LoanLove.com comments on the recent changes and explains some of the ways this will affect senior home owners.
San Diego, CA (PRWEB) December 08, 2013
LoanLove.com is a borrower advice website that sidesteps the stuffy professional language of most mortgage advisors and gives detailed and in-depth loan advice and info in a clear, easy to understand, and even entertaining way, so that both first time loan borrowers and experienced home owners will be able to get the most out of it. With connections to top-rated industry professionals, valuable resource and first class knowledge, the website empowers borrowers to find loans that they will love. As a trusted destination for current news and expert advice, the website is constantly updated to keep abreast of any new developments that could affect home buyers and owners. With the recent changes to the FHA’s Home Equity Conversion Mortgages (HECM), more commonly known as “reverse mortgages”, there are no doubt many senior homeowners who are wondering how this recently enacted reverse mortgage reform might affect them.
According to H.R. 2167: Reverse Mortgage Stabilization Act of 2013 the purpose of the new law is: "To authorize the Secretary of Housing and Urban Development to establish additional requirements to improve the fiscal safety and soundness of the home equity conversion mortgage insurance program."
While these loans were originally meant to help elderly homeowners remain in their homes indefinitely, many borrowers also use them to meet their short-term financial needs – sometimes to their own financial hurt. Loan Love explains that the former setup for reverse mortgages made it possible for homeowners to cash out early, which left them with little ability or motivation to keep current on property taxes and insurance. This not only hurt the homeowners, who would often eventually default on their mortgages, but it was very costly for the FHA to handle these losses and put the whole program at risk.
Because of this, the Reverse Mortgage Stabilization Act was signed into law. As a previously posted video from LoanLove.com explains, “Seems there's a new law out there that was designed to make reverse mortgages a lot safer and a lot more reliable. It's called the Reverse Mortgage Stabilization Act, and it has some built-in safeguards that are designed to protect both homeowners and lenders. For instance, while the old laws required borrowers undergo free financial counseling before getting a loan, the new law goes a step farther, requiring a financial assessment for all borrowers to make sure they get the best loan for their needs. That's a protection for the borrower. For some loans, the law also requires escrow accounts -- kind of like a savings account -- to cover property taxes and insurance to make sure they don't fall behind. That's a protection for the lenders. And, the law also puts some limitations on how much homeowners can take out right away.”
While these changes are good news for the program, and those who count on it to stay in their homes, the limitations could be too restrictive for some homeowners, which is why researching mortgage options is so important. The Loan Love video say, “Now, while most of these changes are designed as extra precautions and safeguards for the borrower, they may have an effect on whether or not a reverse mortgage is right for you, so you really need to read up about them.”
For more information on the changes to reverse mortgages, click here to watch the full video or visit LoanLove.com to read more on the topic.
For the original version on PRWeb visit: http://www.prweb.com/releases/loan-love/reverse-mortgage-reform/prweb11398891.htm