Extensions & expansions support immediate, ongoing needs of homeowners who are experiencing economic impacts related to COVID-19 pandemic
To provide urgent economic relief to homeowners impacted by COVID-19, the U.S. Department of Housing and Urban Development (HUD) announced extensions of the Federal Housing Administration’s (FHA) foreclosure and eviction moratoriums, as well as an extension of the initial start date of a COVID-19 forbearance. Forbearance is an option mortgage servicers use to provide homeowners with a pause to their monthly payments for a limited period of time during a COVID-19-induced hardship.
The FHA has extended the length of forbearance for some borrowers, and will allow more borrowers access to COVID-19 loss mitigation options. These measures will provide relief to the nation’s homeowners with FHA-insured single-family mortgages who continue to suffer financially because of the COVID-19 pandemic.
Additionally, the Office of Public and Indian Housing is planning to announce similar relief for Native American and Native Hawaiian homeowners assisted under the Section 184 Indian Home Loan Guarantee Program and the Section 184A Native Hawaiian Housing Loan Guarantee Program.
HUD said its “actions align with President Joe Biden’s priority to provide economic relief and support to working families by providing urgently needed housing relief for homeowners and renters.”
“As President Biden has made clear, it is urgent that we help homeowners throughout the nation who are struggling financially from this unprecedented national emergency,” Acting HUD Secretary Matthew Ammon said. “The steps we are taking today will provide both immediate relief to those in desperate need of assistance and help more homeowners keep their homes and resume their payments when the pandemic subsides.”
Stephen Murphy, HUD deputy regional administrator for New York and New Jersey, said, “Today’s announcement of the foreclosure and eviction moratorium extension of FHA-insured and Home Equity Conversion Mortgage loans will bring vital relief during unprecedented times to struggling homeowners all across New York and New Jersey. The HUD Region II team is here to support struggling families by connecting them to all available pandemic resources.”
The extension of the foreclosure and eviction moratoriums applies to all homeowners with an FHA-insured forward or Home Equity Conversion Mortgage loan, and homeowners with a Section 184 or Section 184A mortgage loan, except for properties that are legally vacant or abandoned, through June 30. HUD prohibits servicers from initiating or proceeding with foreclosure and foreclosure-related eviction actions during the moratoriums. HUD also extended the deadlines for the first legal action and reasonable diligence timeframes for servicers to 180 days from the date of expiration of the foreclosure and eviction moratorium.
To address the ongoing need to expand mortgage payment assistance solutions for homeowners, for all FHA-insured forward mortgages, HUD:
√ Extended the timeframe for homeowners to request the start of a COVID-19 Forbearance from their mortgage servicer through June 30. This extension provides homeowners with additional time to request a forbearance from their mortgage servicer.
√ Expanded the COVID-19 forbearance to allow up to two forbearance extensions of up to three months each for homeowners who requested a COVID-19 forbearance on or before June 30, 2020. These additional forbearance extensions will provide relief to homeowners in this situation who will be nearing the end of their maximum 12-month forbearance period and have not yet stabilized their financial situation.
√ Expanded the use of FHA’s streamlined COVID-19 loss mitigation home retention and home disposition options to all homeowners who are behind on their mortgage payments by at least 90 days. This expansion will require mortgage servicers to assess more homeowners for a streamlined waterfall of loss mitigation home retention options, starting with FHA’s COVID-19 standalone partial claim.
To assist seniors with HECMs, FHA has extended the timeframe for the start of an initial COVID-19 HECM extension through June 30. For HECMs that entered an initial extension period on or before June 30, 2020, up to two additional three-month extension periods are available.
A press release stated, “HUD urges all homeowners who are able to make their mortgage payments to continue to do so. However, homeowners who need COVID-19 mortgage payment assistance should contact their mortgage servicer immediately or consider contacting a HUD-approved housing counseling agency. Homeowners may also visit HUD’s coronavirus relief for homeowners webpage or HUD’s COVID-19 resources for Native Americans webpage for additional information and resources.
Homeowners and renters can visit www.consumerfinance.gov/housing for up-to-date information on their relief options, protections and key deadlines.
Reverse mortgage companies provide homeowners ages 62 and over with home equity conversion mortgages, or HECMs, that convert home equity into cash. The best reverse mortgage lender provides multiple options for tapping your home equity and solid educational resources focused on the lending process and reverse mortgage rates and costs. A counseling session is mandated for all homeowners who apply for a reverse mortgage, but you will still most likely have questions. A good lender is prepared to answer questions and serve as a guide through the entire process.
