HUD gave March 2, 2015 as the implementation date that all lenders implement financial assessments in applying for a reverse mortgage. Stating that there is a delay of certain system enhancement support the changes, had just sent an email to lenders indicating that they are going to delay the policy.
The expected delay may be between 30 and 60 days of the original March 2, 2015 effective date.
HUD created new policies stating that all borrowers applying for reverse mortgage must meet residual income requirements. This is to assure they can meet their responsibilities of paying property taxes and homeowners insurance. The assessments will not be as stringent as a regular forward mortgage. Potential applicants that have mortgage payment defaults, IRS liens, and revolving or installment credit defaults could see themselves either denied or having forced escrow accounts for holding property tax and homeowners insurance funds for the lifetime there loans.
The changes in guidelines will shore up the program and assure the longevity of reverse mortgages for the Boomer generation.
I have heard of situations where people researching reverse mortgages feel pressured by loan officers to hurry up and apply to get underneath the financial assessment guidelines. Such an important financial decision should not be rushed. The financial assessment process may add extra paperwork and time to the underwriting process. The most important consideration is to make an informed decision if a reverse mortgage is the proper financial vehicle for you and your situation. Make sure you feel good about the process and who you work with.