Reverse Mortgage Becomes Retirement Tool
The rules for reverse mortgages are changing. According to writer Brian Collins at National Mortgage News, seniors can no longer receive the entire proceeds from a Federal Housing Administration-insured reverse mortgage in one lump sum. Instead, they are generally limited to just 60% of the funds during the first 12 months. The rationing of proceeds is to make sure borrowers have some equity left when they leave the closing table, reducing the likelihood of default.
In the past, many seniors used a reverse as a last resort to avoid a foreclosure. Then, they were unable to afford the taxes, insurance and maintenance and faced a reverse mortgage default. Now, the efforts are to make the product saver for mortgage lenders and to attract a different kind of borrower.
Real estate advisors and financial advisors are compelled to keep up with the changes in order to properly advise their clients that may benefit from the use of a reverse mortgage.
Reverse Mortgage Goes from Last-Chance Loan to Retirement Tool
As regulations reshape the reverse mortgage, lenders hope to end up with a safer, more reputable product. Meantime, the changes are turning the economics of this business on its head. - National Mortgage News
Many real estate professionals avoid reverse mortgage conversations or dismiss the product as unacceptable because they are behind the knowledge curve. If you advise seniors, you need to be able to identify the situations where a reverse mortgage should be considered. An experienced reverse mortgage loan officer is probably your best source of knowledge.
Pink Dogwood, Kentlands IMG 6056
Photograph by Roy Kelley
Roy and Dolores Kelley Photographs
Comments (29)Subscribe to CommentsComment