[vimeo id=”86566936″ width=”625″ height=”352″]
Product Changes and Returning to Founding Principles
If you look at the federally insured reverse mortgage one could say we have come full circle coming closer to the program’s original intent. What intent? To help seniors age in place. For the most part that is exactly what the HECM or Home Equity Conversion Mortgage has done since it began in 1989. However one could argue some trends in our recent past did not reinforce that mission. Much of the program’s recent changes since 2008 would have gone unnoticed had it not been for the housing and economic crash. After all why fix what’s not broke? However the HECM program began showing signs of stress beginning with…
For more reverse mortgage tools, technology & training visit www.ReverseFocus.com
3 Comments
Shannon,
Can you send me a written copy of today’s program “Back to Basics”
Thanks
Skip,
I will upload the PDF today for you. Thanks again for being a faithful viewer.
The law [12 USC 1715z-20(a) in part] states the following is the reason for creating the HECM program: “The purpose of this section is to authorize the Secretary to carry out a program of mortgage insurance designed—
(1) to meet the special needs of elderly homeowners by reducing the effect of the economic hardship caused by the increasing costs of meeting health, housing, and subsistence needs at a time of reduced income, through the insurance of home equity conversion mortgages….”
Where is it documented in any authoritative document comparable to the law that the purpose of the HECM is aging in place. After doing a search, it is clear that the HUD HECM Handbook 4235.1 never uses the term “aging in place.” This is an idea outside of the actual reasons given as the purpose of the program.
Aging in place is a possible outcome of a HECM but not a program requirement or even one of reasons why the HECM program was created. Because the concept has so much dogma surrounding it, the concept seems foreign when it comes to program restriction. Borrowers are free to leave anywhere just as long as one borrower resides in the home as his/her principal residence.
While I do not have the statistics, I remember hearing that tenure payments were rarely elected by borrowers even before 2007 when ARMs were so dominant. It would be interesting to see those stats.
As to fixed or adjustable, the real issue is whether the mortgage is open or closed.