Americans who are at least age 62 have a unique way to reduce their housing debt—a reverse mortgage. Reverse mortgages convert home equity to cash, which can relieve debt, but they still require consumers to pay property taxes and homeowners insurance.
Consumer Financial Protection Bureau reported in February 2015 that a frequent complaint about reverse mortgages is that consumers face foreclosure because of nonpayment of property taxes or homeowners insurance. New rules from Department of Housing and Urban Development that went into effect in April 2015 require lenders to conduct an in-depth financial assessment to ensure that reverse-mortgage borrowers can afford property taxes and insurance.
Ramsey Alwin of National Council of Aging tells us that the new rules might reduce the number of people who qualify for a reverse mortgage, but they also should reduce foreclosures.