Shanne Sleder of The Mortgage Planners Explains Changes to Reverse Mortgages as Announced by the Federal Housing Administration

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San Diego mortgage broker Shanne Sleder reveals and explains several changes that the Federal Housing Administration recently made to home mortgages.

The HECM Fixed Rate Saver option allows a smaller payout than the HECM Fixed Rate Standard product, in turn reducing risks to the Mutual Mortgage Insurance Fund.

According to a recent article on reversemortgagedaily.com titled FHA to Halt Fixed Rate Standard Reverse Mortgage Starting April 1, the Federal Housing Administration recently announced that they will eliminate the standard fixed rate option for reverse mortgages. This prompts a response from mortgage broker Shanne Sleder of The Mortgage Planners.

“According to the announcement, the FHA made changes to its Home Equity Conversion Mortgage (HECM) reverse mortgage program to reduce risks to the agency’s finances. Among the changes is the elimination of the standard fixed rate option for reverse mortgages. The changes will apply to case numbers assigned on or after April 1, 2013 for loans closed on or before July 1, 2013,” explained Mr. Sleder.

“It’s a shame because the standard fixed rate HECM has been the most popular option over the last several years for seniors who were getting reverse mortgages. Now, they can only choose the saver fixed rate HECM option if they want a fixed rate reverse mortgage,” he continued.

According to the Federal Housing Administration (FHA) Commissioner Carol Galante, the changes are meant to manage and protect FHA’s single-family insurance programs.

The HECM Fixed Rate Saver option allows a smaller payout than the HECM Fixed Rate Standard product, in turn reducing risks to the Mutual Mortgage Insurance Fund.

“The saver fixed rate option requires a lower initial Mortgage Insurance Premium (MIP) of .01% of the loan amount instead of the 2.0% that the standard fixed rate requires. So the closing costs are much cheaper for the saver fixed rate option. However, you can’t borrow as big an amount as you can under the standard fixed rate option,” explained Mr. Sleder.

Besides reducing risk to the FHA’s Mutual Mortgage Insurance Fund, the changes are meant to encourage more private capital investment to return to the housing market and help the FHA stay sustainable for future generations of American homebuyers.

The Federal Housing Administration announcement also mentions that it will be making more changes to its insurance programs in the coming weeks to further reduce risks to the MMI fund.

Projected changes will include raising mortgage insurance premiums for forward loans, requiring additional underwriting standards for certain forward borrower profiles and raising down payments for certain loans.

San Diegans looking to get a mortgage for a home can contact The Mortgage Planners for further guidance on the best type of available loan for their situation.

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