New Changes to the FHA Home Equity Conversion Mortgage, aka Reverse Mortgage. Great News for non borrowing spouses!

New rules go into effect on new Reverse Mortgages originated after August 4th that protect a non-borrowing spouse from foreclosure.

One of the criticisms of the Home Equity Conversion Mortgage is when a younger spouse, who cannot be on the loan if they are less than 62 years of age, looses their older spouse, the loan becomes due and payable.  Many times they are not able to qualify for a new refinance loan, and the home eventually gets foreclosed upon.

Recent case-law has established that the non borrowing spouses cannot be foreclosed upon, so HUD has written new guidelines that prevent the non borrowing spouse from facing foreclosure.

As a result, HUD has published new principal limit factor tables that run from ages 18-90 that give an approximate percentage that a married couple could borrow using a Reverse Mortgage.

The new principal limits are based on the age of the youngest spouse, generally.  This has the effect of lowering the amount that a Reverse Mortgage can provide but protects the younger, non borrowing spouse.

I think it’s a pretty good and fair tradeoff.  The Home Equity Conversion Mortgage is a life changing program for those who choose it but was a potential housing nightmare for non borrowing spouses prior to August 4th.

There are requirements on the non borrowing spouse, too many for a single post, but generally if they continue to live in the home as their primary residence, pay the taxes and insurance and maintain the property, they can stay in the home.

If you have questions about the Home Equity Conversion Mortgage, aka Reverse Mortgage, feel free to contact me and I can answer any questions for you as well as run custom quotes for your individual situation.

 

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