Reverse Mortgage Information

Home equity is the best retirement plan anyone can think of. It is a long-term tool, which can be effectively used to generate regular income.

A report generated by MetLife’s Mature Market Institute proposes that a home equity is very beneficial for those who are on the verge of retirement. The report makes it clear that no other investment can yield results similar to home equity.

Here are some of the poignant highlights of MetLife’s Mature Market Institute report:

Recession has wreaked havoc in the lives of the senior adults, who are considering delayed retirement for financial reasons. A home equity can be great option in this scenario, as it assures a long term return without much effort.

In this economic slowdown, a home equity can be used to strengthen security. It might also be used to meet the exigencies that can emerge any time.

MetLife’s Mature Market Institute’s report also highlights that in earlier days people used their homes for the sake of living. In those days, using one’s homes to generate income was considered to be a sign of poverty. But the scenario has changed radically at present.

At present, more and more people are using their home as equity, so that they can make the best of now. Revenue generated through home equity is used by modern man to pay off his bills. It is used for the loan repayment or to meet up other miscellaneous needs like electricity bills, education, mobile phone bills, so on and so forth.

MetLife’s Mature Market Institute’s report also highlights that people should first analyze a set of goals and objectives before they use their house as housing wealth. This analysis is vital as it can determine the kind of service you would opt for.

According to the recent guidelines of U.S. Department of Housing and Urban Development, Premier Reverse Closings have now made changes in its condominium project guidelines. They have declared that they would take transactions for constructed properties such as manufactured homes in their projects.

In the past years, many reverse mortgage lenders had made requests to Premier Reverse Closings regarding their policy against manufactured homes. It took some time before the corporation could make a decision. However, the decision came very smooth, as PRC had closed a number of  manufactured homes prior to launching the new policy.

Read More...

Premier Reverse Closings, a unit of National Closing Solutions, recently saved a borrower from foreclosure with the help of a reverse mortgage. The corporation helped the borrower to wind up the entire process in a record period of seven days.

PRC first had to clear the title report for James Atkins and address his liens. They also went overboard to verify his insurance. All this was done in three days.

James Atkins’ property was due to be sold on June 25; PRC, in association with Generation Mortgage and Lend America, arranged for the reverse mortgage just one day prior the auction.

Ed Sanchez, an employee of Lend America who helped Atkins through the process, is thrilled about his team’s achievement. He said that such an arrangement is possible; but it requires a proficient team to conclude such a task in such a short span.

Read More...

The Department of Housing and Urban Development recently announced that more that $52 million has been ear marked for different housing counseling projects aimed at helping more families to retain and preserve their homes. The total amount is a 23% increase of about 11 million from last year which was just $41 million.

From the $52 million budgeted for HUD’s Housing Counseling Grant program, $8 million has been specifically reserved for Reverse mortgage Counseling. This amount is double the 4 million amount spent on reverse mortgage counseling programs last year by HUD. The grants will be competitively awarded to hundreds of counseling agencies approved by HUD and State Housing Finance Agencies. In total HUD grants will be awarded to approximately 400 applicants. Interested applicants can download applications from the HUD’s official website.

Counseling agencies are very important in helping people make better mortgage decisions and avoid foreclosure. With the economic depression the roles of these counseling agencies even becomes more critical. According to Shaun Donovan, HUD Secretary “These counseling agencies are also vital to the success of the President’s Making Home Affordable Plan which is helping families avoid foreclosure and remain in their homes.” He was further quoted as saying “Now, more than ever, it is crucial that American families make informed decisions about their housing choices.”

Read More...

Mortgagee letter 2009-19 was recently issued by the Department of Housing and Urban Development, HUD on June 12. The mortgage letter implements a new approval process for all condominium mortgages and home equity conversion mortgages insured by FHA. The new amendments are in accord with the 2008 Housing and Economic Recovery Act.

The new approval process would be effective come October 1. According to the new approval standards, all condominium projects will have to be approved before mortgages can be insured. After approval of the project the lender can underwrite a condo unit loan.

According to the HUD mortgagee letter, project approval terminates and expires two years after it has been added on the list of HUD approved condominium projects. After expiration the condominium will have to be re-certified. The 2 years expiration term also affects all projects currently on the list. The list is said to already contain 40,000 condo projects from across the country.

Read More...

In Alcoa, Tennessee a 71 year old woman was able to save her home from foreclosure and auction with a reverse mortgage loan. The original home mortgage loan was secured from Wells Fargo. The bank had to first write off $30,000 from her original mortgage balance.

