“Short-Sighted” Changes Are Coming to the Reverse Mortgage Program

“Short-Sighted” Changes Are Coming to the Reverse Mortgage Program

The reverse mortgage program, as we know it, will be gone October 1. While the specifics on how these changes will be implemented, and regulated, are yet to be seen as well as the consequences of so many changes with little prior notice, they are coming swiftly.

The AARP, however, despite providing support for the Reverse Mortgage Stabilization Act of 2013, initially, continues to express doubts on the effectiveness of the law, which has bypassed the rule making process by not including public option.

According to an article in Reverse Mortgage Daily, published this past June, theAARP’s Senior Strategic Policy Advisor Lori Trawinski stated:

“While we support the idea of tax and insurance escrows set asides, the public should have the opportunity to comment on the specifics of such program changes during the normal rule making process to ensure that changes contain adequate consumer protections and are resonsable regarding the amounts to be set aside.”

I think these changes are a double edged sword, and will continue to be, until they are fully in effect and we are able to see the extent of their success or failure. Like AARP, I don’t believe all regulations cast a dark shadow and many of the changes that have been included in the Stabilization Act do have the consumer’s best interest mind.

However, HUD’s recent announcement, which states that they will merge the two existing reverse mortgage program, has caught everyone by surprise.

I’m not going to say the sky is falling because it’s not true. When HUD first announced that it planned to eliminate the Fixed-Rate Standard back in January, the panic set it, but come April 1, when the change was implemented, everything remained mostly unchanged.

The problem with these changes, aside from the lack of consumer input, is that they are coming too soon, too fast, without prior notice to consumers, lenders, or independent brokers like myself. One of the reasons I think the elimination of the Fixed-Rate Standard was so successful was that we were given months of prior notice, we knew what was going to happen, we just didn’t know when.

Now the program we have known for so long will be meshed and molded into a new program with little time between announcement and execution. We don’t know the future, so all we can do is wait, for now and see where all this leads.

The Director Financial Security and Consumer Affairs, Cristina Martin-Firvida, at AARP State and National Group recently said in Reverse Mortgage Daily:

“Hearing from those affected by these problems and experts on reverse mortgages is an indispensable step in addressing the challenges that have resulted from dramatic market changes over the past decade. The HECM program needs reforms to address these challenges, but failure to allow for comment is short sighted and will not provide the information needed to solve the HECM program’s long term or even short term problems.”

At PS Financial Services, a reverse mortgage company in Florida, we offer all the reverse mortgage options available for a retiring or retired senior homeowner. However, it’s crucial not to wait until the changes come into effect. The amount of money you can potentially receive will be less, even if you qualify for initial principal limit of at or above the 60% threshold, which will be determined by the consumer’s “mandatory financial obligations”.

Give us a call at (888) 845-6630 or send us an email at  info@PSReverseMortgage.com. We do not pressure those who inquire, we are simply here to help.

Click here for more information about the elimination of the reverse mortgage program as we know it: