This weekend the Hartford Courant published Senior Home Buyers Allowed To Use Reverse Mortgage which goes over the upcoming HECM for purchase program. Journalist Theresa Sullivan Barger writes about the new program which is set to become active January 1, 2009.
According to the article, the Federal Housing Administration noticed an increasing number of seniors selling their homes, buying new homes and then getting a reverse mortgage to pay off the new home. "They were going through two mortgage transactions and paying all those fees," said Meg Burns, director, FHA office of single-family program development. "Seniors need to keep their money in their pocket."
As FHA staff members continued to look into the trend, they found the traditional HECM which was designed to keep seniors in their home, wasn’t helping those who wanted to downsize. Burns said a program allowing a Home Equity Conversion Mortgage for purchase "came from us internally" as a way to accommodate that kind of consumer.
"We talk to seniors. The folks we’ve talked to agree that it makes sense," Burns said. "I feel like this product is going to address a social issue for them."