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Reverse Mortgages Changes Roll Out October 1

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On January 13, 2014, there are other big changes that potential borrowers can expect:

 

1. Lenders will be required to do “financial assessments.”

· The “financial assessment” may have lenders looking at the borrower’s income sources and credit score. This has not been done previously with reverse mortgages. Some professionals have criticized this new rule, as it does not take into account of seniors who may have a credit score of zero due to them no longer using a credit card or have not had a mortgage for years. The goal of the financial assessment is to ensure that reverse mortgage borrowers have the capacity to meet their financial obligations of the reverse mortgage, which includes keeping up with home insurance and taxes.

2. Borrowers would have portion of proceeds withheld for property taxes and home insurance as set asides.

· If the lender determines through the financial assessment that you are not able to keep up with the taxes and insurance payments, they will require a set aside for those payments.
If you are interested in learning how these changes can affect you, you can speak with an advisor at 1-888-8486.

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About the Author:

I have been working in the reverse mortgage industry for 20-plus years. My goal is to provide consumers the most up-to-date and relevant information about the reverse mortgage industry and how it can affect them.

Thanks for reading!

-Alan F.

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