Senate Launches Senior Anti-Fraud Hotline for Seniors
In an effort to better protect seniors from falling victim to investment scams or internet thief, the Senate Aging Committee has launched an anti-fraud hotline where seniors or relatives can call and report if they suspect or feel they have fallen victim to a scheme.
In launching a hotline directly geared toward helping out the senior community, the Aging Committee is taking the necessary steps to make sure people or companies who scam seniors are caught and/or investigated. The lack of concern for the senior community is becoming a thing of the past as, day-by-day, new programs are launched in an effort to help seniors.
Most importantly, relatives can report suspected fraud as well. In the past, even if seniors have fallen victim to a scam, they’ve been too embarrased to report it, even to a family member. This way, if a relative feels something out of the norm has happened to their relative they can take action themselves and ask questions later.
New FHA Regulations Created to Protect Non-Borrowing Spouses
Recent changes to the reverse mortgage program have made it a more advantageous retirement planning tool for the future. However, for some borrowers, there was still the lingering question of what would happen to their spouse upon their passing.
Non-borrowing spouses can finally sleep soundly, thanks to the recent changes made by the Federal Housing Administration regarding non-borrowing spouses.
In a recently released mortgagee letter, outlined by Reverse Mortgage Daily, non-borrowing spouses will be able to remain in their homes, after the borrower has passed away, if they were married to the borrower at the time of closing and their status as a married couple was disclosed at the time through a certified letter.
While not an all inclusive solution, it does demonstrate that FHA is making the necessary changes to protect borrowers and non-borrowing spouses. The new regulations will be set forth for new case numbers assigned on or after August 4th.
HUD Appeals Non-Borrowing Spouse Ruling
The Department of Housing and Urban development is not giving up without a fight and has appealed the October court decision that found them liable for foreclosing on the homes of non-borrowing spouses whose spouse had a obtained a reverse mortgage.
According to an article published by Reverse Mortgage Daily, the appeal, filed by HUD Secretary Shaun Donovan, was submitted by Assistant Attorney General Stuart F. Delery on November 26.
The plaintiffs, Robert Bennett of Maryland and Leila Joseph of New York, filed the lawsuit against HUD after they foreclosed on their homes when the loan became due and payable upon their their spouse’s passing. Both spouses had their names removed from the home’s title so that their spouses could obtain the most money possible when they applied for a reverse mortgage.
HECM Loan counseling is an essential part of any reverse mortgage transaction.
Those who tell any client otherwise are lying.
Reverse mortgage counseling is a safeguard against unethical practices, ensuring that consumers who apply for a reverse mortgage are fully aware of the in’s and out’s of the program. In addition, counseling makes sure that consumers are aware of their financial obligations, such as homeowner’s insurance and property taxes, before they sign on the dotted line.
Personally, I go over every document with the client face-to-face as well, even if they are have been to counseling. A successful reverse mortgage transaction is one in which the consumers fully understand what they’re getting and what they’re giving in return.
The non-borrowing spouses of reverse mortgage borrowers have finally found a reprieve when a court of appeals rule in favor of the two plaintiffs in a lawsuit against HUD.
According to an article in Reverse Mortgage Daily, a court of appeals is holding HUD accountable for providing a remedy for the plaintiffs.
The lawsuit, which was filed more than two years ago, was originally dismissed for lack of standing as the plaintiffs were unable to demonstrate an adequate connection between HUD’s repayment guidelines and the emotional distress caused by HUD’s action.
AARP, however, was able to bring the case back in early 2013 via a court of appeals.
If you are thinking about doing a HECM to HECM Refinance, it’s important to know FHA’s current value limits as well as your current home value. One without the other, makes it impossible to know how much money you are entitled to receive if you refinance.
For instance, if the money you are poised to receive from the refinance is less than the cost of refinancing, it is not in the homeowner’s best interest to do a HECM to HECM refinance.
One exception, however, is if you are refinancing to include a previous non-borrowing spouse on the reverse mortgage loan.
If this is the case, the borrower must write a letter explaining the following:
The HECM loan changes, that were recently passed by Congress, and approved by President Obama, include a financial assessment of the borrower, mandatory set asides for property taxes and homeowners insurance, restrictions on the amount of fund that can be initially withdrawn and…most importantly, inclusion of all borrower spouses on the loan regardless of age.
This last regulation is poised, not only to make big changes in the way reverse mortgage loans are conducted, but also in the way they are repaid when the loan reaches maturity.
In the past, reverse mortgage loans–that have become due–with a non-borrowing have caused unforeseen consequences, which have forced the Department of Housing and Urban Development, to consider making changes to current regulations. Currently, pending the President’s signature, the HUD is one step closer to fine-tuning non-borrowing spouse regulations on reverse mortgage loan applications.
This past friday, August 9, President Barack Obama signed the Reverse Mortgage Stabilization Act into law, according to an article published in Reverse Mortgage Daily.
The bill grants the Department of Housing and Urban Development the authority to establish additional requirements to improve the financial stability and safety of the Home Equity Conversion Program.
The President’s signature was the only component missing after the Senate approved the bill last week. The bill was approved in the House of Representatives back in June.
The additional requirements the HUD is seeking to include are:
In what has been a long and winded battle, the Senate has finally approved a bill granting the Department of Housing and Urban Development the authority it’s been seeking to closely manage the reverse mortgage program, pending the President’s signature.
The Reverse Mortgage Stabilization Act of 2013, which was introduced by Representative Denny Heck and Representative Mike Fitzpatrick in May, will allow the HUD to establish additional guidelines and regulations to the already existing requirements of 62 years of age and older, live in your primary residence and have enough equity in your home.
The regulations aren’t all bad, in my opinion, and will help better qualify future homeowners for the reverse mortgage program. The HUD has been seeking this authority since last year’s audit of the Federal Housing Administration’s insurance fund which indicated that the reverse mortgage program’s losses could require a Department of the Treasury bailout.
The fastest way to apply for a reverse mortgage is with both senior homeowners to qualify and be on title of the house. However, there are still ways to qualify for a reverse mortgage even when one spouse doesn’t qualify as a borrower for a reverse mortgage.
PS Financial Services follows new guidelines as a safeguard for senior households with both a borrowing and non-borrowing spouse, ensures senior homeowners are aware of the rules and regulations when applying for a reverse mortgage.
Very few companies still offer Reverse Mortgages for borrowers with Non-Borrowing Spouses (NBS). At PS Financial Services, a reverse mortgage company in Florida, we DO offer NBS Reverse Mortgages.