Housing Bailout good for Reverse Mortgages??

The housing market was the leading story in all media outlets for the past week. The main focus was the nations foreclosure rates and the strength of the banks that hold the mortgages for these homes. The housing bill (HR 3221) that was passed draws most attention to the emergency funds for Fannie Mae and Freddie Mac.

But there is some GREAT news to bill HR 3221 regarding Reverse Mortgages. The bill addresses two aspects of reverse mortgages that have sometimes made them unattractive to potential borrowers:

1. Fees. Most borrowers pay hefty upfront fees for a reverse mortgage, which reduces the amount of money available to borrow. There are many stories of unethical companies taking advantage of homeowners with this loan program.

Now... this housing bill limits origination fees for federally insured reverse mortgages to 2% for up to $200,000 of a home's value, plus 1% for the amount that exceeds $200,000. This is a great way to keep mortgages companies in check! I hate stories of people being taken advantage of.

2. Loan limits. The size of a reverse mortgage is based on the borrower's age, current interest rates and the home's value. In the past, however, the maximum home value for a federally insured reverse mortgage was capped at $200,160 to $362,790, depending on where the homeowner lived.

Now... loans limits will go to $417,000, and that the high cost area adjustments to a max of $625,500 will take effect on January 1. This is great news because it will free up more money for seniors taking out a lump sum of funds, or setting up monthly installments.

A few other points to address in the new bill regarding Reverse Mortgages are:

• Home Purchase products will become available
• Requirements on counseling protocols and quality of such counseling.

This new bill is great news for seniors wanting to secure a reverse mortgage today. Its a great day also for loan originators like myself, because it will weed out unethical loan officers and their companies, and gives us more freedom with higher loan amounts to work with homeowners who may of otherwise not have been in the right equity position to take advantage of such a great program. I think now, more than ever, seniors and their families can have confidence in a reverse mortgage, and the doors it can open for a senior financially.

Be sure to call me anytime to discuss the new changes to this program, or any other questions you may have.