Senior Reverse Mortgage

With the first month of 2012 coming to a close, many seniors are wondering what the rest of the year will bring for the reverse mortgage industry. By the end of 2011, the Department of Housing and Urban Development (HUD) had let the industry know that they would be releasing guidelines dictating how lenders must assess future borrowers. Yet it is already a month into the new year, and the industry has yet to see any real changes. However, a few changes might be on the horizon.

Will the Reverse Mortgage Industry Be Affected by Higher Mortgage Insurance Premiums?

In December of last year, Congress voted to increase fees on mortgage loans insured by the Federal Housing Administration (FHA). This fee increase will appear as a 0.1% increase in the mortgage insurance premiums (MIPs) paid by borrowers. However, FHA has yet to actually raise premiums or let the industry know when this increase will take place.

Also, while this increase is minimal, it does mean that reverse mortgage borrowers will be forced to pay higher premiums. This will slightly affect the size of seniors’ payouts and increase the overall price of getting a loan. With interest rates at record lows and MIPs set to rise, experts suggest that prospective borrowers begin the loan process fairly soon. The only way to dodge higher MIPs is to close your loan before the change goes into effect.

What Prospective Borrowers Can Expect from HUD’s New Financial Assessment

In upcoming months, the reverse mortgage industry will also see the release of HUD’s new financial assessment. The exact date, however, is still unknown. It appears as though many lenders have different views on what this assessment should consist of. As of December 2011, approximately 8% of all reverse mortgage borrowers had failed to pay their real estate taxes and homeowners insurance, therefore defaulting on their loans. Most lenders agree that some sort of assessment is necessary. The problem is that strict guidelines would disqualify some seniors that could hugely benefit from getting a reverse mortgage.

Currently, lenders who implemented assessments in the end of last year have already stopped using their new guidelines. Seniors hoping to get a reverse mortgage in the future can breathe a sigh of relief–at least temporarily. To avoid upcoming changes to the reverse mortgage, contact us at (877) 267-0274 to begin learning more about these unique loans.