Reverse Mortgage Reform Law Passes - Loan Love Reports On What The New Law Will Mean For Senior Homeowners
San Diego, CA (PRWEB) August 20, 2013 -- 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. The team at LoanLove.com continues to show their dedication in helping both first-time and experienced homeowners with their knowledge and expertise on the mortgage industry. With their many valuable resources and top-rated professionals, LoanLove.com strives to stay on top of all mortgage-related news, such as the recent reverse mortgage reform of 2013. In helping home owners and loan borrowers understand the new reform bill, a new Loan Love article guide has been released to get customers better acquainted.
The new law, aptly named the Reverse Mortgage Stabilization Act, was passed after receiving binary support from both Democrats and Republicans and supports many reverse mortgage reforms. As the Loan Love article “Reverse Mortgage Reform 2013 (Updated Guidelines)” expresses, the bill was passed with the intention of making reverse mortgage loans safer and more appealing for seniors who want to take advantage of their home equity. But how exactly does a home owner make use of their home’s equity?
“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.” states the article. However, a HECM is not without its risks. The new law is designed to secure both the interests of consumers and lenders alike with a few new requirements."
For instance, the mortgage reform bill now requires loan borrowers to go through financial assessment before being authorized for a loan. This is to determine if a borrower is applicable for any HECM products and to provide only the most relevant HECM loan s. What this allows is homeowners having the option to avoid unnecessary loan products that may be promoted to them, as well as assuring lenders that their loan requirements will be met.
The LoanLove.com article further states: “Second, 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.”
The new law also sets a cap on the amount of money homeowners can withdraw when a loan has been passed. What this means is that a borrower may only withdraw enough to pay for costs considered “mandatory obligations”, such as closing costs and a mortgage lien. This helps protect the funds that go into a reverse mortgage loan and ensure that no losses are incurred when the entire amount of the loan is withdrawn right after a loan has been approved.
Borrowers and lenders can rest assured that their loans are being protected as the law states no changes can be made to reverse mortgage lending procedures unless designed to specifically improve the financial security and accountability of the loan. “By signing this bipartisan bill into law today, the law now respects that desire while at the same time enacting safeguards for both lenders and seniors. Republicans and Democrats worked together to get something done in Washington” says Congressman Mike Fitzpatrick, a sponsor of the Reverse Mortgage Stabilization Act.
For more information on reverse mortgages, please visit LoanLove.com.
Kevin Blue, Loan Love, http://www.LoanLove.com, +1 (949) 292-8401, [email protected]
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