FHA has announced a new deadline for the implementation of the reverse mortgage financial assessment of April 27th, 2015. As of that date, all borrower’s will be subject to the new FHA Home Equity Conversion Mortgage, or HECM, financial qualifications. These qualifications will include both credit and income requirements, and potential borrowers’ will be evaluated to determine both their willingness and ability to meet their monthly obligations.
This is a major shift for the reverse mortgage industry, the reverse mortgage has always been the loan with little to no qualification required. FHA has determined that too many borrowers were finding themselves in a position where they ran out of funds and faced financial hardship even with a reverse mortgage. The new rules are designed with the long term financial health and viability of the borrower and FHA in mind.
These new rules take effect April 27th. They will cause all potential borrowers to face more difficult qualifying standards, and may cause some borrowers not to qualify at all. Some borrowers may qualify but will be faced with setting aside funds sufficient to pay their lifetime taxes and insurance bill from their available proceeds. In order to avoid these new rules, you simply need to complete and application, complete reverse mortgage counseling, and have an FHA case number assigned to you prior to April 27th. If you would like to discuss how to do that and to see if the new rules will impact you, please call us today!
These materials are not from HUD or FHA and were not approved by HUD or a government agency.