Home Keeper: What was it, and is there anything similar today?
Home Keeper was the name of a now-defunct Fannie Mae reverse mortgage program that allowed older homeowners to borrow against the equity in their homes. Anyone age 62 or older who either owned their home free and clear or had very low mortgage debt was eligible. The program was discontinued in 2008, though Fannie Mae still provides reverse mortgage programs for borrowers who meet specific requirements.
What was the Home Keeper program?
Fannie Mae’s Home Keeper was a conventional reverse mortgage loan that helped older homeowners convert equity in their homes into cash. One benefit of the program was that it had higher lending limits than the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM).
There were a few ways in which borrowers could receive their payments:
- Scheduled equal monthly payments
- A line of credit, or unscheduled payments to the borrower whenever a disbursement was requested
- A combination of equal monthly payments and a line of credit
To qualify for Home Keeper, homeowners had to, among other criteria:
- Be at least 62 years old
- Live in the home full time
- Have equity in a home that needed no more than 15 percent of its value in repairs
- Take out at least $50,000 but no more than $417,000
- Own a single-family home, condo, co-op or two-, three- or four-unit residence
When Congress increased the loan limits for the HECM program in 2008 as part of the Housing and Economic Recovery Act (HERA), Fannie Mae decided to discontinue Home Keeper, saying it no longer saw a need for it.
Reverse mortgages and HECM
Reverse mortgages are a type of loan that allow borrowers aged 62 and older to borrow against the equity in their homes, generating a tax-free income. The requirements are complex, and you typically need to either own your home outright or have a very high level of equity.
Home Equity Conversion Mortgages (HECMs) are a type of reverse mortgage backed by the Federal Housing Administration. Participants in this government program must also meet certain requirements for eligibility.
Many big reverse-mortgage lenders offer both HECMs and proprietary reverse products for borrowers 55 and over, rather than 62 and over.
Bottom line
The Fannie Mae Home Keeper program no longer exists, but the FHA’s HECM program is a relatively close equivalent. These types of reverse mortgage loans are an option for seniors who have substantial equity in their home and want to access it, but there are strict requirements. As you plan for your retirement, use Bankrate’s retirement calculators to set your savings goals and track your progress.
