SAN DIEGO, Aug. 22, 2013 /PRNewswire-iReach/ -- LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending news, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. In helping loan borrowers stay on top with latest news in the mortgage industry, LoanLove.com discusses reverse mortgages 2013 trends in a brand new article. Titled "Reverse Mortgage Reform 2013 (Updated HECM Guidelines)", the Loan Love article discusses the newly implemented reverse mortgage law and what it will mean in the future for senior home owners and loan lenders.
For the uninformed, a reverse mortgage loan, otherwise known as an HECM (Home Equity Conversion Mortgage), allows senior citizens – those of at least 62 years of age – to make use of their home's equity by drawing out money from their homes without having to make monthly payments. More over, a homeowner will retain their title to their home the entire time. While the benefits are clear, there can be a few risks involved when taking on a reverse mortgage loan. To help prevent these risks, the U.S. congress has recently passed a new law called the Reverse Mortgage Stabilization Act with the hopes of protecting the interests of loan lenders and borrowers alike. As the bill's Republican sponsor Congressman Mike Fitzpatrick states:
"By signing this bipartisan bill into law today, the law now respects that desire while at the same time enacting safeguards for both lenders and seniors. Republicans and Democrats worked together to get something done in Washington."
How the Reverse Mortgage Stabilization Act protects the loan lending process is by adding a new set of implemented rules. First, the law now requires borrowers to undergo a financial assessment to determine which HECM products are appropriate for a borrower, if appropriate at all. This helps loan borrowers from taking on loans unsuitable for their needs while satisfying a loan lender's lending requirements at closing costs.
The Loan Love further elaborates on the bill with this statement: "Second, when necessary, the law requires an escrow account be established to prevent defaults that can occur when a homeowner falls behind in paying homeowner's insurance or property tax bills. This step protects lenders from losing their investment in homes when homeowners can't pay these bills or simply refuse to."
Also, the law puts a limit cap to how much a homeowner can withdraw upon signing a loan agreement. This is to help circumvent losses made if a loan borrower decides to withdraw the entire amount of a loan by only allowing enough cash for payments considered 'mandatory obligations' instead. These mandatory obligations can range from closing costs to mortgage liens.
Finally, the Reverse Mortgage Stabilization Act now requires that any new adjustments made to the rules can only be implemented if the changes improve the assurance and reliability of the reverse mortgage loan lending process, as the Loan Love article explains. Knowing these guidelines can help future home owners make the best of their home equity and take on reverse mortgages with confidence.
The learn more on the Reverse Mortgage Stabilization Act and Home Equity Conversion Mortgages, pleasevisit LoanLove.com
Media Contact: Kevin Blue, LoanLove.com, 949-292-8401, firstname.lastname@example.org
News distributed by PR Newswire iReach: https://ireach.prnewswire.com