The New York Times is reporting that new reverse mortgage programs will change the way reverse mortgages are calculated for borrowers starting this week.
Barb Stucki, vice president for home equity initiatives for the National Council on Aging, told the Times, the HECM Saver really changes how the organization thinks about reverse mortgages. “In the past, with the sizable upfront fees, it was only appropriate for people who wanted to stay in their home for the rest of their lives. But now that advice no longer applies to Saver loans,” she said.
On Monday, consumers at least 62 years old will have access to the HECM Saver and the HECM Standard. The Saver program will eliminate nearly all of the upfront fees borrowers are required to pay and the standard reverse mortgages will significantly increase certain costs but, in some cases, make more money available.
According to data from Reverse Market Insight, more a wider range of baby boomers are using reverse mortgages.
For the last decade, borrowers were most commonly in their 70s. But now, borrowers are increasingly in their 60s: more than 5 percent of borrowers in 2009 were 63, compared with just 2 percent 10 years ago, according to Reverse Market Insight, which tracks the industry. While the sheer number of baby boomers eligible can explain part of the increase, the economy is probably forcing many people to resort to these products earlier, John K. Lunde, president of the R.M.I., said.