Pennsylvania Has New Reverse Mortgage Guidelines

New reverse mortgage guidelines in Pennsylvania are aimed at protecting homeowners. The Pennsylvania Department of Banking and Pennsylvania Department of Aging set up new rules to help seniors avoid being taken advantage of by scam artists or getting bad advice about reverse loans.

Protecting Reverse Loan Borrowers

“Because reverse mortgage products are specifically designed for — and marketed to — older residents, we feel a particular responsibility to safeguard their interest by making sure that they are not taken advantage of,” said Steve Kaplan, Secretary of Banking, in a statement. “Our policy is designed to make these products, which can be useful to some, available under the right circumstances.”

Reverse Mortgage Rules

The state’s reverse mortgage guidelines are aimed at keeping reverse mortgage lenders from offering borrowers loans for the purpose buying the lenders’ products and services. Reverse mortgage lenders also won’t be able to receive fees for referring borrowers to companies that offer products and services obtained with reverse mortgage proceeds.

Reverse mortgages should not be offered to borrowers if lenders think that the loans would be wrong for the borrowers’ situation. That could include cases were a borrower does not understand how reverse mortgages work or the terms of a specific loan.

Home Equity Conversion Mortgage (HECM) Counseling

Reverse mortgages have pros and cons and it is important for borrowers to get all the facts before applying. Some critics of these loans argue that many borrowers are not being counseled by qualified individuals and that these loans have high fees. You can get all the information you need by talking with a housing counselor (this is required for FHA’s HECM reverse mortgages) approved by the Department of Housing and Urban Development.

This entry was posted on Monday, August 2nd, 2010 at 1:48 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.