Page 3 - AAG140_Evolution of Home Equity Brochure

The Safe and Steady
Many Years of Constant
Improvements
Over the years, the HECM loan has been improved
and strengthened through the united efforts of
many different parties including HUD, the FHA,
the Federal Trade Commission, the National
Reverse Mortgage Loan Association (created
in 1997), senior advocacy groups such as the
American Association of Retired Persons (AARP)
and the National Council on Aging (NCOA), and
the now scores of private lenders they work with
to ensure that the HECM is a safe and sustainable
loan for seniors who want to responsibly access
some of their home equity for retirement.
New protections continue to ensure the integrity
and mission of the HECM program to help
seniors unlock a portion of their home equity so
they have the cash they need for a more secure
retirement.
The largest of these safeguards began rolling out
about a decade ago, which was perfect timing,
considering the first wave of baby boomers in
2008 were turning 62 — the age when someone
can first apply and qualify
for a reverse mortgage.
March of Progress
2008 TAKING ACTION: The SAFE Act requires
states to implement uniform procedures when
licensing and registering HECM loan originators.
The Housing and Economic Recovery Act
establishes more consumer safeguards, such
as a limit on origination fees, rules against
cross-selling, and guidelines for counseling
independence.
2009 THE HECM FOR
PURCHASE: The HECM
for Purchase is introduced,
allowing borrowers to
purchase a new home using
a HECM loan. This new option
now provides seniors with
the choice of aging in place in
their current home or aging
in place in a new home.
2010 THE RESULTS: Research conducted
by Marttila Strategies for NRMLA reports that
90% of surveyed borrowers felt no pressure to
proceed, 90% did not feel they were misled in
any way or given wrong information, 80% said
they were likely to recommend the product to
a family member, and more than 50% said they
could not meet their monthly expenses without
their HECM.
2013 NEW POLICIES: HUD releases new HECM
policies creating more consumer and product
safeguards, including placing a limit on the
amount of equity borrowers can access their first
year.
2014 NON-BORROWING SPOUSE
PROTECTIONS HUD: Implements
comprehensive new safeguards for non-
borrowing spouses. To remain in the
home after the HECM borrower dies, the
nonborrowing spouse must meet certain
conditions, such as showing proof of
marriage status at the time the loan was
taken out, proving legal ownership, and
complying with all existing loan terms.