2022 Reverse Mortgage News


The Federal Housing Administration has further extended some of the leeway it gave distressed consumers with reverse mortgages and servicers during the pandemic.

The extension from the end of this year to Dec. 31, 2023 affects two waivers that remain in place for Home Equity Conversion Mortgages the FHA insures. HECMs constitute the bulk of reverse mortgages, which are loans designed to help seniors withdraw equity from their homes while still living in them.

One waiver removes a limit to the amount of unpaid property charges borrowers could be in arrears on while still being eligible for a repayment plan. Normally, that cap is $5,000.

The other waiver has, since March 1, 2020, allowed mortgage companies who pay off a borrower’s delinquent property taxes and insurance to immediately assign the loan to the Department of Housing and Urban Development, avoiding a standard three-year waiting period.”These waivers provide mortgagees with continued flexibility to help senior homeowners,” the FHA said in a bulletin.

The extension of the waivers may be a test of whether they, or some form of them, could be used on a more permanent basis. Various iterations of the waivers have existed since April 2020, when they were first introduced, and their deadlines have been pushed forward at least five times, including the most recent extension. Because reverse mortgages have been particularly prone to losses due to underwriting shortcomings in the past, officials will likely be watching closely to see how HECMs perform with these waivers in place.

The waivers likely have been allowed to remain in part because of the recent financial strength of the fund that the FHA, an arm of the Department of Housing and Urban Development, uses to insure home loans.

The fund’s capital ratio, which compares the economic net worth available to cover losses to the dollar volume of active loans, has been positive for the HECM portfolio the past two years thanks to home price appreciation and underwriting reforms.

By Bonnie Sinnock November 29, 2022, 4:58 p.m. EST

2016 Reverse Mortgage News


If, after considering other housing options, you have decided to remain in an eligible home or to move into a new home, you may want to consider a Home Equity Conversion Mortgage (HECM) – more commonly known as a reverse mortgage – as a source of retirement income.

Any discussion of reverse mortgages as a retirement income tool has typically focused on real or perceived negatives related to traditionally high costs and potentially inappropriate uses for these funds. These conversations often include misguided ideas about the homeowner losing the title to their home and hyperbole about the American Dream becoming the American Nightmare.

However, developments of the past decade have made reverse mortgages harder to dismiss outright. The federal government has been refining regulations for its HECM program since 2013 in order to:
– improve the sustainability of the underlying mortgage insurance fund;
– better protect eligible non-borrowing spouses,
– ensure borrowers have sufficient financial resources to continue paying their property taxes, homeowner’s insurance, and home maintenance expenses.

For heirs wishing to keep the home, a larger legacy offers an extra bonus of additional financial assets after the loan balance has been repaid. The home is not lost.

As the government continues to strengthen the rules and regulations for reverse mortgages and new research continues to pave the way with an agnostic view for their role, reverse mortgages may become much more common in the coming years. Many Americans rely on home equity and Social Security as the two primary available retirement assets.

Credit to Wade Pfau via Forbes February 11, 2016

2015 December Mortgage News


The Federal Housing Administration released its maximum mortgage limits for 2016 on Wednesday. Limits are increasing for 188 counties because of home price changes, and no counties will have decreasing loan limits.
FHA’s loan limit floor — which is 65% of the Federal Housing Finance Agency’s conforming loan limit — is still $271,050. The ceiling will also stay at $625,500.
The administration calculates loan limits annually by using a value worth 115% of the median home price in each area. The updated limits kick in on Jan. 1.
For a list of the 188 counties with new loan limits, click here.

Credit to Crissinda Ponder via December 10, 2015