A statement confirming that reverse mortgage lenders can conduct a financial assessment to help ensure borrowers can meet their tax and insurance payments on the loans is coming soon, a Department of Housing and Urban Development official told RMD on Thursday.
While there has long been talk of such a financial assessment, and with a recent push by the National Reverse Mortgage Lenders Association to develop that assessment, many lenders have been hesitant to underwrite for taxes and insurance without official guidance from HUD, or at least something in writing to indicate that such an underwrite is permitted.
“We have decided that we are going to provide a written clarification and expect to do so in the next couple of weeks,” Karin Hill, director of the Office of Single Family Program Development at HUD told RMD this week.
Additionally, Hill said, “There’s nothing in the regulations that would prohibit the lender [from such an underwrite]. The lenders are responsbile for making credit decisions on the loans.”
On a recent occasion, Hill told attendees of a mortgage regulatory conference that underwriting for tax and insurance was fair game for HECM lenders. An official statement, however, would be the first of its kind.
NRMLA recently announced that appointment of a special task force to collect and analyze data in an effort toward developing a financial assessment. Given the longevity of the program, it is the first time that such a thorough data collection has taken place.
“We’re beginning to see some very positive results,” Hill said. “Hopefully, we’ll be able to start releasing and tracking the data soon.”
Written by Elizabeth Ecker