Here is the final portion of the article that I shared in the two previous posts in this blog.   As this article discusses, there are been several changes to the FHA Reverse loan program, effective in October 2013 that limit the amount of funds the borrower can receive but also include additional options.

Investment News:  Reverse Mortgages Recast for Financial Planners.  Alyssa Gerace 2/19/14

“The three have done extensive research [2] on how the government-insured Home Equity Conversion Mortgage (HECM) product can be used as a retirement planning tool [3].

“Our study considers using a HECM Saver reverse mortgage as a risk management tool in conjunction with a two-bucket investment strategy, coined the standby reverse-mortgage strategy, in order to increase the probability a client will be able to meet predetermined retirement goals,” they wrote in a 2012 article published in the Journal of Financial Planning.

Since then, HUD has issued new rules for HECMs that limit homeowners from borrowing more than 60% of the maximum reverse mortgage loan amount when it closes for a one-year period, Investment News writes. The program changes are meant to ensure loans will cover borrowers’ ongoing expenses, in addition to other common uses such as improving cash-flow.

“A HECM is just another way we can help clients address their retirement income needs,” task force member Marguerita Cheng, a financial planner and chief executive of Blue Ocean Global Wealth, told Investment News.”