General Mortgage Knowledge · 20% of the SAFE exameasy
Correct answer: $150,000 — HECMs are non-recourse, so the debt cannot exceed the home's appraised value
HECMs are NON-RECOURSE loans. The borrower (or heirs) will never owe more than the home's appraised value at the time of repayment, even if the loan balance exceeds that amount. In this case, the daughter can sell the home for $150,000 to satisfy the debt, and the $30,000 shortfall is covered by the FHA Mutual Mortgage Insurance (MMI) fund. Alternatively, the daughter can keep the home by paying the lesser of the loan balance or 95% of the appraised value. This non-recourse protection is a core HECM feature.
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