Recent Changes

Reverse Mortgage Home >>> Reverse Mortgage Changes

With little warning that a big change was coming, Fannie Mae recently made allowance for higher margins for reverse mortgage lenders. Basically, you can interrpret this to mean a higher interest rate for seniors acquiring a reverse mortgage. In addition to a higher margin, this percentage can change from when the process starts until and loan is funded.

In the process of trying to increase the profit lenders can profit from selling reverse mortgages by raising fees and by now allowing rates to changes. There is a fear that this can also in crease fraud.This can allow margins to fluctuate until the entire process is finished.

The borrower receives a disclosure form from the lender that projects the maximum amount of money the borrower can receive. But with this new ruling, the rate can fluctuate constantly and the senior will not know the final amount until close to the day of closing.

The senior's counselors must help them through this turbulent transition. Unfortunately, this is not a good situation for seniors and members of the Reverse Mortgage Association for Loan Officers have gathered to air their dismay at these recent changes.

There exists a fear that this recent change will lead to fraud and deception by unethical lenders. Quoting a low margin without fully disclosing that the rate can change by the end of the process. This is called a bait and switch strategy.