Reverse Mortgage Financial Assessment
HUD announced that effective with all new case numbers issued on March 2, 2015, all borrowers would be subject to the New Reverse Mortgage Financial Assessment as outlined in the Mortgagee Letters. The changes to the program are sweeping and as of the writing of this announcement, we have not even had the opportunity to analyze the full effect of all the changes.
There are also some provisions for lifetime set asides for taxes and insurance but at this writing, it is unclear how that will affect borrowers’ abilities to qualify and the costs of the loan. Currently most loans are available without servicing fees but once lenders have to administer impound accounts and do more than send out a monthly statement, those monthly costs might also reappear on the new HECM loans with impounds for taxes and insurance. However, one thing is clear, gone are the days that borrowers can obtain a reverse mortgage without having to income or credit qualify.
If you planned to obtain a reverse mortgage but were waiting for some reason or another and you think that you might have credit issues (delinquent credit obligations, collections, past due taxes or mortgage payments, etc) or if you are concerned that your income may not be sufficient to qualify under the new guidelines and you don’t want to wait to see what the new guidelines will do to your ability to qualify or the costs of the loan, you have until March 1, 2015 to start your reverse mortgage loan under the old parameters.
Borrowers on any new loans begun after that date must meet the income and credit requirements as outlined in the Mortgagee Letters above.