The 5 new reverse mortgage rules
You may be required to save for taxes
To reduce default rates by ensuring borrowers have the funds to cover property tax and insurance, some borrowers will be required to set aside additional cash (similar to an escrow account) as part of a new rule that goes into effect in January.
A single homeowner with a minimum of $529 remaining each month after paying their expenses likely will not be required to set aside funds for property taxes and insurance, according to a HUD letter sent to borrowers. (Couples and families will have to show additional income to avoid the set-aside requirement).
Borrowers who don’t meet the minimum income requirements will either be required to set aside funds to cover property taxes and homeowners insurance for the life of the loan, called a Lifetime Expectancy Set Aside, or have these fees withdrawn from monthly reverse mortgage payments they receive.