Saturday, August 3, 2013
Recently, Congress authorized the Federal Housing Administration to change its Home Equity Conversion Mortgage program. The administration is projected to disclose exactly what changes will occur later on this month and could be implemented by Oct. 1.
The changes will likely make it more difficult for people to be eligible for reverse mortgages. A reverse mortgage is a loan for elderly home owners that permits the homeowner to use home equity as collateral and compels repayment when the homeowner dies, moves, or sells the property. Borrower’s who already have reverse mortgages should be made aware the changes will make eviction more difficult. Folks considering getting a reverse mortgage should think about applying for one soon before the below changes are put into effect.
- Applicants will have to go through financial assessments to prove that they can make payments.
- Risky applicants would have a chunk of the reverse mortgage’s loan withheld to pay property taxes and homeowner’s insurance.
- The HECM program is projected to put a ceiling the amount received at closing.
- Surviving spouses would be protected from eviction.
See Richard Eisenberg Reverse Mortgages: Big Changes Ahead, Forbes, Aug. 2, 2013.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.