The changes to the reverse mortgage program will affect everyone. From HUD to brokers to borrowers, these new changes are poised to change the reverse mortgage program (as we know it) completely.
For brokers, these changes have been in the back of our minds for a while. We knew change were coming, we even knew some of the proposed changes, but we didn’t know the whole story.
Namely, the fact that the two existing reverse mortgage programs, the Standard and Saver, will be consolidated into one product and the amount that borrowers potentially qualify for will be cut by 15%.
In truth, these new changes caught me by surprise but that’s the name of the game; we have to constantly adapt to changes in the business. In fact, this isn’t the first time we’ve have to adapt to changes. On April 1st, with the elimination of the fixed-rate Standard, we were forced to retool our strategies to fit future consumers’ needs based on the products available to them.
It will take some time, especially as lenders adapt to the new HECM landscape, but we will find the middle ground eventually, offering the best options for our clients.
The changes could become a breeding ground for a new kind of animal: the retirement planning animal, that is. Often seen as a “Hail Mary,” according to a Reuters column, I’m sure there were consumers who were hesitant to use it. By making the program safer, but also more restrictive, the changes could potentially open up the market to a new niche of consumers, ones who could balance out the scales in the future.
One of the biggest hurdles we will have to overcome, however, is applicant approval. Before the changes, a homeowner who was 62 years of age and older, lived in their primary home and had enough equity, could qualify for a reverse mortgage.
This will no longer be the case.
The problem is, when does “restrictive” become “too restrictive”? As the full impact of the changes occur over the next several months, this is a question I’ll keep asking myself. Hopefully, my answer will be: “restrictive enough but not suffocating.”
Interested in a reverse mortgage or simply want more information? 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’re just here to help.
Click Here for Part 1: HECM Loan Changes…What They Mean for HUD
Click Here for Part 3: HECM Loan Changes…What They Mean for Borrowers