Changes set to go into effect October 2 have some industry experts worried that reverse mortgages will start costing more but offer less benefits to seniors. Borrowers will see up to a 20 percent reduction in the funds they are able to tap into. This will be in conjunction with a 1.5 percent increase in up front insurance premiums at the time of origination. These changes were announced last week by the Department of Housing and Urban Development.
In an interview with Reverse Mortgage Daily, former assistant HUD secretary Orlando Cabrera said, "I'm very worried about elderly people who rely on the program to access what they can [from the] HECM, which really keeps them in their homes and allows them to get the value they need to do what they want to do."
HUD says the reason for the change to the popular Home Equity Conversion Mortgage is a $7.7 billion increase in liabilities to the insurance fund which protects lenders in the event of default.
Meanwhile, conforming no-point 30-year fixed mortgage rates averaging 3.875 percent while 15-year rates are near 3.125 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.