LESA (Life Expectancy Set-Aside)
A portion of HECM proceeds set aside to pay future property taxes and insurance when financial assessment requires additional support.
A Life Expectancy Set-Aside (LESA) is a reserve carved out of a HECM's available proceeds to help ensure future property taxes and homeowners insurance are paid. LESAs are typically required when financial assessment shows that the borrower may need additional support to keep these obligations current.
A LESA can be fully funded (the servicer pays property charges directly from the set-aside) or partially funded (funds are released to the borrower on a schedule). Either way, the LESA amount is part of the loan balance and accrues interest as it is used.
While a LESA reduces the cash proceeds available at closing, it can be a meaningful protection for households with limited liquid resources, since unpaid property taxes or insurance can put the entire HECM at risk.
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