How Have Reverse Mortgages Changed?

Since 1989 when the first reverse mortgage was funded, the program has matured and become safer for senior homeowners. Here are a few examples:

  • When the program began, homeowners would sign over the title to their home. This has not been the case for decades.
  • In 1998 Congress allocated funds for counseling prior to a borrower starting the refinance process, in 2008, the guidelines were changed so counseling would be conducted by an independent 3rd party.
  • Congress approved the Home Equity Conversion Mortgage purchase or H4P program in 2009. This made it possible for seniors to purchase a home and finance it with a reverse mortgage.
  • With some seniors losing their homes to foreclosure for not paying the property taxes, the financial assessment requirement was put in place in 2015. Now a borrower provides income documents. Credit history is reviewed to ensure they can afford to pay the property taxes, homeowners insurance, any HOA or other fees such as flood insurance and maintain the home. This makes the loan safer for borrowers.
  • Finally, one area that was corrected in August of 2014 was the non-borrowing spouse not having to move out of the home when the borrower vacated the property permanently.

What are the Benefits of the reverse mortgage we know today”?

  • No monthly mortgage payments*
  • You still own your home*
  • Insured by the Federal government
  • You can still leave your home to your heirs
  • Does not affect your Social Security**
    *Homeowner is still responsible for taxes, insurance, and property maintenance.
    **May affect SSI or Medicaid. Please consult with your financial advisor.