Los Angeles County Reverse Mortgage Guide

Other Options Los Angeles County Homeowners Consider First

Before looking at any loan, it helps to ask what problem the money would solve. Sometimes the need is smaller, or different, than it first appears.

A budget and benefits check. This means reviewing monthly spending and checking whether any public help applies. The CFPB notes that there are state and local programs that may help defer property taxes and provide help with utilities and home repairs. What it trades: time spent on applications, but no new debt.

Property tax relief. California's Property Tax Postponement program, run by the State Controller's Office, lets eligible homeowners put off current-year property taxes. The county section below covers its rules and dates. What it trades: postponed taxes become a lien (a legal claim on the home) that must eventually be repaid.

Help from family or a housing counselor. A relative may be able to help with a bill, or a HUD-approved counselor can talk through the whole picture. What it trades: family arrangements work best when they are written down and understood by everyone involved.

Selling or downsizing. Selling turns equity into cash and may lower housing costs. What it trades: leaving the home, and the costs and effort of moving.

A home equity loan or line of credit. A home equity loan is a one-time lump sum borrowed against the home. A home equity line of credit, or HELOC, lets you draw money as needed, up to a limit. The CFPB notes that these may be a cheaper way to borrow, but they "usually have monthly payments" and depend on income and credit. The reverse mortgage vs home equity loan comparison sets the two side by side.

A cash-out refinance. This replaces the current mortgage with a new, larger one and pays out the difference in cash. What it trades: a new loan with its own monthly payments.

A reverse mortgage. No monthly loan payment, but a growing balance and continuing duties. The rest of this guide looks at it closely.

Types of Reverse Mortgages Available in California

A Los Angeles County homeowner comparing information may notice that different sources seem to describe slightly different loans. That is because more than one kind exists.

The Home Equity Conversion Mortgage, or HECM. HUD describes it as "the only reverse mortgage insured by the U.S. Federal Government," available only through a Federal Housing Administration (FHA)-approved lender, on its HECM program page. The CFPB calls it the most common type. Congress authorized it in 12 U.S.C. § 1715z-20, which says the program's purpose is to permit "the conversion of a portion of accumulated home equity into liquid assets."

Private, or proprietary, reverse mortgages. These are offered by lenders outside the federal insurance program. The FTC notes that some lenders offering proprietary reverse mortgages also require counseling, and suggests asking a counselor to compare costs across different types.

Single-purpose loans and deferral programs. Federal law lists "deferred payment loans, and property tax deferral" among the other home equity conversion options that counselors discuss. These typically serve one use, such as repairs or property taxes.

California adds its own rules. Civil Code section 1923.2 applies to reverse mortgages made in the state, whether or not they are HECMs. Its requirements include, among others:

• Prepayment without penalty. You may pay off the loan in whole or in part at any time. "Penalty" does not include fees that would have been due anyway when the loan became due.
• No reduction of advances because of rate changes. If the loan pays periodic advances, they may not be reduced in amount or number because the interest rate adjusts.
• No required annuity. A lender may not require you to buy an annuity as a condition of the loan.

Under Civil Code section 1923.10, this chapter applies to reverse mortgage loans executed on or after January 1, 1998. Civil Code section 1923 also requires the lender to be licensed or chartered under California or federal law.

HECM Eligibility Requirements for Los Angeles County Homeowners

A homeowner, or an adult child helping one, often wants a quick way to tell whether a HECM is even worth looking into. The federal rules give a starting point. They are the same in Los Angeles County as everywhere else, and meeting them does not mean a lender will approve a loan.

Age. Under 24 C.F.R. § 206.33, "the youngest borrower shall be 62 years of age or older at the time of loan closing."

Principal residence. Under 24 C.F.R. § 206.39, the property must be the principal residence of each borrower, and of any Eligible Non-Borrowing Spouse, at closing.

The type of home. The statute, at 12 U.S.C. § 1715z-20(d)(3), requires a dwelling designed principally for a 1- to 4-family residence in which the borrower occupies one of the units. Its definition of "mortgage" also reaches shares in a residential cooperative housing corporation. Whether a specific condominium building or other property is eligible is a question for a HUD-approved counselor or a lender. The guide to reverse mortgage property requirements covers condition and repair rules.

An existing mortgage. The house does not need to be paid off. But a HECM must be a first mortgage under 12 U.S.C. § 1715z-20(b)(3), so an existing mortgage generally has to be paid off at or before closing.

Counseling and other requirements. The borrower must receive independent counseling, covered next, and must meet "any additional requirements prescribed by the Secretary."

As for the amount, HUD says it varies by borrower and depends on factors including the age of the youngest borrower or Eligible Non-Borrowing Spouse and the lesser of the appraised value, the HECM FHA mortgage limit or the sales price. HUD publishes the current limit.

Required HUD Counseling: What to Expect and How to Find It

Counseling can feel like one more appointment, but it exists for the homeowner's protection. It is a conversation with someone who is not selling the loan.

Under 12 U.S.C. § 1715z-20(d)(2)(B), a HECM borrower must receive adequate counseling from an independent third party that is not associated with or paid by anyone originating, servicing or funding the loan, or selling annuities, investments, long-term care insurance or other financial or insurance products. Under 12 U.S.C. § 1715z-20(f), the counselor must discuss topics including:

• options other than a HECM, including housing, social service, health and financial options;
• other home equity conversion options, such as sale-leaseback financing, deferred payment loans and property tax deferral;
• the financial implications of the loan; and
• a disclosure that it may have tax consequences, affect eligibility for federal and state assistance, and affect the estate and heirs. The list continues with any other information HUD requires.

To find a counselor from Los Angeles County, HUD directs readers to search its HECM Counselor Roster or call (800) 569-4287, as its HECM program page states. The CFPB's list of questions for a reverse mortgage counselor can help you prepare. You can talk to a counselor while you are still only considering the idea.

