Reverse mortgages are more difficult to get than they were a year ago, writes the “Savvy Senior” in a Huffington Post reader question & answer article this week.
But while the Savvy Senior points to some recent changes that are reshaping the reverse mortgage market, he may be a bit misinformed as he writes that reverse mortgages are more difficult to obtain due to a more stringent financial assessment.
While the financial assessment has been drafted by industry stakeholders and the Department of Housing and Urban Development, its implementation is still forthcoming under HUD’s guidance.
“Tighter rules on reverse mortgages that have recently gone into affect have made them harder to get, especially for seniors with heavy debt problems,” writes the Huffington Post columnist. “The reason the Federal Housing Administration (FHA) made these changes was to strengthen the product, which has suffered from a struggling housing market and a growing number of defaults by borrowers.”
The article details the fees associated with getting a reverse mortgage as well as the added underwriting components that the financial assessment will have, including a look into income, assets and credit history.
The article also specifies a mortgage insurance premium of 1.25% but does not detail the different upfront premiums required depending on the loan type and upfront draw selected by the borrower.
Written by Elizabeth Ecker