New Reverse Mortgage Rules Will Limit Eligibility

As I have previously discussed, reverse mortgages allow individuals62 and over to receive money from a bank in return for their home upon theirdeath. Counseling for reverse mortgages is mandatory due to theircomplexity and the possibility that these individuals may destroytheir nest eggs if something goes awry with the loan. Reverse mortgage rulesare going to change, which could mean less available funds for borrowers. Thechanges can also lower the program’s high default rate. 

Recently, Congress granted authority to theFederal Housing Administration to change the federal program for homeowners.The rules are expected to go into effect as early as October 1. The changeswill reduce the number of homeowners that will qualify for reverse mortgagesand the maximum amount will be reduced as well. People who apply before October1 will qualify for the amounts under the rules now. Folks that are consideringa reverse mortgage should act quickly if they want the current laws to apply.

See Anne Tergesen Tighter Rules For Reverse Mortgages, The Wall Street Journal,  Aug. 25, 2013.