan once the property is transferred out of the Trust, Estate or Probate into their name.
No, we follow the BOE guidelines and lend directly to the Trust, Estate or Probate, and use the subject property as collateral.
Banks and credit unions offer little help in this regard, whether out of risk-averse policies or simple lack of knowledge regarding trust or estate administration.
In most cases limited documentation is required, which varies slightly on a case-by-case basis. Please contact us to discuss your specific matter, and we can provide a detailed list of items needed.
| Step 1 | Step 2 | Step 3 | Step 4 | Step 5 | Step 6 |
|---|---|---|---|---|---|
| Determine who will retain property | Determine loan amount | HCS Equity provides a loan to the trust | Equalization and distribution | Change of ownership | Trust loan is repaid |
| Oftentimes one or more beneficiary wishes to retain the property and it’s tax base. | The property value, other assets/cash in the trust or estate, and the number of beneficiaries are used to determine the liquidity needs for equalization. | HCS Equity provides private capital directly to the trust to create the liquidity needed for equalization, a necessary step to avoid reassessment under Proposition 58. | Cash or property are distributed as mutually agreed upon by the beneficiaries. | Change of ownership and exclusion from reassessment are filed. | The beneficiary retaining the property either repays the private loan with their own funds, or secures conventional financing to repay the trust loan. |
HCS Equity provides private 3rd party loans ranging from $30K – $2M, 1 – 3 year terms, no prepayment penalties and no minimum months of interest. We work to customize specific solutions that best fit the needs of the particular situation.
Often, beneficiaries have the funds to pay the other beneficiaries for their share of the real property in the trust, or lend money to the trust necessary to make an equal distribution of assets. Per BOE guidelines, “a loan cannot be made by any of the beneficiaries of the real property to the trust in order to equalize the trust interests. Such loan would be considered payment for the other beneficiaries’ interests in the real property resulting in a transfer between beneficiaries rather than a transfer from parent to child, which would disqualify the transfer from the parent-child exclusion.” http://www.boe.ca.gov/proptaxes/pdf/lta08018.pdf
In most cases, and with all the supporting documentation, HCS Equity can fund a loan in as little as 5-7 business days.
Trustees (with the power to encumber trust property), Administrators of estates (with Letters of Administration and Full/Limited Authority), Fiduciaries, and Conservators. Please note, restrictions do apply
Trustees, executors, administrators, private fiduciaries, and estate and trust attorneys routinely encounter problems when administering cash-poor trusts, estates or probates after someone passes away. These problems include how to equalize and distribute assets between children so that everyone gets an equal share; how to pay expenses when there is little or no cash in the estate; how to pay off a reverse mortgage that a parent or grandparent has taken out on the home; or how to structure the trust or estate administration so that one beneficiary receives real property while ensuring that the other beneficiaries receive an equal share. Often, there is too little cash in the estate to achieve these goals, and the trustee or executor is forced to sell real property assets in the course of the trust or estate administration in order to raise the money needed. HCS Equity provides private 3rd party loans to create necessary liquidity to retain the applicable property tax exemptions, and can do so in a fraction of the time it takes to prep and sell a property.
In the State of California, real property is reassessed at market value if sold or transferred, and property taxes can increase dramatically as a result. However, if the sale or transfer is between parents and their children, or from grandparents to their grandchildren, under specific/limited circumstances, the property will not be reassessed if certain conditions are met, and the proper application is timely filed. These propositions allow the new property owners to avoid property tax increases when acquiring property from their parents or children or from their grandparents. The new owner’s taxes are calculated on the established Proposition 13 base year value, instead of the current market value when the property is acquired. For additional information, please visit the BOE FAQs site: http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm
