By Tyler Plack
Tyler Plack is the President of South River Mortgage. Tyler holds an active FHA Direct Endorsement (DE) underwriting certification and is the author of The Retirement Solution: Maximizing Your BenefitTyler is a seasoned entrepreneur and real estate investor renowned for his expertise in reverse mortgages and his commitment to addressing seniors' equity challenges. Tyler brings a unique perspective to his ventures, having built several successful companies throughout his career. His insights are frequently sought by industry publications, where he is recognized for his vast knowledge in the realm of reverse mortgages.
An avid investor in income-producing properties, Tyler is dedicated to helping seniors navigate their financial needs with compassion and expertise. When Tyler is not helping solve America's retirement crisis, he is a skilled pilot flying airplanes for fun.
When you apply for a reverse mortgage (also called a HECM loan), the FHA looks at a few things—mainly your credit history and whether you’ve been keeping up with property expenses like taxes and insurance.
But here’s the good news:
Not every missed payment means an automatic “no.”
If something serious happened that was out of your control, your loan may still be approved. These situations are called extenuating circumstances.
What Does “Extenuating Circumstances” Mean?
Extenuating circumstances are life events that caused financial trouble—but weren’t your fault.
In other words, the FHA understands that real life happens. Instead of denying a loan right away, lenders are required to look at why a payment was missed.
If the reason makes sense and can be documented, the loan can still move forward.
Common Examples of Extenuating Circumstances
The FHA lists several examples in its official guidelines, including:
- Death of a spouse
- Divorce
- Losing a job
- Reduced work hours or furlough
- Emergency medical treatment or hospitalization
- Major home repairs not covered by insurance
- Other serious events that directly caused late payments
These aren’t rare edge cases—they’re normal life events that affect a lot of people.
Why Your Lender Matters (A Lot)
The FHA gives lenders a lot of flexibility when reviewing extenuating circumstances.
That’s a double-edged sword.
A knowledgeable lender can properly explain and document your situation. An inexperienced one may not know how to apply the rules correctly.
That’s why working with a lender who understands reverse mortgages—and the FHA guidelines behind them—is so important.
Are You Eligible for a Reverse Mortgage?
(Find out in 60 seconds)
How Lenders Review Extenuating Circumstances
To approve a loan, the lender must confirm a few key things:
- The event had a clear, measurable impact on your finances
- You didn’t make the situation worse by taking on new debt
- The issue is unlikely to happen again after the loan closes
- You have other financial resources or income that show long-term stability
If these boxes are checked, an approval is often possible.
What Documentation Is Required?
Because lenders have discretion, proper documentation is critical.
You’ll usually need:
- A letter of explanation describing what happened
- Supporting documents that verify the event
For example:
- A divorce may require a divorce decree
- A spouse’s passing may require a death certificate
The exact documents depend on your situation, but clear proof makes all the difference.
The Bottom Line
A few late payments don’t automatically disqualify you from a reverse mortgage.
If those late payments were caused by a real, unavoidable life event—and you work with the right lender—your loan may still be approved.
Understanding how extenuating circumstances work can turn a “maybe” into a “yes.”
Frequently Asked Questions (FAQ)
I’ve had late payments—does that mean I’m automatically denied?
Not at all. Late payments are common, especially after major life events. What matters most is why they happened. If there’s a clear reason and it can be documented, many borrowers are still approved.
I’m worried my situation is “too messy.” Should I even apply?
Yes. Many approved reverse mortgage borrowers start out thinking the same thing. Our job is to look at the full story—not just a credit report—and determine whether your situation can be properly explained under FHA guidelines.
What if my credit issues happened recently?
That doesn’t automatically disqualify you. Lenders mainly want to see that the issue has stabilized and that you have the ability to handle future obligations. Recent challenges can still qualify when reviewed correctly.
Do I need perfect credit now?
No. Reverse mortgages are not based on traditional credit score minimums. The focus is on your overall financial picture and whether past issues were caused by circumstances outside your control.
Can you help me figure out what documentation I’ll need?
Absolutely. This is one of the most important steps—and one where many lenders fall short. We help you understand exactly what’s needed and how to present it clearly so there are no surprises later.
What if another lender already told me “no”?
That happens more often than you’d think. Different lenders interpret FHA guidelines differently. A second opinion—especially from a lender experienced with extenuating circumstances—can make a real difference.
What’s the first step if I think I might qualify?
The best first step is a no-pressure review of your situation. We’ll look at what happened, explain your options, and tell you honestly whether a reverse mortgage makes sense for you—before you commit to anything. Call (844) 230-6679 to start your review today.
