Reuters: Seniors Face New Hurdles with Reverse Mortgage Changes

New reverse mortgage program changes will create new hurdles for cash-strapped seniors looking to draw on their home equity during retirement, according to an article from Reuters

A major hurdle borrowers will face stands to be less proceeds from their reverse mortgages under the new program changes, which will take effect next week on October 1, 2013, notes the article.

While the deadline draws nearer until the program changes take effect, some homeowners have been able to lock in reverse mortgages and access more of their home equity than they would under the new changes.


The article references a woman who used a reverse mortgage on her California home in 2011. After refinancing one summer to obtain more cash, under the pending rules the amount she would have been able to take out would have been cut by 15%, that is, assuming her application qualified under the new financial assessments.

Less proceeds could also make reverse mortgages less appealing for a “vast number of seniors,” writes Reuters. 

Read the Reuters article.

Written by Jason Oliva

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  • I just requoted to a person looking to supplement his income to pay for in-home care for his ailing wife. I initially quoted the Saver and now have quoted the HECM 60. His MIP has increased but so did his principle limit so his care has extended to more than he had anticipated. I thought the PLF was going to be the same as the Saver but it appears there’s a bit more in there than I had originally thought. His Principle limit went from $285,000 to $295,000. This article, like many others focuses on any negative aspect and certainly doesn’t highlight what I’ve just discovered.

    • The bigger question will be whether this person even qualifies come January. I deal with quite a few families who need money to pay for in home care because they have exhausted all resources. These people will probably no longer qualify with the financial assessment. The families I deal with would not have made it through MetLife when they introduced their assessment. Get them while you can! Also, remember margins are a cost of this loan and the saver has always carried a higher margin. In some scenarios the saver is actually more expensive to families over the life of the loan than the standard due to the high margins. It will be interesting what kind of margins will be offered with the New HECM.

  • For those who’ve been following – from the originator’s point of view I discussed there will be no less than 6 pay cuts with the latest HECM changes. (

    One cut discussed was not to be discovered until rate sheets and premiums were published today. Looks like premiums are 22% to 55% lower depending on the margin being sold. (55% cut in premiums if you are trying to get the client the max loan amount – 2.250% margin as of today)

    So there you have it – probably the biggest pay cut of them all. Shrinking business! Add the “funny munny” that went to FHA for the first time ($1.7 BILLION!!!!!) Do you think many senators and congressmen will have more ammunition for the fire-fight which continually calls for ELIMINATION of the HECM (if not even FHA?) Hmmm…..could be?

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