Reverse Mortgage Benefit Tucked Away In Housing Bill
The Federal Housing Bill of 2008 has an additional perk for senior citizens borrowing money via a reverse mortgage. The cap on reverse mortgages has been lifted to $625,000 and fees that can be charged by lenders have been restricted.
I wonder if the costs and the risks in these loans will make lenders less willing to make the loans as their income opportunity will be lowered. No one wants to see the unscrupulous take advantage of senior citizens so I am not completely against safeguards.
However, politicians know seniors are one of the most reliable voting blocks out there. So whenever the politicians make laws targeting seniors, expect them to be very one sided. Mortgage companies may have to lower their fees so much now that the loans will be much harder to attain.
Now there will be a higher borrowing level on FHA reverse mortgages — with $625,000 of home value as a cap, and a $417,000 borrowing limit. Fees will be capped at 2% of the first $200,000 borrowed, and 1% on the balance — with an absolute maximum of $6,000 in fees.
These rules apply to FHA mortgages, which insure the lender against the possibility that the homeowners will stick around far longer than anticipated! via TheStreet.com
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Comment by buytoletstudent on 5 August 2008:
I live in the UK at the moment and am having trouble sorting out. In the UK we do have a system of grants and pension aid towards providing for the elderly (http://www.financingretirement.co.uk/grants-and-funding-for-senior-citizens.html) but there is very little in term of mortgage allowances aim at that age demographic. Do you think the Federal Housing Bill of 2008 and its benefits for the elderly could have a similar but opposite effect for younger people wanting to borrow? You do suggest this in you article can you expand on it please or suggest some other sources where I could find this information out.
Thanks,
Jim