The Home Equity Conversion Mortgage (HECM) from HUD is rapidly gaining respect and favor from important professional organizations. The Journal of Financial Planning has featured this financial tool in several articles over the last year or so in a positive way. The SRES (Senior Real Estate Specialist) Council is promoting the judicious use of the program and has partnered with my company, Security One Lending, to help change perceptions by presenting actual facts, not myths and (dare we say it?) old wives’ tales.
Additional positive movement was seen just last week when FINRA (the Financial Industry Regulatory Authority) officially eliminated language that characterizes HECMs as a tool “of last resort”. This is a huge shift and is well deserved progress. More elderly Americans are likely to be helped because of the removal of this particular negative verbiage. We have quite a job ahead of us, but my industry is certainly winning over more and more influential people and organizations!
Of course, this welcome and beneficial shift in perception does not preclude the suitable use of a HECM to assist seniors in improving current cash flow and eliminating mortgage payments that may cause financial strain. That original purpose which birthed the program in the late 80’s is still quite valid today. And with the recent transformation of the program that went into effect on September 30, 2013, steps have been taken to make the program even more suitable for elderly homeowners.
Left fully intact with the “new” HECM is the remarkable HECM for Purchase program (H4P). This is a boon to Realtors and Builders who utilize it. I urge you to request some data on how effective the H4P truly is.
Please take a look at the Press Release announcing the FINRA development HERE.