Reverse Mortgage Financial Assessment to Begin March 2015
The Department of Housing and Urban Development (HUD) has issued a financial assessment for reverse mortgage borrowers that will take effect March 2, 2015
HUD writes in explaining the purpose of financial assessment, “The mortgagee must evaluate the mortgagor’s willingness and capacity to timely meet his or her financial obligations and to comply with the mortgage requirements.” The mortgage requirements include paying property taxes, homeowner’s insurance and keeping up home maintenance.
HUD states, “In conducting this financial assessment, mortgagees must take into consideration that some mortgagors seek a HECM due to financial difficulties, which may be reflected in the mortgagor’s credit report and/or property charge payment history. The mortgagee must also consider to what extent the proceeds of the HECM could provide a solution to any such financial difficulties.” For borrowers who do not demonstrate their willingness to meet their loan obligations, life expectancy set-asides will be required.
The mortgagee letter also specifies documents that must be collected and submitted to all borrowers. The documentation has been updated to include “Financial Assessment Documentation” including, credit history, income verification, asset verification, property charge verification, residual income analysis, documentation of extenuating circumstances or compensating factors and calculations for life expectancy and residual income shortfall set-asides.
If you have a question about qualifying for a reverse mortgage today, or how the financial assessment will impact your situation, contact Carol today.