California adds steps. Under Civil Code section 1923.5, before counseling, the lender must give you a printed notice warning that a reverse mortgage "is a complex financial transaction," plus a reverse mortgage worksheet guide to bring to the session. Under Civil Code section 1923.2(j), before accepting a final application, the lender must give you a list of not fewer than 10 HUD-approved counseling agencies. Under section 1923.2(k), the lender may not accept a final application or charge fees until seven days after counseling, and must first receive your signed certification. That certification records that counseling was in person, unless you elected another manner. The HUD reverse mortgage counseling guide explains the session itself.

Costs, Fees, and How the Loan Balance Grows Over Time

The cost question is often the one that worries families most, partly because the costs are not paid out of pocket each month. They are usually added to the loan.

Upfront costs. These can include an origination fee (the lender's charge for making the loan), an FHA mortgage insurance premium, an appraisal (a professional estimate of the home's value), title insurance (protection against problems with ownership records) and other closing costs. Federal rules limit the origination fee, the statute provides that it may be fully financed with the loan, and the lender discloses the actual amount. HUD sets and publishes the current mortgage insurance premium.

Disclosure of costs. Federal law, at 12 U.S.C. § 1715z-20(d)(2)(C), requires full disclosure of all costs charged to the borrower, including services such as estate planning or financial advice. It must state clearly which charges are required to obtain the mortgage and which are not. Before closing, the lender must also give a statement of the projected total cost of the loan.

Interest and the growing balance. Interest is charged on what you owe and added to it, so you are charged interest on interest. As a hypothetical illustration only, a balance that starts at a given amount will be larger after several years even if you never draw another dollar. California's Civil Code section 1923.2(b) allows fixed or adjustable rates, including compound interest. The guide to reverse mortgage interest and balance growth explains this in more detail.

Yearly statements. Under 12 U.S.C. § 1715z-20(e)(3), the lender must send, by January 31 of each year, a summary of the principal paid to you, the deferred interest added and the balance at year end.

Costs that stay with you. Property taxes, homeowners insurance and upkeep remain your responsibility for the life of the loan. The reverse mortgage costs and fees guide goes further.

Changing your mind. The CFPB states that with most reverse mortgages you have three business days after closing to cancel for any reason, without penalty.

When the Loan Comes Due and What Happens to the Home

For an adult child, this is often the real question: what happens to Mom's or Dad's house later?

According to the CFPB, a HECM must be paid off when the last surviving borrower or Eligible Non-Borrowing Spouse dies, sells the home, or no longer lives in it as a principal residence, which the CFPB describes as where they live for a majority of the year. Under 24 C.F.R. § 206.27(c), the loan can also become due, upon HUD's approval, if the borrower does not pay property charges, does not perform another obligation, or is away for longer than 12 consecutive months because of physical or mental illness while no other borrower lives there.

California sets shorter limits for absences. Under Civil Code section 1923.2(g), absences of up to 60 consecutive days do not make the loan due. Absences longer than 60 days but under a year do not either, if the borrower has first secured the home in a way the lender accepts, as the loan documents specify.

A spouse who is not a borrower. Under 24 C.F.R. § 206.27(c)(3), the loan documents must defer the due date for an Eligible Non-Borrowing Spouse until that spouse's death or until the deferral requirements stop being met and are not cured.

What heirs owe. By the time the loan is due, interest and charges have been added for years, so the balance is higher than what was first borrowed. The CFPB states that when the loan comes due, a sale of the home is the usual way it is repaid, "but, neither you nor your heirs will have to pay back more than your home is worth." Federal law, at 12 U.S.C. § 1715z-20(d)(7), provides that the homeowner is not liable for any shortfall between the debt and what the lender recovers from the net sale proceeds or from FHA insurance benefits. Heirs who want to keep the home generally need to repay the loan.

Heirs settling an estate in Los Angeles County may face questions about probate that an estate attorney can answer.

Los Angeles County Property Tax and Benefit Programs for Older Homeowners

Property taxes deserve close attention for anyone with a reverse mortgage, because falling behind is one of the events that can make the loan due. The county's own bill insert sets out the dates.

When county property taxes are due. The Los Angeles County Treasurer and Tax Collector's 2026-27 annual tax bill insert states:

• First installment. Due November 1, delinquent after the close of business on December 10.
• Second installment. Due February 1, delinquent after the close of business on April 10.

If a delinquency date falls on a weekend, it moves to the close of business on the next business day. Late payments bring a 10 percent penalty on each installment and a $10 cost on the second. The Tax Collector accepts partial payments, which reduce the penalties imposed, though it recommends paying the total due.

The homeowners' exemption. Under Revenue and Taxation Code section 218, an owner-occupied dwelling may receive a $7,000 exemption from its full value. The county insert describes this as a reduction in assessed value for an eligible owner who occupies the home as the principal residence as of January 1. The county's Office of the Assessor handles property valuations.

Property Tax Postponement. The State Controller's Office program page states that homeowners who are seniors, blind or have a disability may defer current-year property taxes on their principal residence if they meet criteria including at least 40 percent equity and an annual household income of $57,002 or less, among other requirements. For 2026-27, the filing period opens October 1, 2026, and closes February 10, 2027. The program fact sheet adds that applicants must be at least 62, blind or disabled, and must not have a reverse mortgage on the property. Postponed taxes carry 5 percent simple interest per year and are secured by a lien. Funding is limited and first come, first served, so not everyone who qualifies may be approved. Revenue and Taxation Code section 20583 states that the 40 percent equity test must be met each time a claim is filed.

Because postponement and a reverse mortgage cannot be combined, a homeowner weighing both may want to compare them before choosing either.