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HUD has made it official, reverse mortgage lenders have the authority to help prevent tax and insurance defaults when it comes to financial underwriting and potential reverse mortgage borrowers assessments.
7 Comments
In reading the letter, there is really not much said other than lenders already have the right to reject applications. It does not seem to permit any modifications to the terms of the loan or allow lender mandated set asides. That is an important distinction.
Will the drastic increase in counseling dropout rate be considered? As of yet there is no known impact in the default rate since it generally takes several years before that rate begins to be fully realized.
How soon will HUD address the modifications presented in the June letter to Karin Hill?
Lots of questions, few answers!!!!
Lenders SHOULD underwrite for capacity to pay taxes and insurance.
Although mandated set-asides not allowed, perhaps ‘optional’ set asides should be suggested. Too bad States don’t have a mechanism to have monthly tax payments ACH’d from borrower accounts.
Every insurer I know will accept a ongoing monthly electronic debit so half the problem can be solved with nothing from HUD or the lenders.
Jeffrey,
Voluntary set-asides sound great but if the senior has the right to revoke those set asides, how do they reduce lender risk? If they can be revoked, they should not be considered in whether or not the application should be accepted.
we realy need more convusing paper work for us seniors,,,,,,,,,,,some companies are over 75 pages ,,,,what the heck why not another 10 to 15 ???? asuming it has to be at least 2 or 3 copies ,,,,,,,,,
RM’s require the maintenance of the property, as well as, payment of taxes and insurance already. Further underwriting will soon lead to lender imposed escrows and will ultimately eliminate more seniors who have already lost equity. Unless HUD can provide a uniform guide for RM lenders, this is a slippery slope!
Sorry for making the statement again that seniors should not be asked to pay property taxes slated for schools. Since we cannot use the benefits of doing so, we should not be asked to pay. Does anybody out there share the same opinion? If not please explain why we should.
I agree 100%. My kids been gone from home over 30 years. why am I still paying taxes for other people kids education? That makes no sense to me, please give me an explanation as to why. Can someone do that for me.