We follow a rigorous editorial policy designed to keep our writers and editors independent. Articles may reference products from our partners, so here’s more information on
How we make money
The Simple Dollar is an independent, advertising-supported publisher and comparison service. The Simple Dollar is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. The Simple Dollar does not include all companies or all available products.
In this article
Today’s mortgage and refinance rates
According to Bankrate’s latest survey of the nation’s largest mortgage lenders, these are the current refinance average rates for a 30-year, 15-year fixed and 5/1 adjustable-rate mortgage (ARM) refinance rates among others.
Product
Interest Rate
APR
30-Year Fixed Rate
2.840%
3.140%
30-Year FHA Rate
2.680%
3.560%
30-Year VA Rate
2.780%
3.130%
30-Year Jumbo Rate
2.870%
2.980%
20-Year Fixed Rate
2.720%
3.040%
15-Year Fixed Rate
2.330%
2.650%
15-Year Fixed Jumbo Rate
2.340%
2.410%
5/1 ARM Rate
2.990%
4.000%
7/1 ARM Rate
2.880%
3.860%
7/1 ARM Jumbo Rate
2.950%
3.830%
10/1 ARM Rate
3.000%
3.910%
Rates data as of 2/3/2021
Best reverse mortgage lenders reviewed
Lender
Sample Interest Rates
Mortgage Types
Quontic Bank
4.195%–4.815%
HECM
AAG
2.264%–6.168%
Lump-sum payout Growing line of credit Jumbo loan Term or tenure Reverse for purchase
Longbridge
2.949%–4.333%
HECM reverse mortgage HECM for purchase reverse mortgage Platinum mortgage
All Reverse Mortgage Inc
3.31%–6.99%
HECM reverse mortgage HECM for purchase Jumbo loans Proprietary loans
Finance of America Reverse
Not listed
HECM reverse mortgage HECM for purchase Jumbo loans HomeSafe® Standard HomeSafe® Select
*Rates accurate as of December 2020
Best reverse mortgage lenders reviewed
Quontic Bank – Best digital option
In recent years, Quontic Bank, formerly a regional bank in the northeast, has expanded its digital footprint and does business in all 50 states. Its reverse mortgage options are limited to HECM, meaning you must meet all of the standard requirements for the FHA’s program. As part of the process, Quontic will verify you have adequate assets to cover the necessary fees for the loan, including annual insurance payments, the money needed to maintain the home, and enough to cover property and other taxes. The bank provides easy access to loan officers who can answer the questions of remote customers via phone, e-mail or live chat.
AAG – Best recognized brand
AAG, or American Advisors Group, is the most recognized reverse mortgage lender due to its advertising efforts. The brand clearly explains the different types of reverse mortgages to potential borrowers and provides specialists to help you review the different loans options.
A lump-sum payout is an option that provides 60% of your potential funding in the first year. This is an option that is best used for major unexpected expenses. A line of credit could appeal to you if you have a need for more funds, like a new vehicle purchase or home improvements, and would prefer not to tap into your traditional retirement accounts to pay for it. Much like ORM, AAG also offers an in-house loan known as the jumbo reverse mortgage for properties outside the scope of FHA’s HECM program. The loan lets you tap up to $4 million in equity at a fixed rate. No mortgage insurance is required.
Longbridge – Best online tools
Longbridge Financial, LLC differentiates itself from competitors by offering easy-to-use tools, including a free quote calculator and scenario-based guides to answer the most common questions about reverse mortgages, such as, “What happens when the homeowner can no longer live in the home or dies?” The answer is that the loan must be repaid. In many cases, the home is sold. If it sells for less than the amount owed on the reverse mortgage, the FHA insurance covers the difference, not the heirs. If it sells for more, the lender is paid back, and the estate receives the remainder.
Longbridge also provides a loan option for homes with a higher value along with the common HECM for purchase loan. With a for-purchase loan, you buy a new home with a down payment up to 50% of its purchase price and pay for closing. The HECM covers the balance and provides any remaining funds to you. Going forward, you do not have to make monthly mortgage payments. Many homeowners who choose the option want to relocate to a different climate, move closer to children and other family members or need a home that meets new needs by providing accessibility options and other amenities.
All Reverse Mortgage Inc – Best customer reviews
All Reverse Mortgage Inc — also called ARLO — offers a variety of reverse mortgages including HECM’s, jumbo reverse, HECM purchase, proprietary reverse, HomeSafe reverse, Platinum reverse, and more. Using the ARLO calculator on its website, you can get information quickly and easily on what reverse mortgage you may qualify for. If you meet the requirements of a reverse mortgage, you can apply over the phone or online. It can take 30 or more days to close a reverse mortgage with All Reverse Mortgage, which is pretty standard in the industry.
