This announcement today November 10, 2015 confirms what has been an expected change in how the HECM ( home equity conversion mortgage) is originated. HUD wants long term program viability and wants to meet the demand of an aging population heading into retirement. This new underwriting layer is how the conventional lending side has conducted business for years ( although the recession was in large part due to a lack of income verification) For a reverse mortgage, income verificaton will assure the lender of the homeowners abilty to pay their propertry taxes and insurance. These two responsibilities have ALWAYS been required of the HECM loan and soon verification of that fact will bring further stability. The documentation has been updated to include “Financial Assessment Documentation” that includes, but is not limited to, credit history documentation, income verification, asset verification, property charge verification, residual income analysis, documentation of extenuating circumstances or compensating factors. For borrowers who do not demonstrate their willingness to meet their loan obligations, life expectancy set-asides—full or partial—will be required.
If you are over 62 financial assessment for refinance and purchase HECM’s will go into place after march 2, 2015.
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