Tuesday, May 26, 2015

REVERSE MORTGAGES NOT FOR EVERYONE

And the reason of course is "affordable housing". That's because under the new rules, you’ll now be subject to what’s known as a “financial assessment” — much like what lenders do when sizing up applicants for regular mortgages. Lenders will now review the income, cash flow and credit reports of prospects. You’ll need to prove that you have the “willingness” and “capacity” to continue paying your home’s property taxes and insurance premiums. If the assessment convinces the reverse mortgage lender that you won’t have the cash to make those home-related payments, you may be rejected. That’s because a reverse mortgage borrower who fails to pay property taxes or homeowner’s insurance could be tossed out of the home and the house could then go into foreclosure.

I believe this new rule is a major "point". And yet, it would appear that those involved in marketing reverse mortgages (Home Equity Conversion Mortgage or HECM) downplay this new rule. For example:

http://www.reversemortgageadviser.com/blog/reverse-mortgages/reverse-mortgages/

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