Reverse Mortgage Stabilization Act – A New LoanLove.com Guide To Today’s Home Equity Conversion Mortgages

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LoanLove.com provides home owners with a guide discussing the newly passed reverse mortgage law.

LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. With a new law that has been recently passed, the mortgage industry is experiencing many changes, mostly with the way reverse mortgage loans are handled. This new bill, called the Reverse Mortgage Stabilization Act was passed in agreement from both the Republican and Democratic parties with the intention of securing the interests of both loan lenders and borrowers when it comes to reverse mortgages. But in what way? LoanLove.com explains all in a guideline from their newest article.

This Loan Love article, titled “Reverse Mortgage Reform 2013 (Updated HECM Guidelines)” discusses all the new reverse mortgage requirements that come with the new law. It also helps consumers in understanding how a senior home owner may make use of their home’s equity. As the article states:

“For most people, the only way to make use of the equity you’ve built up in your home is by selling or refinancing and pulling equity out at closing. A reverse mortgage (you may know it by its more formal name – Home Equity Conversion Mortgage or HECM) lets people who are at least 62 years old access that equity using an entirely different approach: Homeowners can take money out of their homes without having to make any monthly payments. What’s more, the homeowner keeps the title to their home for the entire time they’re living in it.”

A HECM may be tricky to work with for those inexperienced with reverse mortgage loans however. That’s where the new law helps protect both loan borrowers and lenders. For instance, it is now a requirement for loan borrowers to go through a mandatory financial assessment each time they are permitted a loan. This will help determine if a consumer is eligible for any HECM products, if any, and apply the most convenient HECM product for their needs. This also prevents the unethical practice of lenders handing out loans that don’t align with a home owner’s needs. In the end, it also protects the lenders by allowing them to write realistic lending requirements.

Another way the Reverse Mortgage Stabilization Act protects HECM s is the use of escrow accounts. The Loan Love article elaborates on this: “When necessary, the law requires an escrow account be established to prevent defaults that can occur when a homeowner falls behind in paying homeowner’s insurance or property tax bills. This step protects lenders from losing their investment in homes when homeowners can’t pay these bills or simply refuse to.”

Loan borrowers are also now limited to how much they can withdraw finalizing loan approval. This means that only a certain amount can be withdrawn at any time, allowing only enough to pay for necessary payments, or “mandatory obligations” (closing costs, mortgage liens, etc.). This will help ensure that no losses are incurred such as when the entirety of a loan amount is withdrawn from a loan borrower after signing a loan agreement. Finally, the new law states that any changes to the rules in relation to reverse mortgages can only be made if it will revamp the loan lending program in such away to increase its security and reliability.

Although all these new laws may be restrict a certain aspects of loan lending, borrowers and lenders can be more at ease and not have to worry about digging themselves in a deeper hole financially. To learn more about a HECM and the new rules implemented by Reverse Mortgage Stabilization Act, please visit LoanLove.com.

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Kevin Blue
Loan Love
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