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Reverse Mortgage News
REVERSE MORTGAGE FINANCIAL ASSESSMENT COMING SOON
The FHA Home Equity Conversion Mortgage (HECM) will soon require a borrower financial assessment in an effort to help determine if a reverse mortgage borrower will have enough cash flow after the reverse mortgage to pay property expenses such as property tax, homeowners insurance and home repair costs. The financial assessment will review the borrower’s credit history, income and other financial criteria before approving the reverse mortgage. Some borrowers will face mandatory set asides or escrow account to allow the lender to make property tax and homeowner's insurance payments. The Mortgagee Letter is expected out in Mid February and to be implemented 90 days from the date of the letter which would be mid-to late May 2014. A good reason to apply for the reverse mortgage now!
NEW RULES COMING FOR NON BORROWING SPOUSES AND REVERSE MORTGAGES
If the reverse mortgage is taken out only in one spouse’s name, the terms of the loan, including the loan amount and repayment, apply to that single borrower, and not the “non-borrowing spouse.” The problem is, the reverse mortgage becomes due when the borrower passes away or moves from the home. The spouse who is not on the loan or on title will need to repay the loan. In some cases, that may be fine as the other spouse may have other living arrangements. But it could leave a spouse in a difficult situation. That's why extra steps are in place such as meeting with an attorney who will write a letter stating you understand the ramifications of this arrangement. But changes will be coming soon from a statement from NRMLA in January, 2014: “The first Mortgagee Letter will essentially require that in the case of a non-borrower spouse, the age of the younger member of the couple will be utilized to determine the appropriate PLF [principal limit factor],” “HUD will be modifying the PLF tables to cover ages below 62 for this purpose.” So if you want to do a reverse mortgage with only one spouse on title, do it now!
MIP CHANGES TO HECM REVERSE MORTGAGE TOOK AFFECT OCT 2013
The standard and saver option has been eliminated with a new HECM for both fixed and variable rates. The new option has a low initial mortgage insurance premium (IMIP) at .5% if the funds received at closing is 60% or less of the available principal limit. If higher, the IMIP is 2.5% of the home value or maximum claim amount.
The maximum claim amount high lending limit has been extended another year and remains at $625,500.
Jumbo or propriatary reverse mortgage are expected to arrive on the scene in 2014.