According to her mortgage banker John Smaldone, mounted media and political pressure was part of the reasons that led Wells Fargo to assign a loss mitigation manager to negotiate the settlement and write off the $30,000. 71 year old Lorraine Zickefoose owed approximately $138,000 . The reverse mortgage loan which was funded by New Jersey based Village capital & Investment LLC was valued below her mortgage debt. The reverse mortgage loan value plus donations from the community was a little over $106,000.

Read More...

Whenever you plan to cash out the equity in your home, you go for reverse mortgage loans without having to pay cash on a monthly basis. Reverse mortgages are primarily meant for people aged 62 years and above, as in senior citizens and elders. Even if you wish to go for medical care, buying home goods, or short vacations, reverse mortgage loans fulfills all your needs, since it provides you with cash that is tax free in either lump-sum amounts or monthly installments. Mentioned below are 7 tips which one must keep in mind while going for reverse mortgage loans:

1. Clear all doubts: Whenever you visit any lender, always make sure that you understand the terms and conditions completely. Accept the loan only when you are sure that it will serve your purpose and when you have understood everything completely.
2. Wait till you are older: The elder you are, the more amount of money you are eligible to draw.
3. How to obtain funds: You must be clear about the way you want to receive your cash - in monthly installments, in lump-sums, a line or credit or in a combination of both monthly checks and line of credit.
4. Know your financial obligations: When you take loans, you must be paying your property and maintenance taxes regularly. Your loan may become a due in case you don’t pay taxed properly.
5. Be alert of the scams: While reverse mortgage scams are rare, there are a small amount of fraudsters out there, so always be aware of what you are doing. If needed, check the record and history of the lender.
6. Consider the cost of the loan: Some loans may have a high cost of obtaining, so work everything accordingly.
7. Find out if you qualify for medical aid: This loan may affect your eligibility to qualify for facilities like medical aid. Therefore, make sure that you research everything.

The Governor of Vermont, Jim Douglas signed a bill last week that puts a limit on reverse mortgages to federal programs. This bill effectively eliminated the possibility and potential of a proprietary market in Vermont.

The H222 bill, mandates that Vermont lenders has to be approved by the Department of Housing and Urban Development. The new bill also stipulates that all loans must be in accordance with the HUD home equity conversion mortgage program or federal reverse mortgage program with same standards. The loan also has to be insured by the Federal Housing Administration or similar federal agency. The bill however allows reverse mortgage loans by government-sponsored enterprises.

The bill also makes face to face counseling a requirement in most loan cases. A counseling agency will have to be used by those borrowers who chose to request for phone counseling. The chosen counseling agency must be approved by the state Department of Banking, Insurance, Securities and Health Care Administration (BISHCA). The bill also makes the cross selling of annuities before the borrower’s right of recession period is over illegal.

BISHCA Commissioner Paulette Thabault was quoted during a interview the week before the bill was passed as saying “We wanted to make sure if reverse mortgages became a vehicle for people who had economic needs that there were some consumer protections in place so that those were appropriate mortgages and seniors were protected from any downside of getting a reverse mortgage,”

The new bill would be effective from July 1 and also includes other provisions that regulates life settlements and allows BISCHA to new rules in relation to professional senior advisory designations.

The present fiscal year is just eight months gone (the HUD fiscal year begins in October) and it has already shown tremendous improvement in the Reverse Mortgage industry. According to data released from the Department of Housing and Urban Development, the number of home equity conversion claims going to the Federal Housing Administration in the past eight moths have already surpassed the total figure of the last fiscal year 2008.

By May end the Federal Housing Administration has already recorded 2,930 claims to the FHA insurance. The value of all 2,930 claims was $372.1 million which surpasses $345.7 million which is the total value of all 2,799 claims recorded in the last 2008 fiscal year. New reverse mortgage loans did not increase alone as the value of claims has also gone up. In 2003, the value of claims fell to $69.8 million from $80 of the previous year, However from 2003 the the value and number of claims have been increasing steadily. The month of may recorded a total of 467 claims with a total value of $64.8 million.

HECM claims covers the shortfall balance between outstanding mortgage balance and the maximum amount of the claim at the origination for properties involved in deed-in-lieu or foreclosure which is the difference between net sales of a mortgagor’s sale and loan balance is what is covered in HECM; or an optional amount for when the principal balance is close to the claim amount.

The state of Texas has risen to be the third largest reverse mortgage market, with 30,000 loan sanctions totaling about $2.2 billion. The reverse mortgage loan volumes have increased by more than 208% between 2004 and 2008.

Just during the past two years, Texas senior home owners have taken more than $1.1 billion in reverse mortgages, based on figures from the Texas Association of Reverse Mortgage Lenders.

Reverse mortgages in Texas are kind of new phenomena as Texas was a late entrant in the arena of reverse mortgages. A dozen years ago, the Texas Legislature tried to allow reverse mortgages using an amended law passed in 1999 and even that took some time. The first reverse mortgage happened only in the year 2001.

