The reverse mortgage industry can rest easily for the next few months following the Federal Housing Administration’s announcement that it would hold off on implementing a financial assessment component to the reverse mortgage program for an unspecified period of time after January 13 of next year.
While we are still in the dark about what exactly the financial assessment will entail and when it will be implemented, at least the industry gets a breather before another change is implemented. This is not to say that the reverse mortgage changes have been unsuccessful, no one can determine that yet, especially if the reputation of the reverse mortgage program is to change positively along with it, but it is nice to see that FHA is taking into consideration the industry’s thoughts about the upcoming changes.
Assistant Secretary Carol Galante stated at the annual National Reverse Mortgage Lenders Association conference in New Orleans in an article published by Reverse Mortgage Daily:
“We have thrown a lot at you in a short period of time. We threw a lot at ourselves. But this was necessary to get a program that will be stable from a budgetary perspective.”
I get her point of view. There were some components of the reverse mortgage program that needed some fine-tuning before we could move forward but the financial assessment continues to be a source of controversy in the industry.
How is the program supposed to be all-inclusive if it carries a financial assessment? Hopefully FHA is taking this extra time to reassess the pros and cons a financial assessment and looking for ways to make it safer for borrowers without completely alienating others.
In addition, it’s crucial they take into consideration the opinions of industry leaders when making their decisions and analyze how this change will affect the industry as a whole. Most importantly, if they plan to use a financial assessment fairly, they must take into consideration household income and debt or none at all.
If not, the industry will be forced to come up with new strategies that will continue to make the reverse mortgage program a viable option for those who need it, and those who don’t. However, it’s crucial not to wait, make the choice today that will lead you to a better future tomorrow.