The HECM loan is insured by FHA and Ginnie Mae. The investor takes no risk at all, and neither does the beneficiary.
FHA protects the beneficiary by insuring 3% or more of the equity in the home regardless of home values. Meaning if you sold the home and the sale price does not net you 3% of the proceeds, then FHA will make up the difference. The actual investor is Ginnie Mae on these types of loans regardless of what broker or lender originates the loan. The feds have extremely high confidence that home values will increase over the next 30 years.
