Best Reverse Mortgage writer Peter Miller brings up a good question… why not have escrow accounts for reverse mortgage borrowers?
I used to be one of those who objected to escrow accounts on the grounds that I’m a responsible citizen and can set aside money each month for taxes and insurance — and collect the interest earned from such accounts. But now my view has changed because the interest earnings are minimal and when a lender collects money for taxes and insurance it’s not an issue of concern anymore. Reverse mortgage borrowers should also enjoy such assurances — and so should HUD.
This is not just a concern for borrowers and those with FHA reverse mortgages. Reverse lenders want to have a good and credible product to sell and it does not help when borrowers fail. Given this reality, you can suspect that more than a few reverse lenders would actually like to see an escrow requirement — that would create an even competitive field for all lenders while also helping many senior borrowers.
There has been discussion of the Department of Housing and Urban Development having a “financial assessment” as part of the HECM, but nothing official yet.
I thought I’d pose the question to RMD readers. Let us know what you think.