Important News Regarding Reverse Mortgages
Filed under: Reverse Mortgage
There is some important news in the world of reverse mortgages. The National Reverse Mortgage Lenders Association (NRMLA) has recently announced that it will support the Federal Housing Administration’s new financial assessment rule for home equity conversion mortgages.
The U.S. Department of Housing and Urban Development (HUD), through industry-supported changes to the program, now requires potential borrowers to first go through a financial assessment. This assessment will ensure that the potential buyer will be able to continue paying his or her property tax and insurance premiums.
Peter Bell, president and Chief Executive Officer of NRMLA supports HUD’s decision to require financial assessments. Bell said, “At NRMLA, we are always concerned about protecting those aging Americans who cannot afford to meet the responsibilities of reverse mortgage loans. Financial assessment will help determine if the product is right for the potential borrower. By implementing this process, HUD is responsibly making the [home equity conversion mortgage] a safer product.”
A recent study done by a team of researchers at Ohio State University explains that by utilizing “credit criteria” as part of this financial assessment, the potential borrower can possibly reduce the possibility of any future default.
The Ohio State University followed the outcomes of 30,000 seniors who received counseling for a reverse mortgage and the report is the first large-scale analysis of the future of the home equity conversion mortgage program since last year.
According to the study, Stephanie Moulton, Donald R. Haurin and Wei Shi from Ohio State University’s department of economics determined that having lower credit scores definitely increases the likelihood of default, and explained that this financial assessment will help borrowers and lenders determine whether a home equity conversion mortgage would be a good fit for the borrower’s current situation.
The research by the Ohio State University team adds to the growing number of studies that support reverse mortgages. It also “fills the void” in data needed to completely evaluate industry-supported changes which were put into effect by HUD in 2013.
If you are interested in a reverse mortgage, or have any questions pertaining to the mortgage industry, please feel free to give me a call and we can discuss whatever is on your mind.
This document is provided by Vintage Mortgage Professionals. Any materials were not provided by HUD or FHA. It has not been
approved by FHA or any Government Agency
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