NY Times: Reverse Mortgages About to Change Again

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.”

Tighter Rules Will Make It Harder to Get a Reverse Mortgage

Written by John Yedinak

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  • This NYT article is pretty well written, it lays it out OK in my mind. What chafes me is the comments- take a look at them if you can. Have we failed as an industry in educating the public or is the entitled and spiteful and judgmental taking over the asylum? My clients are better informed about this product than the majority of the “holier than thou” that are so quick to point out others shortcomings as faults of their own as if they had it coming to them. They keep saying the banks, the banks- if I’m not mistaken the largest bank still doing reverse mortgages (by deposits) is probably M&T Bank and if you’re not from the Mid-Atlantic you’ve maybe never heard of them and they aren’t a top 10 originator (although quite competent). Someone commented about a small disclaimer that shows up in the Fred Thompson commercials, claiming that for a nano-second it must be some type of soul selling agreement between that “bank” and the borrower. Another mentions her mother has had multiple servicers and all tack on their own line or two of fees to drain what was left of a “paid off home”. How about the “margin call” comment, even that’s a first for me.

    Oh, there’s more.

    Concernicus in Arizona is a master of the English language when he adds “Do a lay down of the lender’s amount due for every month up to just 5
    years once the RM is in place. Then add in the originating fees.” Do a lay down? What the…?

    One of the sadder ones was the comment by vklip in PA that said one of the problems in MANY instances was either the home was in the husbands name or issued ONLY to the husband and once he died the wife lost the home. Unfortunately we are remembered for these types of loans and NOT the ones that saved the family from ruin, saved the house from foreclosure or provided enough cash each month to make ends meet for the foreseeable future.

    The negative comments, they go on and on and on. Where are your comments NRMLA?

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