HappySeniorHomeOwners Blog

Well, It Happened!

Last Friday, one of the Major HECM lenders, said that effective Nov 14, 2011 all new applicants for a Reverse Mortgage will have to be qualified for: Credit History and Financial capacity.

This was cleared by FHA recently in an effort to stem the growing numbers of Reverse Mortgage Borrowers that are defaulting on the payment of their property taxes and insurance, an obligation under their mortgage. This default will lead to the foreclosure of the home.

Many Seniors were taking out a Reverse Mortgage to solve the inmediate problems, but when the money ran out, they got in trouble again by not paying taxes and insurance. This new measure MIGHT "theoretically" prevent this from happening. 

Now, this is only the first Lender applying this evaluation. It is not obligatory, but all Lenders will be following their lead. It is inevitable.

Now, what are some the changes that this one MAJOR Lender will be requiring for Borrowers that apply after Nov 14, 2011. This rule does not apply to those who applied before that date.

CREDIT ASSESMENT: to determine that the Borrower has demonstrated the willingness to manage their current financial commitments.

In plain english: if they have mortgages, show NO late payments for the last 24 months, or show extenuating circumstances.  Other items may apply.

Prior to this, if you were in foreclosure a Reverse  Mortgage could be used to pay off the mortgage and you could save the home. NO LONGER. This is the most worrisome to me. I have helped many Seniors to get out of foreclosure.  Now many will lose their homes because of this.
2) alternative credit might be used: utility bills, , water, telephone, medical bills, department store credit, etc..,, extenuating circumstances, etc..

FINANCIAL ASSESMENT: to determine that the Borrower will have enough income to pay taxes and insurance in addition to living expenses. It is a complex formula that takes income, assets and investments as well as the funds to be received from the Reverse Mortgage into consideration.

To make it short and sour, I my opinion. It would eliminate the vast majority of Seniors who now badly NEED a Reverse Mortgage but do not have the income or good credit. Some will loose their homes. Many will have to continue to struggle with today's economy.

One of the MAJOR attractions of the Reverse Mortgage as we knew it, it was that your Credit or Income was NOT important. That is lost.

Again, the purpose of these changes is to allow the HECM Reverse Mortgage Program to survive this crisis. This I can understand.

The Reverse Mortgage FHA insured HECM Program IS STILL a wonderful help for many Florida Seniors. Don't write it off, don't wait any longer... 

Now, I suggest that even if you feels that you or your parents would not qualify, please inquire. I will run some numbers and get a feeling for your own particular situation. Call me today 786-262-6486 or email RodKohly@Gmail.com

Your comments will be appreciated. Post here or send them to RodKohly@Gmail.com   *   For most answers call me at 786-262-6486  or visit http://HappySeniorHomeOwners.com   (English-Español).   To tell a friend visit  http://www.happyseniorhomeowners.com/tellfriend.aspx