Reverse Mortgage 2011 Review
During 2011 a number of changes, revisions and other alternations were made in the Reverse Mortgage lending program. These clarifications strengthen the program and clarify borrower’s rights based Federal Housing Administration (FHA) and Housing and Urban Development (HUD) guidelines.
As of December 2011 a Language Line operated by HUD offers assistance to non-native English speakers who are interested in obtaining a Reverse Mortgage but who would like to learn more by speaking with an HUD professional in their native language. The telephone interpretation service offers live, one-on-one interpretation services 24 hours a day. The service serves speakers of more than 175 languages. Interpreters are on call to speak to callers in their own language, translate their questions about the Reverse Mortgage to authorized HUD employees and translate the answers back into the caller’s native language. Languages represented in the HUD Language Line include Spanish, Vietnamese, Tagalog, Arabic, Korean, Russian, Chinese, Portuguese and Farsi.
The FHA announced that it would extend the maximum loan limits for Home Equity Conversion Mortgages from their 2011 levels. The loan limits will remain in effect throughout 2012 at $ 625,000. The value of a Reverse Mortgage is based on a formula which determines the amount that an applicant is eligible to receive. The formula takes into account the borrower’s age, the calculated market value of the house and current interest rates. There are also different maximum rates offered in various counties. A Reverse Mortgage calculator can assist applicants estimate the amount that they may obtain through an HECM loan.
The provision affecting mandated counseling for HECM applicants was revised in August 2011. The FHA mandates that all applicants for a HECM mortgage undergo counseling at which time they will receive a full accounting of their rights, obligations and responsibilities regarding the terms of the Reverse Mortgage. The FHA requires that all owners listed on the home’s property deed, including non-borrowing spouses of loan applicants, attend the counseling session. A certificate attesting to the attendance of all such individuals must be signed and dated by the counselor, all property owners listed on the property deed and any non-borrowing spouses.
In December 2011 the Federal Housing Administration announced that the FHA’s anti-flipping waiver would be extended. However, HECM applicants should keep in mind that Reverse Mortgages are not covered. The anti-flipping waiver is aimed at stabilizing home values and improving conditions for areas of high foreclosure. The FHA will, under this waiver, insure mortgages on homes that are resold after being owned by the seller for less than 90 days. This has been previously disallowed under FHA regulations but in the interests of improving real estate options in distressed areas, the FHA is now insuring such mortgages on a temporary basis. However, Reverse Mortgages do not fall under this waiver.
