The FHA announced new rules on reverse mortgages that change the cost structure and also limit the cash available to some homeowners. Here are the details.
So, why the new rules?
Well, this program has been a money-suck for the Federal Housing Authority. Almost one in five, 18 percent, of reverse-mortgage loans taken out from 2009 to June 2016 are expected default or already have. That’s cost the federal housing authority $12 billion.
A HUD report issued last fall found that nearly 90,000 reverse mortgages held by seniors were at least 12 months behind in payment of taxes and insurance and were expected to end in “involuntary termination” in fiscal 2017. That’s more than double the number the year before.