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FLORIDA AND HUD REVERSE MORTGAGE INITIATIVE WILL HELP SENIOR CITIZENS SAVE MONEY AND REMAIN HOMEOWNERS
MIAMI, FL -- The Florida Housing Finance Agency expects to make at least $10 million in reduced-interest reverse mortgage loans available to older homeowners in the state in 1997, in cooperation with the U.S. Department of Housing and Urban Development.
HUD Secretary Henry G. Cisneros and Thomas N. Tompkins, Member of the Florida HFA Board of Directors, announced the joint initiative today at the Southeastern Homeownership Summit sponsored by HUD in Miami.
Reverse mortgages allow senior citizens to tap into the accumulated wealth in their homes without selling the homes.
While a traditional mortgage requires a homeowner to make monthly payments to a lender, HUD's reverse mortgage program allows a homeowner 62 and older to borrow against the value of his or her home. The homeowner receives payments from a lender on a monthly basis, in a lump sum, or as a line of credit. The lender recovers its loan plus interest when the home is sold.
"Reverse mortgages reward older Americans who've worked hard all their lives and want to stay in their homes," Cisneros said. "The cash provided by these innovative loans improves the lives of elderly homeowners who are house-rich but cash-poor."
The Federal Housing Administration provides insurance on loans to elderly homeowners under the HUD program, holding down interest rates and boosting lender participation.
The Board of Directors of Florida HFA voted today to develop a financing mechanism to further lower interest costs on at least $10 million worth of HUD reverse mortgages and increase participation in the program in the state next year. The Florida HFA will work with its network of over 900 lenders, lending consortia and counseling agencies throughout Florida.
"Reducing the financial burden of Florida's elderly homeowners is a definitive way to help our senior citizens live out their golden years with fewer concerns," Tompkins said. "This program represents a small chance to make a big difference in the lives of an essential segment of our community."
To qualify for a reverse mortgage, homeowners age 62 and older must have paid off their home mortgages or have only a small mortgage balance remaining.
HUD proposed legislation in July to make more reverse mortgages available. The bill would allow the reverse mortgage program to continue beyond its scheduled expiration in the year 2000, and remove the cap that limits the program to insuring 50,000 reverse mortgages.
More than 12 million older homeowners around the nation qualify for participation in HUD's expanded reverse mortgage program. In Florida, over 500,000 homeowners qualify.
Detached homes, townhomes and condominiums are all eligible for reverse mortgages.
HUD's reverse mortgage program was capped at 50,000 loans and approved to run only until the year 2000 because it began as a demonstration program in 1989. More than 16,000 reverse mortgages have been issued so far under HUD's program.
The program's temporary nature, the loan cap, a shortage of counselors and limited outreach efforts combined to hold down lender and borrower participation.
The American Association of Retired Persons is supporting an expansion of HUD's reverse mortgage program.
Congressman Rick Lazio of New York, Chairman of the House Banking Committee Subcommittee on Housing and Community Services, has introduced the HUD legislation in Congress.
People around the nation can receive information about HUD's reverse mortgage program by calling 1-800-217-6970.
Florida residents can also call the Florida HFA's Single Family Administrator at 1-904-488-4197 to get more information about reverse mortgages and learn about available counseling.
Content Archived: January 20, 2009