President Obama Signs Reverse Mortgage Reform Bill into Law

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Mortgage and Lending with PS Mortgage Lending 305-791-4874 or 888-845-6630 365768

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:

  1. A financial assessment of the borrower (to determine financial fitness and the amount of debt a borrower is in)
  2. Mandatory set asides for property taxes and homeowners insurance (to ensure homeowners will be able to pay their financial obligations)
  3. Restrictions on the amount of funds that can initially be withdrawn (to ensure homeowners have enough cash flow for many years to come, not just in the beginning)
  4. 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. 

Bell stated:

“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.

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Information and content in this blog is original to Phil Stevenson

Please click the "SUBSCRIBE TO MY BLOG" button on the right, and receive more Traditional and Reverse Mortgage information in Florida and other parts of the US & Puerto Rico.

 

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

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Ambassador
3,716,508
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Phile, the more I learn about reverse mortgages, the more interesting they seem.  They can also let seniors who are down sizing put down a substantial downpayment on the new place and live without mortgage payments.  

Aug 13, 2013 12:26 PM #1
Rainmaker
271,377
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Patricia, that is right. With a HECM for Purchase, you can even downsize without the hassle of monthly mortgage payments. Seniors can relocate or move into a smaller home and still obtain the benefits of a reverse mortgage. Thanks for stopping by!

Aug 14, 2013 12:09 AM #2
Ambassador
1,043,231
Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

Phil, I realize there is much mis information out there about reverse mortgages, the more I read, the more I learn. Thanks for this, and thanks to Pat for giving me a heads up! 

Aug 18, 2013 03:29 AM #3
Ambassador
3,716,508
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Hey, Phil!  I included this post in today’s Last Week’s Favorites.  Please drop by and check it out, and have a great week!

Aug 18, 2013 03:43 AM #4
Rainmaker
271,377
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Andrea, thank you for stopping by! Educating people about reverse mortgages is the only sure fire way to make sure no more misconceptions arise. Every little bit helps.

Patricia, thank you for the heads up and thank you once again for including me in your list! It's definitely an honor to be selected :)

Aug 18, 2013 06:21 AM #5
Rainmaker
5,984,546
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thanks for your reverse mortgage update. Most real estate professionals are unable to explain the benefits of a reverse mortgage.

Aug 18, 2013 11:02 AM #6
Rainmaker
1,599,388
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West & Lend Smart Mortgage, Llc. - Carlsbad, CA
Presence, Persistence & Perseverance

Phil, I leave the subjest to reverse mortgages up to the pros. This law does seem like common sense and makes me worder why it was not part of the original law. Further, are there any other items within this law that the lawmakers never read before voting it up to the Pres? I will have to bring up the law in the Fed. Reg. and read it myself!

Aug 18, 2013 11:01 PM #7
Rainmaker
271,377
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Roy, glad I could be of service. We have to get the word out as soon as possible so we can combat the misconceptions about reverse mortgages.

Norman, it's all part of making the program better. Nothing starts out perfect but, taking into consideration consumer experience, will go a long way in shaping the product to better serve the public. 

Aug 19, 2013 12:02 AM #8
Rainmaker
1,123,549
Gary Frimann, CRS, GRI
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker

Good info to know.  I am a huge fan of these mortgage products.  SOme people are reluctant but I think they have really helped a ton of people financially.

Aug 19, 2013 01:30 AM #9
Rainmaker
271,377
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Gary, that is good to know. Hopefully this information help clients in the decision making process. This product personally helped my own grandparents live a comfortable, relaxing retirement. Seeing the benefits of the reverse mortgage firsthand has further cemented my confidence in the reverse mortgage program.

Aug 19, 2013 01:53 AM #10
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Phil Stevenson, CRMP

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