Reprinting the Washington Post editorial, “'Putting brakes on reverse mortgages a good idea,” was a bad idea.
The FHA reverse mortgage is certainly not for every senior nor should it be considered by a senior who doesn't fully understand this non-traditional mortgage.
In fact, one of the major problems the industry faces is the huge amount of misinformation about the reverse mortgage. The Washington Post’s editorial has added to that problem.
Maintenance, property taxes and insurance are expenses any homeowners have regardless of the type of loan (if any) they might have. Those costs, left unpaid, can cause a lender to foreclose, but it doesn't necessarily mean a loss to the FHA mortgage insurance fund. That insurance only comes into play if the property has declined in value – which is what has happened during the recent recession.
The adjustments Housing and Urban Development is making to the FHA insurance fund are a result of the market. This fund has long been self-sustaining until the recession caused all mortgage insurers to suffer huge losses.
Seniors who want accurate information on reverse mortgages should seek out HUD-approved counselors who can help them decide if this loan is right for them.
John Shore, Clovis