In an effort to catch up on the latest news in the Reverse mortgage industry, I just found out that Wells Fargo is exiting it. Long considered to be the leading lender for the FHA/HUD product, I was very surprised to hear this news. Along with Bank of America who earlier stepped away from offering the loan, we see two very big players disappearing from the Reverse loan industry, along with Financial Freedom who left in March of this year.
With the continued uncertainty due to the wobbly economy and the housing market, they apparently feel that they would rather not risk originating loans when property values continue to decline, even though there is a greater need for it them now then in previous years. With the economic uncertainty, concerns about Medicare and Social Security, more senors could be utilizing the funds from a Reverse loan to pay their monthly obligations and particularly any medical expenses.
The economy future is murky and my personal feelings are that we are a long ways from any recovery. And as the need for the Reverse loan grows ( And it will), the amount of funds that a senior could receive will shrink. The continual slide of the housing sector is directly affecting future of the government program and the financial security of seniors financial safety net.
The housing crisis and it’s inability to recover is mainly due to the continual foreclosure activity and is having a direct effect on Reverse mortgages. Currently the HUD lending limit it set at $625,500 but as of this writing, they are considering reducing it back to a previous limit of $417,000 this coming October.
The immediate effect of the reduction will mean less money will be available to the senior homeowner and if anyone is “thinking” about using the loan, it’s imperative that they do so before the change in October.
The first step is to complete the counseling that is required by HUD and then meet with a Reverse Loan Consultant for further information. Once this has been done, those who are considering the option of a Reverse mortgage will be able to make an informed decision as to whether or not to move forward on an application.
Fear, hesitancy, inertia or not making an effort to be informed only hurts ourselves. Life will move on and it’s up to us whether or not we do too.