Reverse Mortgage Reform Bill Passed With Bi-Partisan Approval - LoanLove.com Reports On What Changes Have Been Made
SAN DIEGO, Aug. 24, 2013 /PRNewswire-iReach/ -- 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 news, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. A recent article from the website covers the recent news of the reverse mortgage reform law that was passed earlier this month and how this new legislation should help to protect elderly homeowners who would like to make use of the reverse mortgage loan type.
The Loan Love article says: "Is the weather forecast calling for snow? Sure, it's summer, but a reverse mortgage law just passed that got the support of both Republicans and Democrats, and in today's political environment, a law that gets bipartisan support is about as rare as a blizzard in August. OK, all joking aside, the new law – called the Reverse Mortgage Stabilization Act – includes lots of reverse mortgage reforms that make these loans much safer and more appealing to seniors who'd like to tap into their home's equity."
This new reverse mortgage law will help to solve many of the pitfalls of this type of mortgage; most notably the lack of understanding an elderly homeowner might have when taking out the loan (these types of loans are very complex) and the risk that they might be taken advantage of in some way by unscrupulous lenders. The new guidelines include safeguards against such problems. The Loan Love article outlines the changes here:
- "First, the law requires borrowers have a financial assessment before being approved for a loan to determine which HECM products – if any – are most appropriate for their needs so homeowners don't end up taking on a loan that's not right for them. This protects consumers from unscrupulous or unknowledgeable lenders who may promote loans that don't meet the homeowner's needs, and it also protects lenders by making sure the loans they write satisfy their lending requirements.
- 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.
- Third, the law limits the amount homeowners can draw when the loan is initially approved, only allowing the amount needed to pay "mandatory obligations" such as closing costs and mortgage liens. The goal here is to protect the fund that oversees reverse mortgages from losses that can occur when the entire amount of the loan is drawn out immediately after signing the loan agreement.
- And finally, the new law requires that changes to the rules regarding reverse mortgages can only be made if those changes are designed to improve the financial safety and reliability of the program."
For more information on reverse mortgages and how the new law will affect senior mortgage borrowers, please visit LoanLove.com.
Media Contact: Kevin Blue, LoanLove.com, 949-292-8401, firstname.lastname@example.org
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