HUD is making revisions to its reverse mortgage product, with an eye toward ramping up protections for senior borrowers and helping manage risk to the FHA's insurance fund. The changes, which the agency posted on Sept. 3, include limits on how much borrowers may draw down at closing and during the first year after that.
In addition, HUD will mandate a financial evaluation for all Home Equity Conversion Mortgage applicants to ensure that they are willing and able to satisfy the terms of their reverse mortgage. The agency also will require an escrow at closing, based on that financial assessment, for the payment of property taxes and insurance. "Our goal here," according to FHA Commissioner Carol Galante, "is to make certain our reverse mortgage program is a financially sustainable option for seniors that will allow them to age in place in their own homes."