Wednesday, August 28, 2013
As I have previously discussed, reverse mortgages allow individuals 62 and over to receive money from a bank in return for their home upon their death. Counseling for reverse mortgages is mandatory due to their complexity and the possibility that these individuals may destroy their nest eggs if something goes awry with the loan. Reverse mortgage rules are going to change, which could mean less available funds for borrowers. The changes can also lower the program's high default rate.
Recently, Congress granted authority to the Federal Housing Administration to change the federal program for homeowners. The rules are expected to go into effect as early as October 1. The changes will reduce the number of homeowners that will qualify for reverse mortgages and the maximum amount will be reduced as well. People who apply before October 1 will qualify for the amounts under the rules now. Folks that are considering a reverse mortgage should act quickly if they want the current laws to apply.
See Anne Tergesen Tighter Rules For Reverse Mortgages, The Wall Street Journal, Aug. 25, 2013.