In addition to the Financial Assessment rules that came out last month, HUD also announced something that they call “Seasoning Requirements for Existing
Non-HECM liens”. But instead of starting on March 2, 2015, this one starts on December 15, 2014.
Odds are that this will not impact you, but if it does, it could put up to a one year delay on your reverse mortgage application.
Here’s what it is…Effective for any reverse mortgage loan applications on or after December 15, 2014, the payoff of existing non-HECM mortgage liens,
(a HECM is a reverse mortgage), using HECM proceeds is only permitted if the liens have been in place for more than 12 months or resulted in less than
$500 cash to the homeowner, whether at closing or through cumu-lative draws (as with a home equity line of cred-it—HELOC), prior to the date
of the initial HECM loan application.
So basically, if you took out a loan on your home or took out $500 or more from a HELOC in the last 12 months, you will not be eligible to get a reverse
mortgage until the loan, or advance, is 12 months old.
For example, let’s say you have a home equity line of credit (HELOC) on your home and took out $500 on December 1st to help your kids out during Christmas.
You then decided on December 16th to apply for a reverse mortgage. You would not be eligible for the reverse mortgage until December 16, 2015 (when
the advance is 12 months old).
If you are considering a reverse mortgage in the next few months, and you have taken out a new loan on your home or taken advances from your HELOC, please
call me right away to discuss your options. Remember that you cannot apply for the reverse mortgage until you complete the counseling, so the process
can take some time.