Key question answered on housing relief act
- Posted by admin on August 18th, 2008 filed in Reverse Mortgage Info
- 1 Comment »
The Housing and Economic Recovery Act of 2008, signed into law by President Bush on July 30, has sparked numerous debates over its mechanisms to assist struggling homeowners, future homebuyers and lending institutions. However, some of the complex law’s nuances are poorly understood, and certain provisions have received only a passing mention in news reports. Here is a Q & A about the reverse mortgage section of the new law.
Q: How does the new law affect reverse mortgages?
A: The housing act will have a significant effect on the issuance of home-equity conversion mortgages, also known as reverse mortgages. Proponents of reverse mortgages, which allow homeowners age 62 or older to liquidate their home’s equity over time by deeding the home to a bank upon their death, say the law makes them safer and more accessible than in the past.
The law requires reverse-mortgage borrowers to receive “adequate counseling” from a third party not associated with the lender, and it allows the government to create a new counseling program funded by mortgage insurance premiums. It also reduces possible conflicts of interest by forbidding reverse-mortgage loan originators from selling insurance, annuities or other financial products. They may not give or receive incentives from others to sell such products to reverse mortgage borrowers. The law also places a $6,000 cap on origination fees, which will be adjusted periodically for inflation.
Found here.
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August 19th, 2008 at 3:51 pm
The home is not deeded over to the bank upon the homeowners death. What kind of comment is that? Its the very reason folks are afraid to do these types of loans. The homeowner’s heirs or estate has 6 months to decide what to do with the property, whether they pay back the reverse mortgage or sell the home, THEY GET ALL REMAINING EQUITY. Not the bank, not HUD, not the lender. What kind of website calling itself reversemortgageblog would let this info be in an admin’s comments. Totally false. In addition, there was always the required counseling but the lender could pay for it and it was considered a conflict of interest. Now its up to the client to pay for it.