Fox News: Getting a Reverse Mortgage Will Soon Be Tougher

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.

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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

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  • What in the world is a “cause reserve?” While Fox News stated that the unemployed will need to show assets and cash reverses, RMD quoted cash reserves as “cause” reverses.

    Bob Massi, who does not seem to be “educated” by our honcho team of industry expert marketers, thought that the “new reverse mortgage” will keep many seniors from getting the reverse mortgage they were counting on in retirement. He did not seem to see it as a more consumer oriented product. Could he be right (tongue in cheek)?

  • On the 15th, RMD reported on its well received discussion of the optimistic outlook of the cumulative impact of all changes made since September 29, 2013, emphasizing the yet to be implemented Financial Assessment.

    Although Bob Massi did not discuss other changes, his conclusion about the effect of Financial Assessment on our market must not have been pleasant to hear by our the market forecasters in our industry. He did not see it as a safety benefit for consumers but rather another means for reducing risk to taxpayers. There is little doubt Bob got it right although he attributed the financial loss from defaults as that of HUD rather than those whose it really is on new HECM closings, lenders.

    There is also this hurdle we have created for ourselves by calling a more restricted HECM the new reverse mortgage. Some have interpreted this as applying to all new reverse mortgages rather than just to HECMs. So that proprietary reverse mortgages which do not require some form of Financial Assessment may still be prejudged or even dismissed as if they did.

    With people like Bob Massi providing insight on reverse mortgages to one of the largest senior cable audiences there is, do not expect glamorous reports on the new reverse mortgage, especially after Financial Assessment. How truly disappointing this is becoming.

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