Reverse Mortgage Revealed

Reverse mortgages have come a long way since their inception, offering seniors more safety and flexibility than ever before. Let's delve into how these once clumsy financial tools have evolved into a reliable option. 1. Regulatory Enhancements: Strict regulations and oversight are now in place to protect consumers. The Federal Housing Administration (FHA) continually reforms to improve borrower safeguards. In 1988, HUD/FHA stepped into the world of reverse by establishing a federally insured reverse mortgage program, the HECM. Since then, HUD has continued to make adjustments and changes turning reverse mortgages into not only lifelines for seniors but also into important portfolio protection tools. 2. Mandatory Counseling: Seniors are now required to undergo counseling before obtaining a reverse mortgage. This step ensures that borrowers understand the terms, benefits, and potential risks involved. Face-to-face or telephone counselors go step by step with reverse borrowers to make...

Gone are the days of qualifying for a reverse mortgage simply because one had equity in one's home. Gone also are soft income and credit guidelines, the days of delivering 100% of proceeds at closing, loans funded without mandated / proper education. Reverse loans aren't as easy as they once were but they are much safer and still a great way to access dormant home equity. Is it hard to qualify for a reverse mortgage?     Well, yes and no.    FHA, VA and Fannie Mae /Freddie Mac loans (forward loans) have always required borrowers to have a stable source of income and to meet 'debt ratio' guidelines; and now reverse mortgages require income qualification too. Reverse borrower income is based on a ‘residual income’ system designed to make sure that borrowers can meet basic obligations .. This is technically called ‘financial assessment’ and is one of the new (HUD letter ML-2013-27) protections enacted by FHA to make certain that borrowers can cover ongoing expenses...