Trump administration to reduce reverse mortgage benefits

The U.S. Department of Housing and Urban Development announced changes last week that will reduce reverse mortgage proceeds and increase fees to most seniors that use reverse mortgages to supplement their income.

This does not impact existing reverse mortgages, but will affect new reverse mortgages starting Oct. 2.

These changes are being done to help shore up the negative Federal MMI fund. If you are considering a reverse mortgage, it is critical to begin the process now, before this deadline.

The industry is anticipating a surge in business to lock in higher proceeds before these changes occur.

A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home, without having to give up title, or take on a new monthly mortgage payment. The money received can be used for any purpose.

The loan amount depends on the borrower’s age, current interest rates, and the value of the home. The homeowner must remain current on property taxes and insurance.

A reverse mortgage does not have to be repaid until the borrower sells or moves out of the home permanently, and the repayment amount cannot exceed the value of the home.

After the loan is repaid, any remaining equity is distributed to the borrower or the borrower’s estate.

For more information, call David Chee, NMLS ID#263222 at (800) 9673575 at HighTechLending, Inc., Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. NMLS #7147. 7777 Greenback Lane #210 Citrus Heights, CA 95610. NMLS Consumer Access: www.nmlsconsumeraccess.org.