reverse loan obligations

Reverse Loan Applicants and Financial Assessment

If you read the previous part of the article in an earlier post, then you are aware of the pending changes that will take place on March 2, 2015 for anyone applying for the FHA Reverse mortgage.   The point of the assessments is to determine whether or not the potential applicant will have the capacity to continue to pay their property taxes and keep their home insured.

At this time, it is not clear what type of documentation will be required from the applicant to verify income and residual cash flow, but more than likely it will be bank statements, copes of Social Security and or pension income.

Reverse mortgages are beginning to sound like a traditional loan, as the documentation will be very similar.

HUD Releases Reverse Mortgage Financial Assessment to Take Effect March 2015

Posted By Elizabeth Ecker On November 10, 2014 @ 1:39 pm In News,Reverse Mortgage

The mortgagee letter also specifies documents [3] that must be collected and submitted for all borrowers. The documentation has been updated to include “Financial Assessment Documentation” that includes, but is not limited to, credit history documentation, income verification, asset verification, property charge verification, residual income analysis, documentation of extenuating circumstances or compensating factors, and calculations for life expectancy set asides and residual income shortfall set asides.

According to HUD, the lender must evaluate the borrower’s “willingness and capacity to timely meet his or her financial obligations and to comply with the mortgage requirements.

“Where the mortgagor has not demonstrated the willingness to meet his or her financial obligations as stated above and no extenuating circumstances can be documented, the mortgagee must require a fully funded Life Expectancy Set-Aside.”

The assessment refers to previous mortgagee letters that drafted the financial assessment but takes the place of those mortgagee letters with some changes.

The changes are likely to present tailwinds, rather than headwinds, one executive told attendees of the National Reverse Mortgage Lenders Association national conference in Miami on Monday.

Written by Elizabeth Ecker

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