March 2, 2015 Changes to Eligibility Requirements (Financial Assessment)

UPDATE:

As of 2/13/15: Financial Assessment Delayed 30-60 Days

As of 2/26/15: New Date Set for Financial Assessment – April 27, 2015

Read more about the Financial Assessment Below.

On March 2nd 2015 FHA will implement its long awaited financial assessment. There has been talk of this happening literally for years. We in the reverse mortgage industry have been told to hurry up and wait more times than I can count. We kept hearing it’s coming next year, the year after that, the year after that. It’s finally here and we are all gearing up to make sure everyone is informed.

For those who are assigned a case number on or after March 2nd 2015 you will be subject to the financial assessment. A case numbeMortgage and Down Paymentr is assigned to a borrower by FHA so that lenders can identify them. The case number is usually good for 120 days and is assigned after the borrower has completed the counseling and an application. If you are able to obtain a case number before that date you can avoid it. To be clear, your loan does not have to be funded or even underwritten just assigned that case number on or before March 2nd 2015 to avoid the financial assessment.

In the past if you lived in a qualifying property as your owner occupied residence, had a good equity position and were at least 62 or older you could obtain a reverse mortgage based on those merits alone. The financial assessment means lenders will now be required by FHA to do a much more comprehensive credit, income and asset underwrite. Now lenders will look at things like lates on credit reports or unpaid property taxes etc and determine what they call a willingness to pay. Many borrowers will be unaffected as most reverse mortgage borrowers use the loan as a tool and not a last minute resort. Borrowers who show that they have not in the past had a “willingness to pay” bills on time etc will see set asides for things like property taxes and homeowners insurance.

We will have to wait and see just what the assessment will do. FHA hopes it will make for a more qualified borrower and help to avoid foreclosure. Lenders hope it will add more legitimacy to the product as a whole. We feel the loan is a good tool if used correctly and always has been. The hope is that financial advisors and others of the like will see it as a safer and more viable option. For borrowers it will make sure the reverse mortgage is not just a band aid on an unfixable situation. We will all be interested to see what happens on March 2nd 2015.

If you have any questions or concerns about this change, please feel free to call or email me.  I’m here as a resource and am happy to answer your questions.  If you want a quote to see if you’re eligible, please feel free to fill our our form located here.

Watch Brandon discuss the new changes along with changes happening in December 2014.