Reverse Mortgages Draining FHA Resources, Overhaul Needed

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Posted To: MND NewsWire

Several housing authorities recently suggested changes to the form and operation of the Home Equity Conversion Mortgage (HECM) program, more commonly known as reverse mortgages. The program, administered by the FHA, serves homeowners over the age of 62, allowing them to draw on their home equity while remaining in their homes. Last year the Department of Housing and Urban Development (HUD), FHA’s parent agency, made significant changes in rules affecting HECM borrowers . The first change reduced the maximum mortgage amount from 60 to 70 percent of the borrower’s home value, and introduced a new formula, tied to not only the property value, but also loan rates and the applicants age. At the time this change was announced, it was predicted the typical applicant, who was previously able to borrow…(read more)

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