Talk has gone on for some time about the possibility of a new reverse mortgage product from HUD. It seems that recent developments indicate that it is on the horizon, but just how soon it will be available is not yet clear.
New Reverse Mortgage Product Announced
At a conference of the Mortgage Bankers Association in San Diego, CA, the Director of the Office of Single Family Program Development at HUD, Meg Burns, announced that a mini-HECM (Home Equity Conversion Mortgage) is in the works. While still only in the developmental stage, it apparently is far enough along to be announced.
One possible reason for the new reverse mortgage product is the action which was just taken by Congress to subsidize the HECM program at a cost of $798 million. The recent economic situation has forced more seniors to rely on reverse mortgages to provide them with an monthly cash flow. This influx of new applications has put a strain on the system.
Future Reverse Mortgages May Be Reduced
Another senator had recently proposed that the actual amount given to each senior be lowered by a small amount – possibly up to 5%. He said that if this were initiated, then subsidizing the plan would not be necessary. Many seniors, however, really cannot afford to have their income reduced even further. Other cuts have already taken place.
New Reverse Mortgage Product Will Work with Smaller Amounts
The new mini-HECM, it seems will provide seniors with an opportunity to work on reverse mortgages that are based on less than the entire amount of the equity. The new product is to be offered along with the more standard HECM product.
The new reverse mortgage product is not fully developed yet. Burns also stated that HUD will also have to develop a way to regulate the use of the product. One concern held by HUD is that it could start a stampede of people wanting to refinance their HUD reverse mortgage. Some time will be needed to study the possible effects once it is released.
Burns also told those attending the conference that HUD would be contacting some of the lenders to gain some feedback from them about the new reverse mortgage loans. With several obvious steps that have to be accomplished before it can be released, it is evident it will not be coming out real soon.
The new mini-HECM may also lower the interest rate, too, but more details need to be revealed. Truly, it is a product that many want to look into, but the details are not yet forthcoming. This is leading many to guess at what might be in it.
A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has helped over 3000 Americans find financial security with a reverse mortgage. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of “62 Senior Moments.” If you would like more information, please call (866) 683-3690 or visit our website to research a Reverse Mortgage Lender.
Tags: Reverse Mortgage
