InfoOctober 4, 2017 · Real Estate
HUD’s Recent Decision to Raise Premiums, Tighten Limits on Reverse Mortgages Takes the Industry by Surprise
The Trump administration is planning to raise premiums, place tighter loan limits on a program that helps seniors supplement their incomes.Press Release VideoLoading the player...Details(prREACH)
MIAMI, FL., September 26th, 2017—PS Financial Services, a leading Miami-based Company specialized in Reverse Mortgages Loans, announced that according to a recent statement released by the Department of Housing and Urban Development (HUD), the mortgage insurance premiums (MIP) on Home Equity Conversion Mortgages (HECM) are set to increase from 0.5% to 2.0% of the maximum claim amount at the time of origination. This change is expected to have serious implications for the reverse mortgage industry, and for seniors looking for ways to supplement their incomes.
According to a presentation released by HUD, the figures above will be similar for all loans even if the initial draw amount differs. Loans with premiums greater than 60% during the first 12 months will see rates drop from 2.5% to 2.0%, and the annual premium will decline from 1.25% to 0.5% of the loan balance. The HUD is expected to implement the HECM final rule on September 19th, 2017. It also released a chart depicting the effects of the changes in specific scenarios, and tables of principal limit factors to become effecting on October 2.
The decision was made under the premise that the current HECM program lacks long-term financial viability and it weakens the FHA fund, thereby increasing the risk for taxpayers. This reasoning has been met with mixed reactions from industry experts who believe there are alternative ways for better managing the HECM program.
About PS Financial Services PS Financial Services is a leading company specialized in the Home Equity Conversion program (HECM) or the Reverse Mortgages Loans. The Miami-based company services many seniors in the states of Florida, Georgia, New York, California, Texas and South Carolina, and is conformed by a group of 28 highly experienced Licensed Mortgage Loan Originators and Certified Reverse Mortgage Loan Professionals (CRMP). The company’s Principal was appointed to the Ethics Committee of the National Reverse Mortgage Lenders Association (NRMLA) and has been quoted in premium outlets such as Forbes. PS Financial Services provides an unparalleled level of service and a commitment to helping their customers in a fast, efficient, and low-cost manner. For more information, please visit www.psreversemortgage.com.LinksQuotes“Our industry has been blind sighted by this announcement as this is a huge change that has been decided without any prior warning or industry comment,” stated Phil Stevenson, Owner and Principal of PS Financial Services. “Unfortunately, many seniors will feel the negative impact of this decision, as the average amount of cash that they will be able to access will decline from approximately 64% of the value of their home to 58%” he continued.ImagesContact
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