Seniors electing to use HUD-insured reverse mortgages to pay for long-term health care insurance would be exempt from paying the standard 2% upfront mortgage insurance premium under a proposal issued by the Department of Housing and Urban Development.A housing bill enacted four years ago authorized the use of HUD-insured home equity conversion mortgages to help seniors pay for long-term health insurance. However, the statute is very restrictive. Once the proceeds of the HECM are used to pay off outstanding debts, all remaining HECM payments or proceeds must be applied to long-term health insurance premiums. They cannot be used for other expenses, according to the advance notice of proposed rulemaking. The Department of Housing and Urban Development is asking whether this restriction will reduce consumer interest in the HECM/long-term care program. The comment period ends Feb. 1.

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