FHA to Halt Fixed Rate Standard Reverse Mortgage Starting April 1
Wednesday, January 30, 2013 - 19:00
FHA was on the radar screen a few months back when bad news about the agencies finances became public. What's been less well know since is how the agency is choosing to address that problem and how these so called solutions will impact average folks on Main Street.
For example we've recently learned FHA will be eliminating choices folks have for reverse mortgages. Click link below to read full article. Effective April 1 the standard version will no longer be available. What does this mean? The handful of types of reverse mortgages are designed so that older Americans with no savings to live off of but equity in their homes (over 35% of American aged 65 to 85 own their homes free and clear) can choose loan requirements and terms that best fit their needs. Variation in terms among product types includes upfront costs, the maximum amount of money you can access, how often and in what amounts funds can be withdrawn and interest rates - fixed verses adjustable etc. all game changing details for many elderly folks meaning that even well intentions Changes like this - to help FHA with its finances - can have significant in intended consequences for Americans trying to make ends meet.
Among the last significant changes in the reverse mortgage arena are:
Lenders leaving the marketplace which also resulted in less choice.
The entry of more private investors who prefer loan requiring borrowers to take the full loan amount up front as opposed to receiving it in payments. The down side to this type of product is it requires borrowers to pay interest on the full amount from day one and leaves elderly folks sitting on their life savings more vulnerable to scammers.