Financial Assessment And LESA

Financial Assessment And LESA

The purpose of the financial assessment is for lenders to review a borrower’s financial status, including income, expenses and credit history. This is to insure that the borrower has the willingness and financial means to continue meeting ongoing obligations. These obligations usually include credit cards, homeowners insurance, taxes and utilities. For borrowers who do not meet HUD’s minimum financial criteria, the borrower may still qualify by having a portion of the available proceeds from the HECM loan set aside to cover ongoing property taxes and homeowners insurance obligations.

Available options are the Fully Funded LESA (life expectancy set aside) or a Partially Funded LESA.

When a borrower has not demonstrated a willingness and or capacity to meet their financial obligations the LESA must be Fully Funded. With the Fully Funded LESA, the servicer will pay property taxes and insurance premiums on behalf of the borrower.

When it is found that the borrower has the willingness to pay his obligations, but not the capacity, a Partially Funded LESA may be used. In a partially funded LESA, the borrower will receive semi-annual payments from the HECM loan and it is the borrower’s responsibility to pay the taxes and insurance in a timely manner.

Richard Keana is a Reverse Mortgage Lender in Tempe, Arizona, also serving the Bullhead City, Kingman, Phoenix, Scottsdale, Lake Havasu City, and Chandler area in Arizona, as well as the Las Vegas, Henderson, Reno, and Sparks area in Nevada.