How Reverse Mortgages Changed Througout 2018
2018 has been a year of big changes for reverse mortgages. Ever since HUD changed the reverse mortgage rules in Oct. 2017, the industry has shifted drastically. At first, it had the effect of reducing reverse mortgage volume, since HUD significantly tightened loan requirements for borrowers. Volume was also reduced because the rules decreased reverse mortgage payouts and increased upfront payouts for borrowers.
Positive Changes for Reverse Mortgage Borrowers
While 2018 has been a challenging year to be a prospective reverse mortgage borrower, a few rays of sunshine have still broken through the clouds. The biggest positive change is the fact that HUD as increased the reverse mortgage lending limit from of $637,650 to $679,650.
In addition, those who are interested in getting a jumbo reverse mortgage now have significantly more options; previously, only borrowers who had a home valued at $1.5 million or more could apply for a reverse mortgage. Now, lenders are issuing jumbo reverse mortgages to borrowers with homes valued at as little as $850,000. In addition, overall interest rates for jumbo reverse mortgages have fallen, and borrowers are now able to get larger payouts, which are based on age.
HUD Now Requires Second Appraisals in Certain Situations
While 2018 has certainly seen some positive trends in the reverse mortgage industry, one thing that many borrowers may have to contend with is the fact that the FHA/HUD is planning to require second appraisals for many reverse mortgage applicants. Now, the FHA will perform a collateral risk assessment on all appraisals for reverse mortgages. If they think that the value has been overestimated, they will require a secondary appraisal to determine the home’s true value.