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Bruce E. Simmons

Reverse Mortgage Manager, American Liberty Mortgage

In case you haven’t kept up with the latest reverse mortgage news, the Home Equity Conversion Mortgage (HECM), program will be undergoing its most drastic change to date on April 27th, 2015.

The HECM is the federally insured reverse mortgage program that accounts for over 90% of the reverse mortgage market.  Since its inception in 1988, the vast majority of borrowers have not had to documents and verify their income and assets and there has never been any credit requirement in order to qualify for a reverse mortgage.

A reverse mortgage is an FHA insured loan specifically designed for people that are age 62 or over allowing the homeowners to convert a portion of the value of their home into money without ever having to repay the loan for as long as they live in the home and pay their property taxes and homeowner’s insurance and maintain the home.

In the recent past, some people have not kept up on their property taxes and insurance and that has led the Department of Housing and Urban Development (HUD), to make changes to the program to insure that it remains on a solid financial footing.  The industry has known that financial assessment, verification of credit and income, has been coming for a long time and as of April 27th, 2015, it will be here.

While industry experts anticipate a decline in volume in the near future, some say as much as 15%, the major players are trying to put a positive spin on it by saying that it will benefit the reverse mortgage industry in the long run.  By making sure that only people who can afford to remain in their home and keep up with the homeowner’s insurance and property taxes, there will be less technical defaults and a stronger financial footing for the HECM reverse mortgage program all around.

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