Archive for September, 2009

HUD Reduces HECM Principal Limit 10%! 

Posted on September 27, 2009. Filed under: 1 |

Ah, how quickly HUD changes the lives of seniors! As of October 1, 2009, many of those senior homeowners who either owed a large mortgage balance or just wanted a certain amount of money won’t be able to do a Reverse Mortgage or won’t get the money they needed.

Beginning October 1st there will be a 10% reduction in the Principal Limit (the money you can borrow) on a HECM (Home Equity Conversion Mortgage) better known as a Reverse Mortgage. This only hurts seniors, the very people the governments claims they want to help.

I get concerned with the changes that HUD makes with very little warning– like this one. Days before September 24th we got wind of this change. Such little notice for us to warn our borrowers is getting too typical. Shades of the Fannie Mae directive the end of March which commanded Reverse Mortgage lenders to increase their margins (the money the lender makes over the interest rate.)

Stay tuned, there WILL be more–just when you think your borrower is all settled and understands the process, and just when you think you can make things easier for them, seniors will get more surprises dumped on them.

I recommend you keep uppermost in your mind an excellent blog from well known expert, author, and attorney, Dennis Haber. His blog address is: www.DennisHaber.com

His blog about the 10% reductions ends brilliantly:

“When an industry is incapable of policing itself, when regulators set inappropriate guidelines, lawmakers will gladly fill the void.

When a particular cohort is treated badly there is the concept of intended consequences. To those lawmakers on the state and federal level who refuse to get it right, who have forgotten what “We the people” means, who try, for example, to convince seniors that they are working in their best interests when they are not, the power of the vote will serve as a good reminder?”

Stay tuned! There is sure to be more from HUD– hey, maybe getting in touch with your government about how you feel about all these changes and losses might help!