Reverse Mortgage Changes are “Mixed Bag” says AARP

NewImage.jpgRecent announcements from the Department of Housing and Urban Development have made reverse mortgages significantly different from what they were a couple months ago according to the Baltimore Sun.

Monthly insurance premiums on new loans went up, making an expensive product even more so. But HUD has offset that rise by introducing another reverse mortgage — the HECM Saver — which slashes the upfront cost.

“It’s a mixed bag,” says David Certner, legislative policy director for AARP, of the reverse mortgage market.

Advertisement

The Saver mortgage with its lower fee is better suited for homeowners who don’t expect to remain in their home for long and don’t have a need to borrow as much, says Peter Bell, president of the National Reverse Mortgage Lenders Association.

Starting last month, counselors must ask a series of questions to make sure that homeowners know what they are getting into, says Barbara Stucki, a vice president with the National Council on Aging. If homeowners don’t understand, they won’t receive a counseling certificate needed to get a loan, she says.

Robert Nowlin took out a reverse mortgage on his Baltimore home three months ago and has no regrets.  “We had been under stress from bills for quite a while,” says the 71-year-old, adding that his wife had been working two jobs to try to keep up.

With the proceeds, bills were wiped out, Nowlin’s wife was able to reduce her hours at work and the old mortgage was paid off, which freed up $600 a month for the couple. And some of the leftover funds were used to take trips to Georgia and Florida, Nowlin says.  The reverse mortgage, he says, “gives us some sort of peace.”

Read the rest at the link below.

Federal government makes changes to reverse mortgages

Join the Conversation (1)

see all

This is a professional community. Please use discretion when posting a comment.

  • To say that seniors will not get counseling certificates if they do not understand what they are getting into is very misleading. This conveys the idea that the counselors are measuring the level of understanding while all they are doing is insuring that the senior are answering 50% of the ten questions they are asking. The two are not the same.

    This is not a comprehensive examination on rocket science, foundational courses on brain surgery or even HECM for dummies. This is a simple test of borrower comprehension and competence. That is all it is. To imply it is more shows the bias that is inherent in the role NCOA now plays in the counseling process.

    What this statement clearly shows is that an outside independent organization needs to evaluate the program to see what it currently is achieving. Is it now structured to help the senior understand the loan, his/her financial situation, or neither? Is the actual amount of time needed to conduct counseling now so long that counseling is now endanger of becoming ineffective even if conducted “properly”?

    While GAO did a good job of evaluating counseling operations before, it was only looking at the counseling program as it existed and testing to see if it met its own standards. What we need now is an independent evaluation of the program not only as to operations but also as to design. While GAO can perform the former, an independent evaluator of education for seniors needs to determine if counseling in its present configuration can be effective. Then a panel of financial experts needs to determine if FIT and BCU provide the means to achieve their lofty goals.

string(93) "https://reversemortgagedaily.com/2010/10/18/reverse-mortgage-changes-are-mixed-bag-says-aarp/"

Share your opinion