The Federal Housing Administration, or FHA, is an agency of the United States federal government that was created under the National Housing Act of 1934. Because so many banks failed during the Great Depression, it was difficult for people to get mortgages to buy homes, so FHA was created to insure loans that met certain lending guidelines. FHA’s role in the mortgage market made it possible for banks to lend confidently to home buyers in a time of severe economic hardship and uncertainty and helped support and stabilize a turbulent housing market.
The HECM reverse mortgage is created
The HECM program was created and signed into law by President Ronald Reagan as part of the Housing and Community Development Act of 1987 and placed under the regulatory authority of FHA and the Department of Housing and Urban Development (HUD).
The federal government created the HECM program to give seniors additional financial options in retirement other than just Social Security or other entitlement programs. Because reverse mortgages have historically been considered risky by banks, FHA’s backing of the HECM played a huge role in making it the widely available product it is today. As long as reverse mortgage lenders conform to the FHA HECM guidelines, they can be confident that the loan will be insured and they (and the borrower) will be protected against loss if the borrower ever ends up owing more than the home is worth. The FHA insurance is what makes the HECM reverse mortgage a non-recourse loan.
FHA implements stricter lending guidelines
HUD and FHA constantly seek to make the HECM program more stable and beneficial for seniors. The latest major regulatory changes include new protections for non-borrowing spouses and new financial assessment guidelines that help ensure borrowers meet a minimum level of financial stability to qualify.
Check out our free reverse mortgage calculator
How much can you get from a reverse mortgage? Check out our free HECM reverse mortgage calculator. It's simple to use, fast, free, and no contact information is required. You can access the reverse mortgage calculator here. Our HECM for purchase calculator can be found here.
Updated for 2021: The Reverse Mortgage Revealed
The reverse mortgage is a fantastic financial tool, but it's not the perfect solution for everybody. Is it right (or wrong) for you?
Author Mike Roberts is the founder of MyHECM.com and a successful reverse mortgage industry veteran. Writing in plain language, Roberts cuts through all the nonsense, rumors, and hype you may have heard about reverse mortgages. There are no sales pitches here!
This book is well-written, understandable, and packed with insights only an experienced professional can offer. You'll discover:
- How a reverse mortgage really works.
- Who should (and shouldn't) get a reverse mortgage.
- Common myths and misconceptions.
- Insider tips and tricks lenders don't tell you (and you likely won't find out anywhere else).
- How to increase your payout & reduce closing costs (this alone is worth the cost of the book).
- Pitfalls to avoid.
- Why some applicants get approved and some don't.
- How to finance a home purchase without a mortgage payment (yes, this is for real!).
Also included are detailed case studies based on real-life scenarios that tie key concepts and terms together. You'll see for yourself how a reverse mortgage can help you live a more enjoyable and financially secure retirement.
Available for Kindle or in paperback at Amazon. Click here to grab your copy now!