The retirement planning world saw a number of policy changes in 2015 that will affect how retirees plan in 2016. One of the most important changes: the Financial Assessment and enhanced consumer protection rules for reverse mortgages, according to recent Forbes article.
The proper use of a reverse mortgage can help retirees improve their retirement security, says the article written by regular Forbes contributor and reverse mortgage advocate Jamie Hopkins, associate professor of taxation at The American College in Bryn Mawr, Pa., and co-director of the New York Life Center for Retirement Income.
In the past, before the new program rules laid forth by the Financial Assessment took effect, some borrowers who used their reverse mortgages poorly ended up in technical default due to unpaid taxes and insurance.
Changes this year to the Home Equity Conversion Mortgage program, such as the income and credit testing criteria of the Financial Assessment, along with updates to the non-borrowing spouse policy to accommodate non-borrowing spouses, have had a positive effect on the appeal of reverse mortgages for borrowers as well as financial planners, many of whom have published numerous studies on reverse mortgages in the past year alone.
“All of these changes, combined with increased awareness about the proper use of reverse mortgages, have set the stage for better and more comprehensive retirement income plans that have the capacity to strategically utilize home equity as an income source,” writes Hopkins.
Read the Forbes article to see the other important retirement changes for 2016.
Written by Jason Oliva