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Appraisals Play a Key Role in Homes Under HECMs


Those who have homes tied to Home Equity Conversion Mortgages may notice that their homes appreciate at a slower rate than home without HECMs. A new report from Reverse Mortgage Daily says that doesn't have to be the case.

According to the report, appraisals can play a key role in whether or not the home under an HECM appreciates at a faster pace.

"While the value of HECM homes declined faster relative to other properties between 2007 and 2008, houses with reverse mortgages actually held onto their value better than the median price in the ZIP code by 10.5 to 11 percentage points the following year," according to RMD.

"That, Mayer said, was the result of appraisal reform in the HECM community, which saw more accurate home values emerge starting around 2009."

Following the appraisal reform, home prices under HECMs carried a more consistent performance along the lines of appreciation, according to Longbridge Financial CEO Christopher Mayer, who conducted the study on HECM home appreciation rates.

Though, even with appraisal reform, RMD notes that many homes under HECM still suffer from appraisals due to repairs and maintenance that cannot be completed by the older homeowners.

To learn more about how appraisals have helped some HECM homes in the appreciation department, click on the image above.

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