Reverse mortgages have garnered a considerable amount of press in the months following the implementation of the Financial Assessment, detailing how new rules aim to make the product safer for borrowers.
A recent article from Florida’s Naples Daily News describes how these new changes under the Financial Assessment, as well as updates to the non-borrowing spouse policy, stand to help today’s retirees.
After detailing the reverse mortgage essentials and the need-to-know eligibility requirements, the article discusses the rules set forth by the Financial Assessment in April.
“As a safeguard against borrowers overextending themselves, new rules as of April 27, 2015, require lenders to review the borrower’s finances prior to approval to ensure that the borrower has enough stable income to pay those ongoing costs,” the article states.
Additionally, the article states that lenders will assess borrowers’ “capacity to pay” via income, and their “willingness to pay” via the borrower’s history of recent payments.
In the event that a loan applicant falls short when trying to meet these requirements, the Naples Daily News also touches on the potential need for a set aside to “pay for the property taxes and other running expenses over the life of the loan.”
A segment of the article then describes the prevalence of Home Equity Conversion Mortgages (HECMs) and the costs associated with getting a reverse mortgage before getting into residency requirements and the recent amendments to the non-borrowing spouse policy from the Department of Housing and Urban Development (HUD).
“For new reverse mortgages, non-borrowing spouses must be identified at the time of the application,” the article states. “Eligibility or non-eligibility is established upfront, and the rules for maintaining eligibility are outlined so there are no surprises.”
Naples is a popular destination for older adults, especially those nearing retirement age. The median age of residents living in the city is 56-years-old, according to data from Realtor.com. Additionally, the median household income is $84,159 and the average household net worth is $722,340.
Read the Naples Daily News article.
Written by Jason Oliva