The federal government is going to make reverse mortgages harder to get starting April 27, said Fox News in a segment about how the new reverse mortgage rules work.
A reverse mortgage is for those 62 and older who have equity sitting in their home and want supplemental income, explained Bob Massi, Fox News legal analyst.
Under the new rules applicants will be required to prove they can pay fees, to present tax and credit reports from the past 24 months and, if unemployed, show assets and cause reserves, Fox News said.
The financial assessment came about largely because of issues seen with reverse mortgage borrowers not being able to fund other mandatory expenses and losing their homes, Massi said.
Reverse mortgage borrowers still need to “pay the insurance, the property tax and maintain the house,” Massi said, adding that during the housing crisis even with a reverse mortgage some people were not able to keep up with those payments.
“I think it’s OK,” Massi said about the financial assessment. “Even though you have equity sitting in your home you still have responsibilities. You still have to maintain it, so as a result there should be some type of guidelines.”
The question, he said, is how the new rules will impact the reverse mortgage market.
“Because of these guidelines, some [potential borrowers] may not qualify anymore,” he said.
For those who are interested in a reverse mortgage, seek a reverse mortgage professional, he said.
View the video here.
Written by Cassandra Dowell