BEN CARSON/HUD: “The Trump administration is planning to raise premiums and place tighter loan limits on some borrowers in a controversial mortgage program that helps seniors supplement their incomes.
The U.S. Department of Housing and Urban Development on Tuesday [8-29-17] plans to announce the changes in a letter to lenders to the so-called reverse mortgage program, which allows seniors to take out a loan against the value of their home. The Trump administration feels the changes are necessary to put the program, which is backstopped by taxpayers, on a sounder financial footing.
‘Given the losses we’re seeing in the [reverse mortgage] program, we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers,’ HUD Secretary Ben Carson said through a spokesman.
The modifications won’t apply to borrowers with existing mortgages, but will affect those who take out new loans. Some 650,000 borrowers have outstanding reverse loans insured by the Federal Housing Administration, which is part of HUD.
Most new borrowers will pay bigger premiums upfront but lower ones over the life of the loan, lessening the risk to taxpayers if seniors live longer than predicted. Borrowers will now pay 2% of the amount of the home’s value upfront and 0.5% annually over the course of the loan.”
-Laura Kusisto, “Trump Administration Plans New Restrictions on Reverse Mortgages,” The Wall Street Journal online, Aug. 29, 2017 10:04am