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Reverse Mortgage Changes

Several changes have been made to the federally insured Home Equity Conversion Mortgage (HECM) reverse mortgage program to shore up the viability of the program. The changes are generally designed to improve the odds that homeowners taking out a reverse mortgage will be able to meet their obligations and not become a burden on the program. The changes are generally effective for new reverse mortgages after September 30, 2013 (but prior rules generally apply to case numbers assigned before September 30, 2013, if closed on or before December 31, 2013). Additional financial assessment and set-aside requirements take effect January 13, 2014. Initial disbursements limited One change generally restricts the amount that can be disbursed to you within one year of your obtaining the reverse mortgage. Under the new rules, the maximum amount that can be disbursed to you at closing or during the first 12-month disbursement period is equal to the greater of (a) 60% of the principal limit or (b) the sum of your mandatory obligations plus 10% of the principal limit (not to exceed 100% of the principal limit). Mandatory obligations include items such as the initial mortgage insurance premium, the loan origination fee, recording fees and taxes, credit reports, a survey, a title examination, title insurance, a property appraisal fee, fees for warranties or inspections, funds to pay any required repairs, and amounts used to discharge liens, debt, and taxes. Except in the case of a single disbursement lump-sum payment option, additional amounts can be disbursed in later years, up to 100% of the available principal limit. New mortgage insurance premium rates Another change increases the basic initial mortgage insurance premium, and applies an even higher rate if more than 60% of the principal limit can be disbursed to you in the first year. Under the new rules, an initial mortgage insurance premium fee of 0.5% of the maximum claim amount will generally be charged. The initial fee is increased to 2.5% of the maximum claim amount if required or available disbursements to you at closing or during the first 12-month disbursement period are greater than 60% of the principal amount. In either case, there is also an annual fee equal to 1.25% of the mortgage balance. Financial assessment and set-asides Finally, changes are made to improve the odds that you will be able to meet certain of your obligations under the reverse mortgage. For case numbers assigned on or after January 13, 2014, you must undergo a financial assessment prior to approval and closing on a reverse mortgage. Based on your assessment and as a condition of loan approval, you may be required to use proceeds from the reverse mortgage to fund a lifetime expectancy set-aside for payment of property charges or authorize the mortgagee to pay property charges from your monthly payments or your line of credit. Property charges include property taxes, hazard insurance, and flood insurance.   (c) Broadridge Communications

Rule of 72

Interesting Take on Savings

Year End Tax Planning Considerations

(c) Broadridge Communications

White House Delays Employer Health Insurance Mandate

The White House announced on July 2, 2013, that it would delay
implementation of the health insurance mandate for mid-sized and large
employers,
as well as reporting requirements for these same employers and
health insurers until 2015.

In separate blog postings, the White House
(www.whitehouse.gov) and the Department of the Treasury
(www.treasury.gov) indicated that the delays
are in response to employer concerns regarding the complexity of
the reporting requirements and health insurance mandate as prescribed by
the Affordable
Care Act. Our Client Alert highlights these announcements.

Related articles

Employers get another year on health insurance mandate

Employers get one year reprieve from Obamacare mandate to provide health insurance (updated)

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2013 Key Financial Numbers to Know

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Tax Filing Delayed

Due to the changes in the tax law prompted by the recently enacted American Taxpayer Relief Act of 2012 (ATRA), the IRS has announced it will begin accepting 2012 tax filings on January 30. The IRS had anticipated a January 22 start date. However, forms and processes must be updated in response to the ATRA, necessitating the delay. And filing paper returns won't speed up the process either. The IRS suggests filers use e-file with direct deposit for faster tax refunds.

Most households may begin filing tax returns on January 30. However, some filers may not have their returns processed until late February or March because of the need for more extensive form and processing system changes. Filers claiming residential energy credits, depreciation of property, or general business credits may not be able to file until a later date to be announced by the IRS. A full listing of the forms that won't be accepted until later is available on the IRS website, www.irs.gov.