The reverse mortgage program changes, in a sense, wiped the slate clean. It created, not only a new, consolidated program, but changed the rules on how future transactions will be conducted.
If anything, the new changes also created a new, unexplored frontier where reverse mortgage brokers, like myself, will have to find new opportunities and conquer new challenges.
As a “last resort,” the program found success, helping many cash poor, house rich seniors live a more comfortable, fulfilling retirement. With the changes, however, the reverse mortgage industry will have to adapt as the program becomes a long-term financial planning tool instead of just a tool for crisis management, according to an article in Reverse Mortgage Daily.
I’ve always seen the reverse mortgage program as both. In fact, I’ve never supported the program as a purely “last resort” effort. It cheapened the program and perpetrated a reputation that made many seniors shy away from using it in their retirement planning strategies. They saw it as a way to get out of debt or a bad situation, instead of taking advantage of the potential source of untapped wealth.
The President of the National Reverse Mortgage Lenders Association, Peter Bell, said at the Texas Mortgage Bankers Association’s Reverse Mortgage event in Austin:
“FHA is trying to encourage borrowers to tap their equity slowly and steadily.”
The new changes are both good and bad. It will protect future applicants, if they qualify, sure, but they will also lock out plenty of others who might be in dire need of the reverse mortgage. The truth is though, that unless some changes were made, the program would face greater problems in the future.
For those who qualify, it’s crucial that they do not use up their equity all at once, regardless of their problems. In addition, for those who borrow above the 60%, there will be new laws in place to protect the program. Like anything else, you have to give a little to get a little, and this is no different.
It’s a potentially beneficial direction that caught everyone by surprise because of how different it was from the original proposed changes.
Bell is faithful, though, that these changes will find their way eventually, creating a stronger, better program in the future:
“We will have the opportunity to engage in dialogue with HUD, and maybe have the chance to change things later. It would not surprise me that if we continue to see improvement in the economy, we could see principal limit factor adjustments in the coming years.”
I don’t think any one reason can account for why these changes are taking place but there are steps that are being taken to rectify what wasn’t working and improve what is. We’ve all had to battle changes and adapt, this is simply another frontier we will need to conquer.
All we need to find is an opportunity to do so.
Interested in a reverse mortgage or simply have questions? Give PS Financial Services a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire, we are simply here to help.