The Veteran Home Equity Conversion Mortgage Act, 2007 was introduced in May 2007. This gave authorization to the Veterans Administration (VA) to guarantee loan programs in reverse mortgage to veteran owners of homes. The NAMB or National Association of Mortgage Brokers supported this legislation and authorizes the Secretary of Veteran Affairs to provide the reverse mortgage loan program for veterans.
In general, the loan amount provided to the VA reverse mortgage borrowers is more than the loan amount shelled out in loan programs of the Housing and Urban Development (HUD) in the United States. The VA reverse mortgage program will also allow the veterans to save approximately 0.5% in rates of interest.
Approximately, 1/4th of the population is eligible for availing a VA reverse mortgage loan. With the help of the proceeds of VA reverse mortgage, one may utilize the loan amount for purchasing anything, refinancing an existing debt, repairing household or simply going for a holiday.
The borrowers of a VA reverse mortgage loan may enjoy the following advantages:
- In case of a VA reverse mortgage program, the loan amount shelled out by the authorities is more than a normal reverse mortgage loan amount.
- By availing of a VA reverse mortgage loan plan, the borrower is able to save about 0.5% on rates of interest applicable to the VA reverse mortgage loan.
- One is not required to spend much on expenses incurred on a monthly basis.
- In case of a VA reverse mortgage loan program, there are no audits or cumbersome requirements on part of the borrowers opting for the reverse mortgage program.
Owing to the US subprime mortgage crisis (2007) in the United States of America, there have been certain changes in the reverse mortgage loan market. However, prior to this (2006), reverse mortgages were regarded as vital financial tools to safeguard the interests of the retired individuals in the country. It was found that as of September 2006 as many as the FHA or the federal Housing Administration registered 76,351 reverse mortgage loan accounts. In the earlier year (2005), the figure was 43,131.