A recent amendment to Rhode Island’s rules governing reverse mortgages will give lenders in the state more flexibility to perform certain Financial Assessment actions prior to the loan applicant’s completion of required counseling.
Enacted on June 25, the amendment stems from Rhode Island Senate Bill 0918 and House Bill 6157, which now allow reverse mortgage lenders to order a credit report and other information for a loan application before a prospective borrower completes a counseling program.
As for additional actions Rhode Island lenders will be permitted to take, these include obtaining information required for inclusion in a loan application, including documenting and verifying credit, income, assets and property charges.
Lenders will also be allowed to evaluate other key Financial Assessment criteria such as extenuating circumstances and compensating factors prior to a loan applicant’s counseling completion; as well as evaluate the results of the financial assessment in determining eligibility for a Home Equity Conversion Mortgage (HECM).
Determining whether a life expectancy set-aside will be required, and whether that set-aside must be fully or partially funded, will also be allowed for Rhode Island lenders, as well as the ability to complete a HECM financial assessment worksheet.
In addition to the permissible actions lenders will now be able to take, the amendment to Rhode Island’s reverse mortgage statute also requires that the department of elderly affairs maintain a list of federally-approved counseling programs. Such list will be made available to all lenders and the public.
Written by Jason Oliva