The Standard Fixed-Rate HECM Loan...A Thing of the Past

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The Standard Fixed-Rate HECM Loan...A Thing of the Past

Earlier this year, the Federal Housing Administration removed the Standard Fixed-Rate Home Equity Conversion Mortgage from its list of available reverse mortgage products, leaving only the HECM Saver ("Standby" Reverse Mortgage) and the Adjustable-Rate Standard HECM.

During a Senate Banking Committee hearing on Tuesday, July 23, the assistant secretary for the Department of Housing and Urban Development, Carol Galante stated that there were no plans to reinstate the program, according to an article published by Reverse Mortgage Daily.

The Congressional hearing was assembled in order to discuss the FHA Solvency Act of 2013, which would require yearly reviews of premium levels and loan performance so that pricing and underwriting standards remain acceptable for consumers. In addition, the bill would hold lenders accountable for fraudulent or mismanaged loans.

In the hearing, Galante also made evident the necessity of the proposed changes to the reverse mortgage program, which, if not approved by Congress, would force the HUD to make further cuts to the reverse mortgage program (on top of the elimination of Fixed-Rate Standard).

Galante said:

"If we can't make those nuanced changes, we are going to have to say the entire amount [that can be borrowed] is going to be just lowered for everybody across the board."

However drastic, I think these proposed changes can potentially be beneficial to future homeowners, who will be better qualified and educated, when they apply for a reverse mortgage.

Current requirements include:

  • Being 62 years of age and older
  • Live in your primary residence
  • Have enough equity in your home

Future requirements can potentially include a financial assessment, including credit history and scores though, making the process less inclusive but also more successful.

In the past, consumers, who have been unable to pay their homeowners insurance and property taxes, have faced foreclosure. If the proposed changes are implemented, borrowers will be more financially aware and prepared for the responsibilities, if they chose to apply for a reverse mortgage.

The permanent elimination of the standard fixed-rate demonstrates a significant retooling is underway for the reverse mortgage program as it tries to push forward, creating a healthier financial environment for future consumers. 

Current programs, however, include many options such as tenure payments for the Adjustable-Rate Reverse Mortgage and the line of credit option on the HECM Saver. These programs will continue to be available in the future if Congress approves HUD's proposed changes.

It's not so much as a complete change to the reverse mortgage, but a way to continue to improve on what's available. The program must adapt to current and future changes in order to thrive; this is just one step toward making the HECM program better suited to sustain consumers in the future.

Interested in a reverse mortgage programGive PS Financial Services a call at (888) 845-6630 or email us at We do not pressure those who inquire, we're just here to help.


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Information and content in this blog is original to Phil Stevenson

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Phil Stevenson

PS Financial Services

Owner and Principal Mortgage Originator

Certified Reverse Mortgage Professional (CRMP)

LO #365768

NMLS #968090

Cell: 888.845.6630

Miami Mortgages & Florida Mortgages

Copyright © 2013 by Phil Stevenson & PS Financial Services, LLC

Comments (4)

Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is not good news for seniors that may need to take advantage of a reverse mortgage. Thanks for sharing the update.

Aug 02, 2013 04:58 AM
1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK
The lending situation is forever changing and evolcing
Aug 02, 2013 02:13 PM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

With rules changing in the lending sector daily, not sure how you guys can ever keep up!

Aug 04, 2013 01:59 AM
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Roy, there are still other products available under the reverse mortgage program such as the HECM Saver. Doing your research helps, but of course we're always here to help anyone that needs it.

Judi, couldn't have said it better myself. It's a daily learning experience because it's my job to be updated before the consumer.

Joan, by staying ahead of the curve. It's about adapting yourself to every situation.

Aug 05, 2013 12:16 AM