Bad News and Good News

Both of these items are time sensitive.

First… the bad news.  It looks like the government, one way or another, is going to cut funding to FHA to help support the reverse mortgage guarantee program.  A house appropriations bill passed the last week in July which could cut net proceeds by an unknown amount, and the Senate is now kicking around a version of the same bill that would reduce proceeds by approximately 5%. 

One possible solution which would keep the net available cash at close almost unchanged would be for HUD to reduce the up front portion of the FHA guarantee insurance, and then increase the annual portion.  Friday evening, I searched dilligently for such verbiage in the Senate version of the bill, and I could not find that this potential solution is presently in consideration. 

What’s my prediction?  Expect at least a 5% reduction, and expect it to go into effect in October.

Here is a quick story from an industry source on the matter (also including more links) published just last week:

Senate & House Appropriations

 

Some good news, however,  is that a nationally known and respected organization, the National Council on Aging (NCOA), is temporarily waiving their $125 fee for the required reverse mortgage counseling by a HUD approved source. They, as most counseling firms, will do that counseling over the phone with an appointment. So, while I am not allowed to point anyone in the direction of any particular counselor, I don’t think there would be any problem with posting a link to a public news story on the internet, right? It looks like they are going to pull the plug on waiving the fee on September 30:

NCOA News Story

 

So, do you know any seniors that need or are considering a reverse mortgage to help pay for health expenses, home repair expenses, or just to provide a safety net?  Between this potential guarantee reduction and an increasing interest rate environment (which we all expect), NOW would be the time for that senior to take action.  Waiting will very likely decrease the amount that a senior will receive from the process.

Agents, all of this is also affects the HECM for purchase program.  So, if you have any seniors downsizing or moving to your area to be close to children, etc., now is the time for them to act.