The Benefits of a Reverse Mortgage with a Fully Funded LESA
- Luis Salazar
- Oct 21
- 4 min read
For many seniors, a reverse mortgage is a powerful way to stay in their home while converting built-up equity into income or savings. But what often surprises borrowers is the concept of a LESA — Life Expectancy Set-Aside.
A Fully Funded LESA isn’t a penalty or a loss of funds. In fact, it’s one of the smartest safeguards within the reverse mortgage program — helping protect homeowners from future financial stress and ensuring their loan remains in good standing.
At Trust Lending, we view the LESA as a valuable tool that enhances long-term security for borrowers and gives families peace of mind.
What Is a LESA?
LESA stands for Life Expectancy Set-Aside, a reserve account established at closing to cover property taxes and homeowners insurance for the expected life of the borrower.
Essentially, a portion of your reverse mortgage proceeds are set aside and managed by the servicer, who uses it to pay your taxes and insurance automatically each year.
There are two types of LESAs:
Fully Funded LESA: The entire projected cost for taxes and insurance is reserved at closing.
Partially Funded LESA: Only a portion of the expected costs is reserved, and the borrower contributes annually.
This blog focuses on the fully funded version — the one most often misunderstood but highly beneficial.
Why Some Borrowers Are Assigned a LESA
HUD requires lenders to assess a borrower’s ability to meet financial obligations such as taxes, insurance, and property maintenance.
If the assessment shows potential cash flow concerns — or if the borrower chooses the extra security — a Fully Funded LESA is established to ensure those obligations are always met.
It’s not about risk; it’s about protection — for the homeowner and the loan.
The Benefits of a Fully Funded LESA
Peace of Mind for the Borrower
Once the LESA is in place, the borrower no longer needs to worry about paying property taxes or insurance out of pocket. The servicer handles it automatically — one less bill and one less risk of default.
Ensures Loan Compliance
Many reverse mortgages default due to unpaid property taxes or lapsed insurance. A Fully Funded LESA virtually eliminates this risk, keeping the loan in good standing with HUD guidelines.
Predictable and Stress-Free Budgeting
For seniors on fixed incomes, fluctuations in insurance premiums or tax rates can be stressful. With a LESA, those costs are prepaid and managed — protecting monthly cash flow.
Protects Heirs and the Property
Because the LESA covers mandatory obligations, heirs are less likely to face complications or foreclosure risk if the borrower passes away. The property remains protected and compliant.
Flexible Funding Source
The LESA doesn’t come out of pocket — it’s funded from the reverse mortgage proceeds. Borrowers simply access a bit less cash at closing, but in return, they gain a lifetime of stability.
Example Scenario
Let’s say Maria, age 74, owns her home worth $420,000 with a small existing mortgage. During her reverse mortgage counseling, she learns she qualifies for a Fully Funded LESA of about $36,000, which will cover her taxes and insurance for the rest of her life.
Instead of receiving that $36,000 as cash, it’s placed in a LESA account. Each year, her servicer pays her property taxes and insurance automatically — even if costs rise.
Maria never has to budget or stress about missing a payment. Her home remains insured and compliant — and she keeps the rest of her reverse mortgage proceeds available for living expenses.
Why Brokers Should Embrace LESAs
For brokers and loan officers, it’s important to reframe the conversation:
A Fully Funded LESA isn’t lost equity — it’s preserved security.
✅ It reduces loan servicing issues.
✅ It protects HUD compliance.
✅ It minimizes borrower stress and improves satisfaction.
✅ It strengthens long-term loan performance metrics.
Borrowers with a LESA are far less likely to face tax or insurance defaults — meaning happier clients, fewer servicing headaches, and stronger portfolio quality.
How Trust Lending Guides Borrowers
At Trust Lending, we make sure borrowers understand every aspect of their reverse mortgage — including LESA requirements.
Our team:
Reviews the financial assessment results in detail.
Explains how the LESA amount is calculated.
Walks the borrower through short- and long-term benefits.
Ensures the family or heirs understand how the account functions post-closing.
Education is key — and we make sure every borrower feels confident that a Fully Funded LESA is there to protect, not restrict, their financial freedom.
A LESA Is Peace of Mind, not a Penalty
A Fully Funded LESA is one of the most valuable features in today’s reverse mortgage programs. It transforms uncertainty into stability, allowing homeowners to age in place without worrying about missed payments or rising costs.
At Trust Lending, we believe every reverse mortgage should be designed to support long-term financial comfort — and the LESA does exactly that.
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