Many consumers who seek information could truly benefit from these loans

In February 2011, Bank of America made the decision to stop offering reverse mortgages to their borrowers. A few months later, Wells Fargo and SunTrust followed suit. These lenders made their decision after these products failed to bring in profits comparable to other loan products.

This recent reverse mortgage information leaves many consumers questioning the future of these loans. If these banks are pulling away from these mortgages, will others follow suit?

Reverse Mortgage Information Regarding the Future of These Loans

While some consumers might be worried, the Department of Housing and Urban Development (HUD) continues to support these mortgages. Representatives of the department are quick to reassure consumers that these loans aren't going anywhere. The fact is, they can be extremely beneficial to seniors who have built a significant amount of equity in their home but have limited savings.

In many cases, Social Security is not enough to keep seniors comfortable. If a person is in danger of losing his or her home or simply needs additional cash, tapping into one's home equity makes a lot of sense. Two of the main benefits of using this product is that the cash is tax-free, and borrowers will not need to repay the loan until they are no longer living in the home. This is what typically leads consumers to choose a reverse mortgage over other loan types.

Many consumers who seek information could truly benefit from these loans. While some banks may find reverse mortgages unprofitable, others will undoubtedly take advantage of the large market for these loans.

Reverse Mortgage Information that Might Impact Future Loans

While reverse mortgages are not going anywhere, it is possible that additional changes will be made to these loans in the future. This is partially due to the fact that many lenders consider reverse mortgages to be significant risk. To maintain a this loan, borrowers are required to keep homeowner's insurance, pay their property taxes, and make necessary repairs to the home. Borrowers that fail to meet these requirements risk foreclosure. Since reverse mortgages are given based on age and equity, instead of credit, lenders worry that borrowers will fail to pay the expenses required to maintain the loan.

To offset the risk, many lenders are calling for more extensive underwriting. While HUD has yet to release any reverse mortgage information that tells the public exactly what changes they will be making, they have indicated that they may allow additional underwriting in the future. These changes would allow lenders to more accurately assess whether a borrower is likely to pay their property taxes, insurance, and maintain their home.

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