SAN DIEGO (KGTV) - Key changes are coming to a program that helps cash-strapped seniors stay in their homes.
Starting Oct. 2, reverse mortgages could get more expensive up front, and some San Diegans may need cash to qualify.
"I've been getting phone calls from other loan officers' clients, just verifying what's going on is actually going on in the market," said Christina Harmes, assistant manager at C2 Reverse Mortgage.
A reverse mortgage lets homeowners 62 and over tap into the equity in their homes to get access to cash and get rid of their monthly principal and interest payments.
They're paid back when the homeowners moves, sells the property, or passes away.
But Federal Housing and Urban Developing is changing parts of its reverse mortgage program - starting Monday.
It's raising up front mortgage insurance fees for some borrowers from 0.5 percent, to 2 percent. That's an additional $7,500 on a $500,000 home. It would then lower future premiums to $2,500 a month, for this example.
Plus, new limits on what seniors can draw on their homes could force some with less equity to bring cash just to qualify.
“So if you are the person that has that big mortgage that just barely makes it, at 50 percent equity, they're trying to get that through right now,” Harmes said.
The Federal Government insures the loans, and has lost $11.7 billion dollars on them since 2009. These changes bring in more money up front.
"We can no longer tolerate putting American taxpayers and future generations of seniors at risk," HUD said in a statement.
San Diegans who have recently completed the state-required reverse mortgage counseling can apply under the current rules until Oct. 2.
