HUD wants Senate approval to shore up Reverse Mortgages, so that the program will remain solvent and give seniors another viable financial tool. The Department of Housing and Urban Development (HUD) who oversees the Federal Housing Administration (FHA), which insures almost all reverse mortgages in the United States, wants the authority to change the existing guidelines to make sure that the program continues to be a viable option for senior citizens. Currently, almost 1 out of 10 reverse mortgages are in default and if changes don’t happen the program may end up going away.The major reason why so many reverse mortgages are in default is because one of the requirements is that the homeowner continues to pay the property taxes and insurance on their own. Typically, property taxes are either due once a year or semi-annually and the homeowners have not properly saved for this payment, so they end up with a tax lien on their home. HUD is asking permission from Congress to change its guidelines so they can mandate set asides for property taxes, so that if a homeowner does not have the money to pay for the taxes it will come out of that set aside fund when the loan was taken out. This solution would cut done on the amount of foreclosures significantly.
Other changes that HUD wants to make is to restrict the amount of money that a borrower can take out on a lump sum payout option and also mandate that all spouses be on the reverse mortgage loan. Currently, HUD is seeing issues that these loans are being called due when a borrowing spouse passes away first and the non-borrowing spouse cannot qualify for another reverse mortgage or traditional mortgage on their own. So they end up getting evicted and their home foreclosed on or sold.
With these changes HUD believes that this will keep the Reverse Mortgage program solvent in the future and it will allow seniors to use it as a viable financial planning tool.
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HUD Wants Senate Approval to Shore Up Reverse Mortgages
![HUD Wants Senate Approval to Shore Up Reverse Mortgages]()
Reviewed by Merlyn Rosell
Published :
Rating : 4.5
Published :
Rating : 4.5