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Is the weather forecast calling for snow? Sure, it’s summer, but a reverse mortgage law just passed that got the support of both Republicans and Democrats, and in today’s political environment, a law that gets bipartisan support is about as rare as a blizzard in August. OK, all joking aside, the new law – called the Reverse Mortgage Stabilization Act – includes lots of reverse mortgage reforms that make these loans much safer and more appealing to seniors who’d like to tap into their home’s equity.
To recap: For most people, the only way to make use of the equity you’ve built up in your home is by selling or refinancing and pulling equity out at closing. A reverse mortgage (you may know it by its more formal name – Home Equity Conversion Mortgage or HECM) lets people who are at least 62 years old access that equity using an entirely different approach: Homeowners can take money out of their homes without having to make any monthly payments. What’s more, the homeowner keeps the title to their home for the entire time they’re living in it. You can read all about reverse mortgages by clicking here or by visiting the Federal Trade Commission (FTC) website.
The new law includes reforms designed to protect both consumers and lenders. Here’s a quick rundown:
After the bill was signed into law, the bill’s Republican sponsor Congressman Mike Fitzpatrick said, ““By signing this bipartisan bill into law today, the law now respects that desire while at the same time enacting safeguards for both lenders and seniors. Republicans and Democrats worked together to get something done in Washington.”
Get out your snow shovels.