Program aims to cut reverse mortgage costs

A new national government program introduced in October is seeking to reduce some of the expenses incurred from cashing in a reverse mortgage — which releases the equity in a property as cash that can be used for expenses, while at the same time paying off whatever remains on the mortgage. The Home Equity Conversion Mortgage Saver, or HECM Saver, trims the upfront insurance premium due at closing to 0.01 percent of a property’s value, from 2 percent, and the amount that can be borrowed is reduced by 10 to 18 percent, according to the New York Times. Experts predict that the program will be popular. “I think we’re going to see a lot of people using it,” said Stanley Gil, a reverse mortgage consultant in the Garden City area of Long Island. The loan “is really going to help people who need some extra cash and have built up equity in their home,” he added. AARP says the program would also work well for homeowners who didn’t need to borrow the maximum allowed. In recent years, reverse mortgages boomed, but later acquired a bad reputation, in part because of their costs. [NYT]