In 2013, everything changed in the Reverse Mortgage industry. With the Reverse Mortgage Stabilization Act of 2013, the Feds implemented strict guidelines to protect borrowers. The act was created to provide safeguards for consumers, lenders, and the FHA which insures the loan.

Today’s reverse mortgage programs contain numerous safety features to ensure that seniors retain their rights as the homeowner, and reduce any risk to themselves, their home, or their family.

At Reverse Mortgage Group, we go one step further with our own safeguards, along with education and open communication. To help with this, we have created a list of the most important consumer safeguards.

1. Independent Counseling. Before a reverse mortgage application can be processed, the prospective borrower must first meet with an independent counselor. The HUD approved counselors have no affiliation with lenders. Their job is to review the transaction, answer questions, make sure the borrower understand the loan, and also suggests alternative options the borrower can look into.

2. Limitation on Fees. Origination fees are capped and may be financed as part of the reverse mortgage. This means a senior incurs very little out-of-pocket expense to get a Reverse Mortgage. Now, even though HUD allows – and most lenders charge – a $6,000 origination fee, we do not. We believe this is excessive and refuse to charge this fee just because most other lenders do.

3. Advance Disclosure. Under the FHA HECM program, the Total Annual Loan Cost, or “TALC” disclosure, is required by the Federal Reserve Board.  We make sure this document is provided to our prospective borrower early in the process so that our clients are made fully aware of the costs incurred in obtaining a Reverse Mortgage.  This document displays the total transaction costs over the projected life of the loan.

4. No Maturity Date.  A reverse Mortgage is designed to last for the homeowner’s lifetime. In a regular forward loan, a rate is fixed for a particular term, like 20 or 30 years. The fixed rate on a standard HECM loan has no term other than the lifetime of the borrower. The fact that there are no required payments and there is a lifetime right to occupy the home provides great protection against unforeseen or unanticipated future circumstances, rendering Reverse Mortgages vastly safer than other loan alternatives.

5. No Prepayment Penalty. Reverse mortgage loans are not typically due and payable until the senior permanently moves out of the home. It can however, be paid off at any point with no additional fees or costs.

6. No Penalty for Canceling the Loan. After the borrower signs their loan documents, they have up to three days to cancel the transaction. This so-called “right of rescission,” allows the senior to “back out” of the loan for any reason whatsoever with no penalty.  With the extent of education and communication we provide, this is extremely rare with Reverse Mortgage Group, but the safeguard is in place for your protection.

7. Asset Protection. In no event will the repayment amount exceed the value of the home, as long as the property is sold to pay back the reverse mortgage. If a decision is made by the heirs to keep the home, then the pay-off amount would equal the total balance on the account. All equity in the house always belongs to the borrower and their heirs.

8.  No Change in Title. The borrower retains title to the home, just as with a regular forward mortgage. In many cases it’s even possible  to close the loan within the trust, if the title is held in the trust.

9.  Prior to the Stabilization Act of 2013, if the borrower who signed on the loan died or left the house, the surviving spouse was obligated to repay the outstanding loan in order to remain in the home. Reverse Mortgage Group allows a “non-borrowing” spouse to be included on the loan. This allows the surviving spouse to defer “due and payable” status and establish legal ownership to remain in the property.

Have questions for us? No problem, connect with one of our friendly Reverse Mortgage Experts to get all of your questions answered. Just click the button below to schedule a time that works best for you!