Plans For Lower Cost Reverse Mortgage Product Announced by FHA

In an effort to combat fears over the costs of reverse mortgage, FHA is proposing a variation of the traditional reverse mortgage product aimed at seniors looking for options to access home equity with lower costs.  The proposed HECM Saver will have a upfront mortgage insurance premium (MIP) of .01% of the maximum claim amount and will have principal limits 10 to 18% less than the traditional reverse mortgage providing an options for less proceeds in exchange for lower costs.  This solution provides a low cost alternative to a home equity loan for seniors who may not meet the income and asset criteria needed by bank lenders offering home equity lines of credit While final details are still being finalized with FHA and HUD, it is expected that final details on the HECM Saver will be released in late September 2010.