Reverse Mortgage Guide

The proposed changes in to the Home Ownership and Equity Protection Act (HOEPA) are getting a lot of media attention because it is said that the proposed rules, if approved, will greatly level the field for borrowers.

“Our goal is to promote responsible mortgage lending, for the benefit of individual consumers and the economy,” said Federal Reserve Chairman Ben S. Bernanke. “We want consumers to make decisions about home mortgage options confidently, with assurance that unscrupulous home mortgage practices will not be tolerated.”

Right.

And yet, while the proposal has some very good features the improvements aren’t worth a dime to senior citizens. The reason? Reverse mortgages are specifically excluded from the new rules — a point NOT made in the news release or the highlights helpfully handed out to reporters by the Federal Reserve.

Here’s what the full proposal actually says:

“Higher-priced mortgage loans” would be defined as closed-end consumer credit transactions secured by the consumer’s principal dwelling where the APR on the loan exceeds the yield on comparable Treasury securities by at least three percentage points for first-lien loans, or five percentage points for subordinate-lien loans. Higher-priced mortgage loans would include home purchase loans, refinancings of such loans, and home equity loans, but would not include mortgages on vacation properties, open-end home-equity plans, reverse mortgages, or construction-only loans. Loans to investors generally are not covered by TILA and HOEPA.”

This entry was posted on Tuesday, December 18th, 2007 at 1:52 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.