Financial Assessment Impact on Reverse Mortgage Lenders

The Department of Housing and Urban Development (HUD) announced last week the implementation of the Financial Assessment for the Home Equity Conversion Mortgage (HECM).  The reverse mortgage industry as a whole welcomes the new guideline to ensure the strength of the program in the long run and added protection for our senior consumers.  The financial assessment is aimed at providing accountability both for borrowers and lenders.  Lenders will be required to closely analyze a borrower's capability to afford and comply with reverse mortgage requirements, such as paying for property taxes and homeowner's insurance.  Some lenders are concerned that loan volume may decrease beginning in March 2, 2015 due to the change keeping some seniors from qualifying.  However, the industry is still working out how the language and criteria of the new rule will affect the lending process, so stay tuned for more information coming soon.