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Amid losses, FHA sets new rules for reverse mortgages

Fixed-rate program eliminated — making reverse mortgages less risky for government, less lucrative for homeowners
By Kenneth R. Harney | December 28, 2012 12:30PM

Former Senator Fred Thompson is a spokesperson for a AAG, a company that offers reverse mortgages

You’ve probably seen the reverse mortgage pitchmen at work on your TV screen — former Sen. Fred Thompson and actors Robert Wagner and Henry “Fonzie” Winkler prominent among them — urging seniors to pull cash out of their homes through a loan program guaranteed by the federal government.  But it looks like the pitchmen will have fewer and smaller mortgages to sell in 2013. In a move aimed at controlling losses to its insurance funds, the Federal Housing Administration (FHA) is clamping a moratorium on the most popular form of reverse mortgage — the so-called “standard” version, which allows large lump-sum drawdowns of cash at fixed interest rates.. [more]