A lot has been going on in the last several months with reverse mortgages. Most notably are the intricate details of the financial assessment. Here we will go over some of them. I will not only hit on the main points and all of the “must know” details, but also just some industry news etc. Reverse mortgages in general have been transformed over the last several years but most radically in recent ones. The reverse mortgage product has become much more of a mainstream product and because of that, such changes have been made to make sure people feel comfortable and secure when obtaining one.
The financial assessment is the most recent change to drastically affect the reverse industry. Loans originated after April 27th 2015 are subject to the financial assessment. This means that borrowers now need to provide income and asset documentation which translates to more intrusive underwriting standards. Lenders will look at things like credit history, history of making your property tax and homeowner’s insurance payments and they will even calculate residual income to see if they feel you have enough funds to pay your bills. They will take what they call “extenuating circumstances” into account as well such as the death of a spouse etc. You can call us today for a more in depth look at your particular situation.
A few years ago the industry saw a big shift when Bank of America, Wells Fargo and finally MetLife all exited the business in quick succession. While each left for different reasons they all had a major impact on the production of reverse mortgages and hence, numbers sank. Because these major players left, so did many originators. Now, it looks like these power players are looking to get back in the mix. And, for those of us originators who toughed it out, we needed to find new ways to get business. Some new leaner lenders entered the business. Many of them created partnerships with non-lending senior centered businesses like in home care etc. Many of us have taken to education to make sure seniors know all the facts and make an informed decision. The worst enemy of the reverse mortgage, or any other mortgage product, is simply a lack of knowledge.
While we are not reinventing the wheel, we are constantly working with industry leaders and the members of the Government to make the reverse mortgage product as safe as possible. At times, it may seem to borrowers, and even us loan officers, that these new regulations are not fair and sometimes too far reaching but in the end it will lend more trust and legitimacy to the industry. And that is ultimately our goal; for people to know the reverse mortgage loan is safe and make it easier of us to help seniors fulfill their retirement goals. The financial assessment is the latest in these hurdles that hurt a little now but will benefit us later. Many of us wonder what changes to the assessment will come in the future. My lender sources tell me that there is some difficulty determining what’s what as different HUD HOC’s (resource centers) around the nation sometimes define the rules differently. As we move ahead there will be increased unity and better guideline procedure in that respect. As always, to learn more about any of this stuff please call or email us.