AARP Reveals Flaws in the Revised Reverse Mortgage Math

March 7, 2018

The AARP has recently weighed in on the revised reverse mortgage math introduced by the Department of Housing and Urban Development. The senior advocacy group pointed out a few flaws in the changes that could have negative effects on the reverse mortgage market.


“If you have an existing forward mortgage, that mortgage needs to be paid off before you can get a reverse,” said Lori Trawinski, director of banking and finance at AARP’s Public Policy Institute, according to Reverse Mortgage Daily.


“So if someone is counting on a certain amount of reverse mortgage proceeds to be able to pay off a forward loan, it could be that with the new principal limit factors, they may not get enough proceeds out of the loan to do that.”


Advocacy groups such as the AARP also believe the new principal limit factors will only translate into fewer customers. Additionally the report claims that the principal limit factors also adds a layer of education on top of what is already a difficult process to explain.


To check out more commentary from the AARP on the principal limit factors, click on the image above.


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