Saturday, July 13, 2013
Reverse mortgages may not remain "slam dunk"
Reverse mortgages, as a kind of “ATM” for baby boomers in retirement, may come under more scruting by HUD and the FHA soon, according to a New York Times Business Day story by Tara Siegel Bernard Saturday, July 13, 2013, link here.
The FHA eliminated a type of “lump sum” loan in 2012, but how it is considering rules requiring senior borrowers to undergo a financial assessment, which can include credit report, and evaluation of income, expenses, net worth, and liquidity.
Borrowers have run into problems, like not being able to pay local property taxes. (In Arlington VA, being one day late with a 6-month tax payment results in an automatic $250 penalty.)
In my own circumstances, I would not be eligible for such an instrument because the house in which I have the right to live technically belongs to a trust. There are indeed trade-offs in how you set things up.