Depending on factors like age, current rates and type of reverse mortgage loan you can expect to receive anywhere from 40% to 60% of your home value. You may choose a line of credit with an adjustable-rate, a HECM (traditional or jumbo), a reverse mortgage for purchase if you’re buying a new home, and if your property exceeds FHA limits, ARLO offers a proprietary reverse mortgage option.
Finance of America Reverse – Best private option
Also in business for 16 years, Finance of America Reverse’s website is user-friendly and thorough, offering loan options to accommodate various life goals you may have. You can then easily review each loan option, including detailed brochures. For example, if you want to unlock the potential in your home’s equity the HECM mortgage option may be for you. This may allow you to achieve goals like paying off your existing mortgage, pay for in-home care, renovate, supplement income, cover medical expenses, stay in the home long-term, and more.
If you are looking for a new home whether to upsize, downsize, or just relocate, the Reverse for Purchase option is available. Finance of America Reverse also offers a HomeSafe option that includes a standard and jumbo reverse mortgage. If you are looking to increase cash flow or leverage your current equity to buy a new home, one of these options may be right for you.
Lender
Sample Interest Rates
Mortgage Types
Quontic Bank
4.199%–4.815%
HECM
AAG
2.264%–6.168%
Lump-sum payout Growing line of credit Jumbo loan Term or tenure Reverse for purchase
Longbridge
2.949%–4.333%
HECM reverse mortgage HECM for purchase reverse mortgage Platinum mortgage
All Reverse Mortgage Inc
3.39%–6.99%
HECM reverse mortgage HECM for purchase Jumbo loans Proprietary loans
Finance of America Reverse
Not listed
HECM reverse mortgage HECM for purchase Jumbo loans HomeSafe® Standard HomeSafe® Select
Reverse Mortgage Buying Guide
What is a reverse mortgage?
A reverse mortgage is a loan that allows you to cash in on the equity built up in a home. These loans are primarily for homeowners over the age of 62. Instead of monthly payments due to the lender, the loaned amount is owed in a lump sum paid when the homeowner passes, sells the home or moves away permanently. There are strict regulations involved with reverse mortgages that prevent the amount owed from being larger than the value of the home when sold by the homeowner or their estate after passing.
How reverse mortgages work
Let’s say you are a homeowner over the age of 62 and your monthly Social Security payments aren’t enough to pay the bills, or you want to help pay for a grandchild’s college. Similar to a home equity loan, a reverse mortgage will cash out the equity built up in the home in one lump sum. Unlike a home equity loan, however, you don’t make monthly payments to repay the loan. The loan is repaid when the house is sold, you pass away or move permanently away from the house, like to an assisted living facility.
Let’s say you have a $150,000 mortgage that you’ve paid off down to $40,000. Assuming that the house’s value is also $150,000, you can access up to the remaining $110,000 in a reverse mortgage loan. No monthly payments need to be made to repay the reverse mortgage loan, but interest is charged on the borrowed amount over the life of the loan. Then, let’s say you sell the home to move to an assisted living center or move in with family members, that’s when the loan payment is due.
If the house went up in value and you sold it for $160,000, part of the sale must go toward paying off the remainder of your original mortgage as well as the money you borrowed in your reverse mortgage. If the house went down in value, there are federal regulations in place to protect the borrower from owing more than the house’s worth in a sale.
Reverse mortgage vs. home equity loan
A reverse mortgage and home equity loan are two very similar home lending products. Both require homeownership and equity built up in the home to borrow. However, while home equity loans require monthly payments immediately after funds are dispersed, reverse mortgages do not have monthly payments attached to the terms. Instead, the funds borrowed in a reverse mortgage are due for repayment when the home is sold or the owner passes away, in which case the estate will be responsible for paying back the loan.
Types of reverse mortgages
Just as there are multiple types of mortgage loans at the beginning of the homeownership journey, there are different types of reverse mortgage available to homeowners.
Lump sum: the funds from the loan are available all at once and charged a fixed interest rate.
Annuity/equal payments: when the reverse mortgage is agreed upon, the lender will send the funds to the borrower in equal monthly payments.
Term payments: the funds are sent to the borrower in equal monthly payments over a certain period of time, such as 10 or 15 years.
Line of credit: similar to a home equity line of credit, the funds from the reverse mortgage are available to the borrower to draw upon as needed, and only what is borrowed will be charged interest and need paid back.
Term and line of credit: this is a hybrid between term payments and line of credit. Monthly payments are made to the borrower over a set term (such as 10 or 15 years), but more funds are available to draw upon if needed.
