Despite the negative perceptions that have plagued reverse mortgages in the past, borrower protections outlined under the new program changes could be the image makeover needed to spur utilization among future senior homeowners, reports an article from National Mortgage Professional Magazine.
From national news publications like The Washington Post to second-hand speak heard from someone else, the blistered reputation of reverse mortgages has prevented the product from reaching its fullest potential, writes NMP.
New federal oversight from the Department of Housing and Urban Development (HUD) in the form of changes to the Home Equity Conversion Mortgage (HECM) program announced in September could revamp borrowers’ perceptions of reverse mortgages, as part of the rules emphasize borrower protections such as financial assessments and mandatory set asides.
“The changes should help drive consumer behavior,” said Peter Bell, president of the National Reverse Mortgage Lenders Association, in the NMP article. “People will be able to take out the amount they need and leave the line of credit. It will be better for everyone.”
Changes to the HECM program also look to aid reverse mortgages in their transformation from a need-based product to one that seniors “want” to obtain.
“Once it was a loan of last resort for people in financial need,” said Bell in the article. “Now, it is being enabled by financial planners for different uses.”
Written by Jason Oliva