Changes in the Home Equity Conversion Mortgage Program

Recently, Congress authorized the Federal HousingAdministration to change its Home Equity Conversion Mortgage program. Theadministration is projected to disclose exactly what changes will occur later on this month and could be implemented by Oct. 1.

The changes will likely make it more difficult for people tobe eligible for reverse mortgages. A reverse mortgage is a loan for elderly home owners that permits the homeowner to use home equity as collateral and compels repayment when thehomeowner dies, moves, or sells the property. Borrower’s who already havereverse mortgages should be made aware the changes will make eviction more difficult. Folks considering getting a reversemortgage should think about applying for one soon before the below changes areput into effect.

1. Applicants will have to go through financial assessments toprove that they can make payments.
2. Risky applicants would have a chunk of the reversemortgage’s loan withheld to pay property taxes and homeowner’s insurance. 
3. The HECM program is projected to put a ceiling the amount receivedat closing. 
4. Surviving spouses would be protected from eviction.

See Richard Eisenberg Reverse Mortgages: Big Changes Ahead, Forbes,  Aug. 2, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.