The agency is finalizing plans to reduce the initial mortgage insurance premium on certain loans to 0.01% of a home's value from 2%. Homeowners, however, would be able to borrow less and have to pay more per month.
The Federal Housing Administration isn't talking publicly about it, but the agency may be getting ready to cut the upfront costs of reverse mortgages for some borrowers.
The agency also, however, may be reducing the amount seniors can borrow against their homes.
In a recent conference call with industry participants, FHA officials said they were finalizing plans to offer a home-equity conversion mortgage requiring almost no upfront mortgage insurance premium, according to the National Reverse Mortgage Lenders Assn. The FHA also may tinker with the traditional product in a way that increases the overall borrowing costs.
"HUD is looking at options to provide a lower-priced [home-equity conversion mortgage] option," said Lemar Wooley, a spokesman for the U.S. Housing and Urban Development Department. "We are still working out the details. Our basic plan is to make the product more attractive, while limiting FHA's exposure to risk."
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