The Federal Housing Administration isn’t talking publicly about it, but the agency may be getting ready to lessen the upfront costs of reverse mortgages for some borrowers.
The agency also, however, may be reducing the amount seniors can borrow from their homes.
In a recent conference call with industry participants, FHA officials said they were finalizing plans to offer a home- equity conversion mortgage with almost no upfront mortgage insurance premium attached, according to the National Reverse Mortgage Lenders Association.
“HUD is looking at options to provide a lower-priced (home- equity conversion mortgage) option,” said Lemar Wooley, a spokesman for the U.S. Department of Housing and Urban Development. “We are still working out the details. Our basic plan is to make the product more attractive, while limiting FHA’s exposure to risk.”
A home-equity conversion mortgage is a federally guaranteed reverse mortgage that lets homeowners 62 or older tap into their home equity. The loans and accrued interest don’t have to be repaid until the owner sells the home, dies or fails to live there for one year, but the loans have traditionally carried significant upfront and annual expenses.
