President Obama signs the Reverse Mortgage Stability Act of 2013 on August 9th. Back on June 12th, 2013, the U.S. House of Representatives passed the Act with full bipartisan support and then was passed by the U.S. Senate on July 30th, 2013 just before Congress went on recess. Essentially this law gives theDepartment of Housing and Urban Development (HUD) authority to change guidelines to the Home Equity Conversion Mortgage program (HECM) without getting approval from Congress.Currently, the Federal Housing Administration (FHA) insures Home Equity Conversion Mortgages (HECM) or which is also known to most as the Reverse Mortgage. HECM is the governments wording for the reverse mortgage. HUD oversees the FHA and governs there’s actions, but U.S. Congress governs HUD. So anytime HUD wants to make any changes to the loan programs they oversee, they must get Congress’ approval first. The problem with this is that Congress has taken up to 3 years to approve any changes HUD wants implemented. To keep the reverse mortgage program solvent Congress and the President has signed into law that HUD has the authority to make any changes necessary to the reverse mortgage program. This will allow HUD to be more nimble to the ever changing housing market.
The reverse mortgage program is currently in the red financially because almost 1 out of every 10 reverse mortgages is in default and HUD will be almost immediately implementing changes to the program to make sure that the taxpayers are not on the hook for yet another rescue of a government program.
Some of the changes to the program, which will more than likely be effective October 1st are a financial assessment of a borrower wanting to take out a reverse mortgage. The reason why so many reverse mortgages are in default is a majority of the borrowers are not paying the property taxes on the home. HUD wants reverse mortgage lenders to look at credit history to determine how much set asides for property taxes are required. The worse the credit, the more set asides it will require.
Another change is requiring all spouses to be on the reverse mortgage loan regardless of age. Some borrowers are taking out a reverse mortgage under just one spouse because the spouse may be older, which they would qualify for more money under the program. But if you leave the other spouse off the loan and the spouse thats on the loan passes away, the reverse mortgage loan comes due within six months. If the surviving spouse cannot qualify on their own or pay off the reverse mortgage, then the spouse is forced to either sell the home or walk away from it. The new guidelines would make it mandatory that all spouses be on the loan, so if something happens to one spouse, the other is not left ‘out in the cold’.
While these are some of the changes being rumored there may be more coming.
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President Obama Signs the Reverse Mortgage Stability Act
![President Obama Signs the Reverse Mortgage Stability Act]()
Reviewed by Merlyn Rosell
Published :
Rating : 4.5
Published :
Rating : 4.5