Opinions Reverse about Reverse Mortgages

Written by Posted On Tuesday, 04 March 2014 04:35


A young Portland widow named Nellie Young received the first version of a reverse mortgage in 1961. It enabled her to stay in her home.  Without this generous unique loan from her neighborhood Savings and Loan, Ms. Young would have been forced to sell the family home.

Through the ensuing years, a number of institutions created a variety of programs that allowed home owners to draw on the equity in their home, but it took until the 1980’s for a formal program to be created. During that decade HUD released the Home Equity Conversion Mortgage (HECM) program handbook, and the first federally insured reverse mortgage was closed.

Two decades later further strides were made to protect borrowers and the Economic Stimulus Act of 2008 enhanced the attractiveness of these loans by allowing an increased FHA reverse mortgage loan limit, currently set at a maximum of $625,500, and by making it unlawful to bundle other financial products into a reverse mortgage transaction.

We as Realtors have likely heard stories about Reverse Mortgages gone wrong, and most of these tales result from misinformation given to the borrower. One of the primary reasons is that senior borrowers have been unaware they are still required to pay property taxes, and neglect this responsibility.

Fully explained and implemented, this can be a valuable tool for homeowners 62 and older to maintain their independent lifestyle, and it should be a resource that we Realtors are familiar with.

For further information, refer your clients, family members and friends to this HUD portal http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten. It includes a free downloadable booklet "Use Your Home to Stay at Home,", and answers the top 10 questions about Reverse Mortgages. 

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