Within the past week major changes have come about the reverse mortgage industry within the United States. Legislation in congress has adjusted the “Home Equity Conversion Mortgage Program” otherwise known as the reverse mortgage. This has been in the balance for some time now as a means of changing consumer perception of the type of loan. Over the past few years the perception has been if there is a default on a reverse mortgage, the borrower will be eliminated from the home and dive deeper into financial crisis. The main goal during talks in Washington has been strengthening borrower protection.
In order to increase borrower protection from loan companies, background checks will make it much harder to qualify for reverse mortgage loans and prevent borrowers from being booted from their homes. For these changes to seamlessly occur, a strict financial assessment will take place as a means of protecting lender from defaults. This change will also set limits on on the amount borrowed and withhold capital to cover property taxes and homeowner insurance. Another major change involves surviving spouses of borrowers being protected from eviction. With these changes set to take place as early as October 1st, 2013 the public perception is bound to change the industry and create a possitive outlook for both borrowers and lenders.