Reverse mortgages allow home owning seniors aged 62 and above obtain loans in place of home equity. There are closing costs and fees involved. The senior borrowers retain titles to their homes during the life of a reverse mortgage. The reverse mortgage money can be taken in monthly payments and can be used for any reason, including vacations, paying medical bills, and purchasing cars. The money supplements Social Security Checks.

The loan can be repaid when the house gets sold. If the loans add up to higher than the worth of the home, the heirs are not liable for the excess amount.

The state of Texas has introduced stronger consumer protection factors on lenders than required by the national law. Seniors will need to receive counseling before paper work starts for a reverse mortgage. Reverse mortgages are allowed to be canceled within a period of three days after closing without any penalty. There is also a cap on the amount of loan origination fees.

Studies showed that in the year 2007, buyers aged 55 and above accounted for 19% of all home buyers, according to a research study made by the Metlife Mature Market Institute and The National Association of Home Builders. But the number of houses bought by this age group has fallen since the year 2005 and it is projected to fall likewise until the year 2010 because of the unstable conditions in the housing markets.

These baby boomers and senior home buyers continue to pay mortgages while relying on their current wealth, according to a report “Housing for the 55+ Market: Trends and Insights on Boomers and Beyond.”

More than 69% of home buyers aged 55 and above used a mortgage to purchase a home in an age-qualified community, a jump of more than 50% when compared to the figures for 2005. And more than half of home buyers in the same age group bought a home in an age-qualified community. There was also a drop in mortgages taken by older borrowers for homes in other 56+ communities (not age restricted).

Home ownership in the 55+ age group has remained nearly constant at nearly 71% since 2001. The average income of home owners drops as the age of homeowners increases.

The study was based on Housing Survey Data from 2001 to 2007. The results were released on April 28 in Philadelphia.

Here is a piece of good news for all Washington state consumers. Due to a recently introduced law, residents of Washington will soon have access to more reverse mortgage lenders. They will also have more reverse mortgage safeguards for their security.

Reverse mortgages are a special financing arrangement that allows homeowners age 62 and above to borrow money from a lender. This money can be borrowed in a lump sum or monthly installments or as a line of credit. Interest is charged on the amount that is borrowed and keeps on getting added to the principal amount. This amount is repaid when the house is sold or the borrower dies or moves out of the house.

Until last year, only select leaders could offer reverse mortgages.  With the implementation of the new law i.e. HB 1311,  other lenders can also offer reverse mortgages. Now people will have access to more reverse mortgage lenders.

Read More...

The number of federally insured reverse mortgages done by the FHA continued upward during the month of April. The HUD (Department of Housing and Urban Development) data shows that the FHA endorsed 11,650 HECMs (reverse mortgage - home equity conversion mortgages), which is 400 more than the figures for March.

The largest retailer of HECMs remains Wells Fargo Home Mortgage. Wells Fargo registered nearly 2,100 reverse mortgages in April, out of a total of 11,790 for the fiscal year. The number two position is occupied by Bank of America and Countrywide Financial is in the fifth position.

Bank of America acquired Countrywide last year and they endorsed more than 1330 retail loans in April. The merger was officially completed on the 27th of April. HECM watch groups expect to see the endorsement reports for Countrywide Financial ‘tail off quickly’.

Financial Freedom currently ranks third in total retail reverse mortgage originations, with a total completed 2,772 originations so far. World Alliance Financial comes fourth with a total of 2,371 HECM loans originated so far.

In the state of Washington, non-bank lenders will now be able to offer reverse mortgages as part of the reverse mortgage legislation made into law recently by the Governor of Washington. House Bill 1311 rectified provisions in a law that took effect last summer that prevented lenders who are not banks from offering reverse mortgages. The non-bank lenders in Washington need to be licensed under the state’s Consumer Loan Act. The law also regulates ‘proprietary’ reverse mortgages.

The law comes into effect 90 days after April 26, according to a legislative assistant of a prime sponsor of the bill, Rep. Steve Kirby. Reverse mortgages are used by senior homeowners to get access to a steady stream of money, but there have been some situations where unscrupulous mortgage lenders have forced homeowners into foreclosure, which is why it becomes important to regulate the reverse mortgage industry.

HUD (Housing & Urban Development Department) has requested nearly $800 million for reverse mortgage, in its budget for the year 2010.

The HECM (Home Equity Conversion Reverse Mortgage) program allows senior home owners to tap their home equity amounts as regular monthly income streams or as a line of credit. This amount does not have to be paid back while they still live in the same homes.

The only problem of HECMs is the unpredictable housing prices which can fluctuate erratically.

