Reverse Mortgage Financial Assessment is Here!
Reverse Mortgage borrowers will soon be required to prove their "ability and willingness" to meet the FHA Home Equity Conversion Mortgage or HECM financial obligations. The new Financial Assessment (FA) requirements go into place for all FHA case numbers assigned on or after March 2, 2015. Since reverse mortgages do not require principal and interest payments, the criteria is easier than qualification for conventional mortgages. You may want to apply now, even if your income and credit is fine, to eliminate the need for additional documentation and longer processing times.But it's important to act now as counseling must be completed prior to ordering the case number. For California borrowers, you must schedule counseling right away because of the 7 day waiting period between counseling and application. Application and counseling certificate must be received prior to the end of February!
Summary of Financial Assessment Guidelines
HECM Borrowers who show sufficient income and assets and good credit will breeze through the reverse mortgage process. If not, we will review compensating factors which show your willingness to manage your finances. You may need to have a set aside in place for property taxes and insurance. Unfortunately, some HECM borrowers will not qualify.
What is considered satisfactory credit for the new reverse mortgages?
All housing and installment debt for the past 12 months were made on time and no more than two 30 day lates in the past 24 months.
No major derogatory credit on revolving accounts that include 90 day lates or 3 or more payments more than 60 days late.
Must document the previous 12 months housing history.
Analysis will include judgments, delinquent federal debt and FHA mortgages, Chapter 7 & 13 Bankruptcy, charge off and collection accounts and other derogatory credit reported. Supporting documentation and explanations will be evaluated and could be considered extenuating circumstances and make it possible to get the reverse mortgage although a set aside account for property charges may be required. We will try to determine if borrower's have a disregard for financial obligations, are unable to manage debt or problems were a result of individual circumstances beyond control.
For Reverse Mortgage purchases, the guidelines could be different and on this date have not been issued by the various Reverse Mortgage Lenders.
For the complete Reverse Mortgage Financial Assessment Guide - click the link below:
In summary, I am not one to rush people into reverse mortgages or 'panic lending' but you should consider getting your application and counseling in prior to the end of February. You will be able to qualify under the old parameters. As long as we have your case number assignment, it will be good until the appraisal expires (4 months from appraisal date). We can hold your application if you are not ready for the appraisal yet. But get your counseling scheduled now! Click here for Reverse Mortgage Counseling List and NCOA booklets. These are the biggest changes yet for reverse mortgages and please contact me for more information.