New Regulations for Reverse Loans

An article that was recently published by Bankrate discussed the new regulatory changes to the FHA Reverse mortgage program for seniors and how these new regulations make this even a safer and more viable option for retirement planning.

Plus it also mentions the option to use a Reverse loan to purchase a property if a senior wants to “down size” from there current home that may be too large and costly for them, to something smaller.

Here is the second part of the summary of the article plus a link to the entire piece.

Bankrate:  New Rules Make Reverse Mortgage Viable

October 23rd, 2014 | by Cassandra Dowell Published in News, Reverse Mortgage

“Another major change noted is when the Federal Housing Administration, or FHA, announced its HECM for Purchase Program, which enabled qualified seniors to downsize or relocate by using a reverse mortgage to purchase their new home, thereby saving on closing costs.

‘Given the use of actuarial tables in determining the loan amount, it’s going to be a smaller draw as a result,” Ramsey Alwin, vice president of economic security for the National Council on Aging, tells Bankrate. “That may squeeze out some of the individuals who are in crisis mode. But generally speaking, the new policies strengthen the product, protect the consumer and make it well-poised to be an important long-term financial planning tool, most likely for the more moderate- to higher-income population.’

However, concerns regarding reverse mortgages remain.

“There may be more predatory products created that are then attractive to the cash-poor, house-rich individual,” Alwin says. “We need to be vigilant about our consumer protections and consumer awareness for those individuals.”

Overall, the industry may see an uptick in reverse mortgages among finically savvy baby boomers, says Peter Bell, president of the National Reverse Mortgage Lenders Association.

“If instead you take a reverse mortgage as a standby line of credit — a standby cash reserve that enables your other assets to remain intact and continue to grow in value or generate income — you end up with a greater amount of wealth to fund longevity,” he says.

Click here for the entire article:

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