President Obama Signs Reverse Mortgage Reform Bill into Law
This past friday, August 9, President Barack Obama signed the Reverse Mortgage Stabilization Act into law, according to an article published in Reverse Mortgage Daily.
The bill grants the Department of Housing and Urban Development the authority to establish additional requirements to improve the financial stability and safety of the Home Equity Conversion Program.
The President's signature was the only component missing after the Senate approved the bill last week. The bill was approved in the House of Representatives back in June.
The additional requirements the HUD is seeking to include are:
- A financial assessment of the borrower (to determine financial fitness and the amount of debt a borrower is in)
- Mandatory set asides for property taxes and homeowners insurance (to ensure homeowners will be able to pay their financial obligations)
- Restrictions on the amount of funds that can initially be withdrawn (to ensure homeowners have enough cash flow for many years to come, not just in the beginning)
- Include all borrower spouses on the loan, regardless of age (to eliminate risks to non-borrowing spouses should the loan become due)
The National Reverse Mortgage Lenders Association President and CEO, Peter Bell, who attended the signing of the bill said:
“All of these changes consider both the best interests of borrowers and the ongoing health of the government insurance fund,” Bell said. “Historically, HUD has made smart changes to improve the HECM program, strengthen the insurance fund, and fulfill its mission of helping aging Americans maintain and remain in their homes.”
The reverse mortgage program is a lifeline for many seniors looking to supplement their fixed income during retirement. I want to stress that it is also not just for the financially desperate. In fact, it can serve as a retirement planning tool for older Americans.
The passing of the Stabilization Act is a vote of confidence for the HUD to continue to improve the HECM loan program. The changes are based on past consumer experiences and will be tailor-made for present and future consumers who wish to apply for a HECM loan.
The new requirements, which the HUD hopes to implement fully and successfully by October 1, will be discussed by a mortgagee letter that should arrive at the end of August.
“Historically, HUD has made smart changes to improve the HECM program, strengthen the insurance fund, and fulfill its mission of helping aging Americans maintain and remain in their homes.”
The impact of the changes has yet to be seen but, for now, the proposed changes can potentially be a win for reverse mortgage program providers and consumers.
There are many options available to you with a reverse mortgage and plenty of ways to use it during retirement. If you think a reverse mortgage is right for you, let us know at PS Financial Services by giving us a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire, we're simply here to help.