When a senior citizen takes a line of credit as reverse mortgage to the tune of $300,000 and the value of the home falls, then the FHA will have to bear the losses. It is for meeting these anticipated losses that the FHA’s budget calls for nearly $800m.

If prices of homes fall, then the insurance fund of the FHA can be hit hard by losses arising out of the reverse mortgages. But the reverse mortgage program itself is still seen as being very solid.

Read More...

Foreclosure filings have been going up incrementally in the United States since the year 2006. There has been an increase of more than one hundred percent since this year, in the number of filings for foreclosure.

RealtyTrac released a Foreclosure market report recently in January of 2009 where it showed that the states of California, Arizona and Florida were the states with the highest numbers of foreclosures during the year 2008. Foreclosure activity in California increased more than 400% since the year 2006. This was followed closely by Florida and Arizona, in that order. Other states with top foreclosures were Ohio, Illinois, Texas, Michigan, Georgia, Nevada and New Jersey.

Foreclosures and mortgage delinquencies are continuing to rise every day. Even during these gloomy days hope comes to senior home owners in the form of a Home Equity Conversion Mortgage (HECM) or reverse mortgage. If you have got a reverse mortgage then you need not be worried about increasing foreclosure rates and about the ability to make mortgage payments. No monthly payments are required with a HECM reverse mortgage.

Read More...

In the twilight years of retirement, seniors are usually under financial pressure. There seems to be a need to cut down on expenditures as far as possible, while improving the sources of money to be as many as possible. A reverse mortgage is a good option to go for, to raise money to meet living requirements during the retirement years. There are no requirements of passing credit score, and there is income proof required either, in order to qualify for a reverse mortgage.

The only requirement is that the borrower needs to be of minimum age 62, and have sufficient equity in a home property. The HUD insures more than 90% of all reverse mortgages. The reverse mortgages are non-recourse loans so the borrower cannot owe more than a home’s market value. For example, even when a senior uses the value of a reverse mortgage to the tune of $200,000, if the home is valued at $180,000 when the senior passes away, then that is the amount that becomes repayable to the lender, and nothing more.

Read More...

If you are an eligible senior home owner aged 62 years or above you may want to have some guidance on why you would like to go for a reverse mortgage loan.

Here are 5 reasons why people may want to get reverse mortgages.

Meet retired living expenses - Most home owners have been spending a lot of years making mortgage payments, this could have been anything between a few hundred to a few thousand dollars a month. Now you can get the same amount back in every month, to meet living costs like housing, medical, insurance and other expenses. This would complement other fixed incomes like from pension plans, social security, retirement accounts, etc. This would be the number one reason why people would be motivated to take up a reverse mortgage - to enhance sources of income.

Pay medical expenses - Medical issues to meet are increasing in seniors daily lives. With the rising costs of health care, this can take the form of cost of undergoing medical treatment or surgical procedures, buying prescription drugs, meeting medical bills, etc. Reverse mortgage can help meet these medical  and long term care costs.

Home improvement/modifications - You may want to make improvements, remodeling and improvements to your home, or get a landscaped garden perhaps. The money from a reverse mortgage can help fund the cost of home modifications and improvements.

Taking a Vacation - The proceeds from a reverse mortgage can be used to take your dream vacation, which would be a good way to relax after spending your time working through your life.

Pay off debts - This is one of the top reasons why people take reverse mortgages. Reverse mortgages can provide a way to get a large amount of cash to manage or repay debts.

With the rising costs of essential items for daily consumption, such as food, medical expenses and rent, seniors have to trim and prune their expenses and budgets, especially more so in these times of economic problems. They can take a reverse mortgage to utilize the equity in their home if they are aged 62 or above. A reverse mortgage is a federally insured loan insured through the FHA (Federal Housing Administration). The FHA uses approved appraisers to determine the value of the home or property being reverse-mortgaged and charges a 2% MIP (Mortgage Insurance Premium).

The FHA requires that borrowers would need to undergo counseling before submitting an application to a reverse mortgage lender. The property being reverse mortgaged would need to be the primary place of residence for the borrower. There are no other credit or income requirements.

The money got from a reverse mortgage is tax-free and can be treated like any other monthly income, a credit line, a lump sum or any combination of these. Home owning borrowers would still need to pay taxes and insurance on their homes.

Read More...

Reverse mortgage brokerage can be a good profession to pursue. To get a reverse mortgage broker license, you will need to possess reverse mortgage training to succeed in this competitive industry. There are many options when you would like to get some reverse mortgage training. You can find ads selling training programs in newspapers, websites and televisions.

It is a good idea to do a historical check of the company that is going to train you to see if the reverse mortgage training program they offer covers everything that interests or concerns reverse mortgage. If the training company is a member of the Better Business Bureau then that would be something better, as it is an indicator of quality.

Read More...