Reverse Mortgages Poised To Become A More Popular Source For LTCi Funding
The Department of Housing and Urban Development (HUD) is proposing a
regulation that may encourage more seniors to tap their home equity to
pay for long-term care insurance protection.
The statute would waive the high up-front mortgage premium currently
required on home equity conversion mortgages (HECM) provided that
payments are used to fund a qualified long-term care insurance contract
for either the homeowner or members of the household who reside at the
property.
The single up-front mortgage insurance premiums (MIP) associated with
HECM have long been criticized as being too expensive for the elderly
Americans who need the loans most. Currently, these premiums equal two
percent of the maximum claim amount. The proposed regulation would
eliminate the up-front MIP in connection with a qualified LTCi purchase
and leave the monthly MIP requirement untouched.
HUD is seeking comments until February 1, 2005 to refine: the
definition of household member; LTCi contract feature or option
requirements; insurer and lender standards and how default should be
handled.
CLTC Comment: The proposed action further underscores federal support
for individual initiative in purchasing long-term care insurance.
Source: Federal Register, December 3, 2004
Click here for your free reverse mortgage analysis
