The New York Times is reporting that reverse mortgages are about to change again and it means less money for new borrowers and as a result, fewer will qualify.
Under the new rules, which are set to go into place Oct. 1st, borrowers will typically receive about 15% less than they do today and have restrictions on how they can utilize the money.
“The changes really put the product on track as a long-term financial planning tool as opposed to a crisis management tool,” said Ramsey Alwin, senior director of economic security at the National Council on Aging during an interview with the NY Times.
The Federal Housing Administration, the agency that insures the majority of reverse mortgages today hopes the changes will encourage people to utilize their equity at a slower rate and enable them to age in place.
“What regulators are trying to do is shift behavior so that people are more thoughtful and methodical about how they draw the money,” said Peter H. Bell, president of the National Reverse Mortgage Lenders Association, the industry trade group during an interview. “The changes are intended to put the program back on track and encourage people to take what they need and no more.”
Written by John Yedinak