The Reverse Mortgage Stabilization Act of 2013 has been passed by the House of Representatives in Washington D.C. The Federal Housing Administration (FHA) insures all reverse mortgages backed by the government, which is officially called the Home Equity Conversion Mortgage (HECM). Currently, the reverse mortgage loans have put the FHA further in the hole when it comes to insuring them.
Reverse mortgage borrowers, once they pass away, if the property is worth less than they owe, the estate sells the property for whatever the market value is at that time and then the FHA picks up the rest of the tab with the difference. Once the owner passes away, no one else is held personally liable for that difference if the home is ‘underwater’, especially the family. Because of the drastic downturn in the housing market, FHA has been picking up the slack in all these cases and has put a major dent in the insurance fund. With this ‘Stabilization Act‘ they are hoping that it will turn things around for the reverse mortgage fund. Congress knows that this product cannot simply go away and it must be dealt with head on.
Some of the changes they have in mind could include: limiting the amount that borrowers can draw, mandatory escrow accounts for the taxes and insurance, because currently the homeowners are responsible to pay it on their own. Also, possible financial assessments of the potential borrowers.
“These changes will improve the product for seniors and return the reverse mortgage program to profitability for the taxpayer,” Rep. Denny Heck (D-WA) said in a statement.
Of course, with housing values starting to come around again, this ‘Act’ may not even have to be put in place permanently.
If you are currently in the market for a Reverse Mortgage or looking for more information, please browse the website to find out more.
Reverse Mortgage Stabilization Act of 2013
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Reviewed by Merlyn Rosell
Published :
Rating : 4.5
Published :
Rating : 4.5