Time to Tighten the Belt...
Even as potential changes to the reverse mortgage program push forward, the Federal Housing Administration plans to continue to offer all its current reverse mortgage programs to future consumers. Current products consist of the Reverse Mortgage Standard and Saver programs, after the Fixed-Rate Standard Reverse Mortgage was eliminated starting July 1 of this year.
If Congress fails to be compliant, however, starting October 1 of this year, another reverse mortgage program product might get eliminated as well, potentially affecting the cash flow available to senior homeowners by 10 to 15%.
In an article that appeared in Reverse Mortgage Daily that signal the FHA's intention to keep all current reverse mortgage products, future borrowers might be facing harsher guidelines if Congress decides to keep all current reverse mortgage products. The purpose would be to ensure borrowers will be able to adhere to payment oibligations which have fallen by the wayside.
Reverse Mortgages are beneficial to seniors who are or might become impoverished during retirement, or as a retirement planning technique in order to save up for the proverbial rainy day. However, current the list of proposed changes keeps getting longer and something's got to give. In the past, some clients, who qualified for a reverse mortgage, have been unable to pay their homeowners insurance and property taxes and have faced foreclosure. Despite rising mortgage rates, the inability of some consumers to pay their financial obligations has landed the reverse mortgage program in the hot seat. In order to save current products, there is little option left but to tighten the belt.
The sliver lining is, with modified consumer guidelines and stricter qualifications, the reverse mortgage program can thrive without interruption. Also, senior homeowners who do qualify will be able to receive as much money as originally intended without having to receive a cut to their cash flow because someone else's mistakes.
It's potential stabilizing strategy that could benefit the reverse mortgage program in the long run. We'll have to wait and see.
Interested in a reverse mortgage program? There are many options available to you with a reverse mortgage and plenty of ways to use it during retirement. Give PS Financial Services a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire, we're just here to help.