Equal payments and line of credit: similar to term payments and line of credit, equal monthly payments based on how much is borrowed are made to the borrower, plus additional funds available to draw upon if needed.
How to choose the best reverse mortgage for you
Because there are many different types of reverse mortgages and even more types of borrower financial situations, it can be difficult to determine which is the best reverse mortgage for you. However, simply addressing your needs, what you want from a reverse mortgage and how you expect your financial status to change.
Determine if a reverse mortgage is the right financial decision to begin with. You should expect to live in the house for another 10 to 15 years to reap the full benefits of the financial transaction. Furthermore, you should have a considerable amount of equity built up in the house.
Determine which type of reverse mortgage you need. If you’re using the funds to supplement Social Security payments, then a term or annuity payments may be the best bet. On the other hand, if you’re using the funds to help a family member with a down payment on a house or to pay for college education, a lump sum reverse mortgage is a better option.
Find and do research on reverse mortgage lenders. Although we’ve covered a few of the top picks in reverse mortgage lending, there are some illegitimate lenders out there that only want to take advantage of older homeowners who do not know any better.
Pick a reverse mortgage lender that offers reasonable interest rates and provides the type of reverse mortgage that you need. The lender should help you in every step of the way, from home appraisal to closing on the loan. If the lender doesn’t offer this type of assistance to borrowers, it may not be worth it to do business with them.
Reverse mortgage FAQS
In short, no. Because it’s still a loan and not a sale or income wages, the IRS does not tax the monthly payments from a reverse mortgage.
Generally, borrowers will have to pay fees upfront for a reverse mortgage. These are typically origination fees, insurance premiums, mortgage insurance and lending fees. However, the government does limit how much lenders can charge borrowers in a reverse mortgage.
Unfortunately for the lender, that’s part of the risk of lending — generally, lenders believe that the house will increase in value, making it possible for the borrower to pay back the loan. However, federal regulations dictate that in a reverse mortgage, the estate or borrower is not responsible for the difference between the sale of the house and the loan; the lender must absorb that loss.
Too long, didn’t read?
Similar to a home equity loan, a reverse mortgage allows homeowners over the age of 62 to cash in on the equity built up in a home. The funds can be available in one lump sum or spread out in monthly payments over multiple years. When the house is sold or the homeowner dies is when the loan is repaid.
We welcome your feedback on this article and would love to hear about your experience with the reverse mortgage lenders we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.
In a bid to aid borrowers, the Department of Housing and Urban Development announced on Wednesday a series of temporary waivers that will allow servicers to use alternative methods when servicing FHA-insured forward and reverse mortgages.
Rather than conducting face-to-face interviews, HUD’s waiver will allow substitute methods for servicers to conduct borrower interviews for FHA-insured forward and reverse mortgages when performing early default interventions, specifically for borrowers in danger of foreclosure.
Alternative methods HUD listed included phone interviews, video calling services and other conference technology.
HUD also said it is waiving the $5,000 property charge payment arrearages cap for reverse mortgage borrowers who are behind on payments.
Under existing policy, when a borrower fails to make two consecutive payments on a HECM repayment plan, the plan fails and servicers may only offer the borrower a new repayment plan if the borrower’s total arrearage is less than $5,000. The new waiver will allow servicers to evaluate impacted borrowers regardless of how far behind they are.
Strategies retail lenders should adopt from D2C lending
Join expert panelists to learn how the pandemic is ushering in a new era of digital lending and is leading to the formation of a hybrid lending model.
Click the headline to register
HUD will also waive the requirement for servicers to obtain a signature on an occupancy certification from a HECM borrower. While HUD requires mortgagees must continue to obtain the HECM borrower’s annual certification, the physical signature requirement is temporarily eliminated.
“President Biden has made it clear that protecting the health, safety, and homeownership security of the nation’s most vulnerable populations, including seniors, are urgent and immediate priorities,” said acting HUD secretary, Matthew Ammon. “The policy waivers issued today are another important step in addressing these priorities.”
HUD had previously released several variations of these waivers originally announced on Dec. 17, 2020 but were set to expire Feb. 28, 2021. However, with no clear route of the virus and the deployment of a vaccine, this latest set of temporary waivers is not set to runout until Dec. 31, 2021.
According to a release, the agency hopes to align these waivers with President Biden’s “Day One” request to provide aid to homeowners struggling from COVID-19. Prior to that request, the FHA extended its foreclosure and eviction moratorium for borrowers with FHA-insured single family mortgages through March 31, 2021.
FHA also extended the deadline for borrowers financially impacted by COVID-19 to request a new forbearance from their mortgage servicer through March 31, 2021.
