Beginning April 27th, 2015, the government is imposing stricter requirements when it comes to reverse mortgages. Reverse mortgages are available to seniors 62 years of age and older whose homes have equity they want to convert into cash. There is no repayment required until the borrower sells the house, moves out or dies. Loan recipients are responsible for paying property taxes, hazard insurance premiums and keeping the home in reasonable condition.
For the past 30 years, The Federal Housing Administration has had lenient standards for reverse mortgages. If a homeowner qualified with their age and equity, they were pretty much guaranteed a loan. The revised application process will be similar to a new mortgage application.
During the recession, many reverse mortgage holders failed to pay the required property taxes and hazard insurance premiums. In addition, the real estate market tanked, creating huge losses on defaulted and foreclosed properties. The FHA’s losses were so significant that the Treasury Department had to provide the Administration with a $1.7 billion bailout in 2013.
As a result, after April 27th, 2015, applicants will be required to demonstrate both the “willingness” and “capacity” to meet their financial obligations before obtaining a reverse mortgage. Lenders will pull borrowers’ credit reports and credit scores, just as they do for home loan mortgages.
Homeowners will have to prove that they have paid their real estate taxes and homeowner association fees on time for the past 24 months. They will also have to show proof of employment, income and other financial assets.
Click here to read more on the upcoming changes to reverse mortgages.
Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.