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HUD Says to Reverse Mortgage Lenders: Financial Assessment Is On Its Way

Posted on Mar 02, 2012 by AnneJohnson · 0

In October of last year, the Federal Housing Administration (FHA) released a statement encouraging reverse mortgage lenders to begin implementing financial assessments. Prior to this statement, lenders had to give Home Equity Conversion Mortgages (HECMs) to seniors who were old enough and had enough equity to qualify. However, because a number of seniors had defaulted on their loans by failing to pay their property taxes and insurance, FHA gave lenders the option of evaluating potential borrowers more closely.

By the end of 2011, the Department of Housing and Urban Development (HUD) announced that they were creating a financial assessment that all reverse mortgage lenders would be forced to implement. Still, no one knew when this new assessment would be released.

Reverse Mortgage Lenders Have Trouble Implementing Financial Assessment

A few weeks after FHA gave lenders the option of assessing borrowers, one major lender rolled out new eligibility guidelines. Within two months, these guidelines were suspended. While official reasons weren’t given, the lender said that the suspension was partially due to other lenders not following in their footsteps.

HUD’s Future Plans for Reverse Mortgage Lenders

For the past few months, HUD has not released any new information about their financial assessment. Today, a HUD spokesperson released a statement letting reverse mortgage lenders know that they were still working on the project. According to HUD, they have been working with lenders, housing counselors and other agencies to “discuss possible approaches to the financial assessment.” While the department “remains committed” to the project, it sounds as if the release of the assessment is still far off.

Seniors who are hoping to get a reverse mortgage in the next few months can breathe a sigh of relief. It appears that FHA’s guidelines concerning their financial assessment are still in the beginning stages. It will be months, if not longer, until FHA begins forcing lenders to assess borrowers’ long-term ability to pay their taxes and insurance.

If you or someone you love is considering a reverse mortgage, contact one of our loan specialists at (877) 267-0274 for more information.

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