The first reverse mortgage was offered by Deering Savings & Loan of Maine in 1961 to a woman named Nellie Young the wife of the loan officer’s deceased football coach. Reverse Mortgages gained widespread recognition in 1988 when HUD administered and FHA Federal Housing Authority with the guidance of AARP and established the program to assist senior homeowners aged 62 to access a percentage of their home equity to provide a resource for retirement. Since that time many compliance resources, education, books, guides and videos have been created to create consumer safeguards.
Tampa Florida reverse mortgage Loan Officer Chris Beard stated “I’m often asked by a consumer is it safe for me to transact a reverse mortgage with you from another state” My response is often to educate them on the safe guards of a highly regulated industry,” unless something seems unusual or hidden you have little to worry about everything we do is transparent.”
Consumer Safeguards and Reverse Mortgage
HECM Counseling-In 1999-2000 Reverse Mortgage Counselors were established stating the borrower must receive reverse mortgage counseling as a mandatory step in the process of getting a government-insured home equity conversion mortgage (HECM) loan through the Federal Housing Administration. Since that time revisions have been created to help qualifying homeowners determine a clear understanding of reverse mortgages including: cost, fees, interest, if they have other options and their ability to pay taxes and homeowners insurance. Today counselors will typically review online the very proposal prepared the loan officer provided the consumer.
FHA Federally Insured Government Program- The only reverse mortgage insured by the U.S. Federal Government is called a Home Equity Conversion Mortgage or HECM, and is only available through an FHA approved lender.
HECM lenders- All HECM Lenders must be approved to offer Reverse Mortgage
HECM Servicers- HECM Reverse Mortgage all go to the same select group of servicers like Generation Mortgage, Genworth Financial, Urban Financial MetLife and several
SAFE ACT-Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), was passed on July 30, 2008. The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan officers & Mortgage loan originators who work for an insured depository or it’s owned or controlled subsidiary that is regulated by a federal banking agency
NMLS-Nationwide Mortgage Licensing System is the sole system of licensure for mortgage companies for 53 state agencies and the sole system of licensure for mortgage loan originators under the SAFE Act. NMLS provides a free service for consumers to confirm that the mortgage company or mortgage professional with whom they wish to conduct business is authorized to conduct mortgage business in their state Check Your Loan Officer /Originator License here: http://www.nmlsconsumeraccess.org/
HECM Fee Regulation- Mortgage Insurance & Loan origination fees are capped for HECM loans, unlike the days of subprime No prepay fees are allowed and interest rates are not determined by credit or income.
National Banks-Lenders-A federally chartered bank which is a member of the Federal Reserve System and the Federal Deposit Insurance Corporation. A charter indicates that the bank complies and must continue to comply with appropriate regulations, such as maintaining a certain minimum capital. Learn More about FDIC requirement’s on their website.
Consumer Associations-These regulatory systems above in addition to consumer protection agencies such as The National Reverse Mortgage Loan Association (NRMLA) FHA & HUD have create transparency to establish the HECM reverse mortgage as one of the safest financial tools offered to consumers. NRMLA provides additional consumer protection information on NMLA’s website.
Three Day right of Rescission- Consumers taking out a reverse mortgage have three days from the time of closing to change their mind and fully cancel the transaction if they feel they have made a mistake in closing a reverse loan.
Undeniably, no other financial product has the customer safety measures of a reverse mortgage. While there will always be fraud these measures can be reviewed carefully and regulated loan officer and lenders within this industry have well intended interest in both assisting and educating seniors before moving forward with the loan.
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