Reverse Mortgage Loans

FREE REVERSE MORTGAGE REPORT!     CLICK HERE!

Go to Part II of this Wiki

REVERSE MORTGAGE 

Ezreverse.com/Senior Advantage's mission is to educate seniors 62 and older on products and services to help meet their needs . A popular choice among many seniors is the Federal Housing Administration reverse mortgage: the Home Equity Conversion Mortgage (a Government Program for Seniors). It allows you to access the equity in your home in a variety of ways without making monthly payments. Seniors have the ability to take advantage of this program with no out-of-pocket expenses.

You retain the title to your home. Based on the property’s value, your age and the maximum credit line allowed by the FHA, you can use some of the financial equity you’ve built up in your home, tax-free. In fact, this cash can be used to pay off your existing mortgage balances.

The Home Equity Conversion Mortgage is insured by the FHA and funded by Fannie Mae, making it a safe and secure option. It ensures that you can stay in your home as long as you choose. If you decide to sell your home, the sale proceeds will be used to pay the balance on the reverse mortgage and the remaining equity is yours to keep. If you should pass away, the equity in the home will pass to your heirs. Your heirs can choose to sell the home or refinance the balance through a traditional mortgage.

To be eligible, you must own your home and be at least 62 years of age. You don’t need to have existing income to qualify, and there are no health or credit qualifications.

Eligible home types include single family homes, two-to four-unit homes, condominiums, planned urban developments, townhouses, manufactured homes, and mobile homes. Cooperative apartments are not eligible in most states.

To request personalized information, submit your request on-line or call Senior Advantage Toll-Free at

1-866-892-9322

or 24 hours a day at

www.EZreverse.com

Mortgage rates are expected to increase in February
Pub Date: Fri, 01 Feb 2008 10:00:00 EST

Based on historical performance of long term interest rates, expect mortgage rates to increase after this last cut to the federal funds rate. Everyone will tell you that fixed-rate mortgage rates are not tied to the Federal interest rate but tend to move with the changing of the long-term government bond yields. The 10-year Treasury can provide some indication of what will happen with mortgage rates in the future. The performance of Mortgage Backed Securities, issued by Fannie Mae and Freddie Mac, is what really determines long-term mortgage rates. If you have a loan that is tied to the Prime Rate then you will see some immediate benefit. These would be loans such as home equity lines of credit and credit cards. If your thinking about refinancing or buying, now may be the best time all year to do that.

Reverse mortgage can provide access to cash for retirement
Pub Date: Thu, 31 Jan 2008 10:00:00 EST
A reverse mortgage can be the right mortgage solution for many people. Sometimes a more traditional mortgage works better. The problem with a reverse mortgage is that the fees and mortgage insurance premiums will eat into the equity of the home. By the time your estate is ready to close on the loan there may be very little equity left. If this is not a concern and you don’t quality for a traditional mortgage because of income or credit requirements, then a reverse mortgage is a great way to gain access to cash without having to sell your home. It is always best to talk with your children, a financial planner or estate planner before making any decision about a reverse mortgage or other home equity finance options such as EquityKey.

The cost of a reverse mortgage
Pub Date: Wed, 30 Jan 2008 10:00:00 EST
Under the HECM program, which accounts for 90 percent of all reverse mortgages in the US, the combination of the origination fee and the mortgage insurance premium can take a serious bite into your homes equity. The origination fee can never be more than $2,000 for a reverse mortgage. It is calculated by taking 2% of the homes value and if that is greater than $2,000 then $2,000 that is all you will pay. This fee is approved by the FHA to help the lender pay for the expense of working the mortgage including any marketing and administrative costs they may have. The mortgage insurance premium (MIP) is equal to 2 percent of the maximum claim amount or the homes current market value (whichever is less), and an annual premium thereafter, which is equal to .5% of the loan balance. The maximum claim amount is defined by the FHA based on the loan amount. The MIP ensures that if the loan servicer goes out of business, the government will take over and ensure that you continue to have access to your loan funds. The MIP also ensures that when the HECM must be repaid, that the borrower will never owe more that the value of his or her house.

Reverse mortgages require existing equity in your home
Pub Date: Tue, 29 Jan 2008 10:00:00 EST

A reverse mortgage is a great way to pull cash out of your home if you are a senior over the age of 62 and have no other means of financing. With interest rates so low, it may be better to refinance and pull cash out. Not all seniors can do that because of income or credit issues. A reverse mortgage only looks at the equity in the home and so it’s available as an option if there is existing equity in the home.

But what if there isn’t? If you are healthy then you may want to consider an alternative from a company called EquityKey. EquityKey has a program that will give you a lump sum of cash today based on the value of your home. This cash is debt-free so you never have to worry about paying it back. It’s not a loan but a payment to you for entering into an agreement that allows EquityKey to participate in the future appreciation of your home. They want you to live for a long time and when its time to sell your house they receive 50% of the appreciation from the sale of the home. It’s that simple. Reverse Mortgage Loans USA can help get you started.

Receive debt-free cash without the need of a mortgage
Pub Date: Mon, 28 Jan 2008 10:00:00 EST 

A reverse mortgage is great for someone who is looking to stay in their home for the rest of their lives. It provides tax-free cash based on the equity in the home. The only problem is that the costs are high due to mortgage insurance premiums and the risks involved for the lenders. Imagine if you could tap into the equity of your home without the need to sign a mortgage. Imagine if that money was debt-free. Too good to be true, what’s the catch?

If you are a healthy 65 to 85 year old with a home that qualifies, EquityKey would like the right to participate in the future appreciation of your home. In return EquityKey will provide debt-free cash equal to 12-15% of your homes value as a lump sum payment for each qualifying home owner. Then when it is time to sell your home for any reason, EquityKey receives 50% of the appreciation after the sale. Reverse Mortgage Loans USA can get you started and give you more information about this exciting program available right now in California, Florida and New York.

Sub-prime mortgage companies have put the housing economy upside down
Pub Date: Fri, 25 Jan 2008 10:00:00 EST

It is easy to play Monday morning quarterback with why the sub-prime mortgage companies have put the housing economy upside down. At the time everyone was excited because home ownership rose to record levels and a lot of people were making a lot of money. If we could have predicted that the level of greed would cause such large increases in the interest rates for these loans, would it have stopped people from taking them? Would the government have stepped in and performed some level of oversight? I am afraid that the answer to those questions are no.

With all that being said it really doesn’t matter how we got here except to prevent future generations from sealing the same fate. We need to concentrate right now on how to fix the problem for both the short term and long term without both policies hindering the other. Tax rebate checks that will be spent on credit card balances, insurance premiums and mortgage bills seem to be a covert way of providing bailouts. Dropping interest rates that are already low don’t provide any immediate or long term help for the average citizen.

If you want to bolster the economy then you need to focus on helping the housing market. Find ways to get the buying and selling of homes moving again. Provide tax reform, incentives and help to the average home owner. Fix the problem that can provide the biggest relief. Don’t be scared of the problem and be ready and willing to hurt some people to help the majority. You can’t make everyone happy. Last apply Occam's Razor, the simplest solution is usually the best solution.

A reverse mortgage can provide mortgage payment freedom
Pub Date: Thu, 24 Jan 2008 10:00:00 EST

So you are over 62 years old and live on fixed income. You’re living within your means but it’s tight. You have no cash flow issues right now but things happen. If you could get rid of your monthly mortgage payment you would be set for life. Does this sound like you? I have talked with many people who fall into this category.

If you have equity in your home, a reverse mortgage can take the burden of your mortgage payment away and provide extra tax-free cash. It is important to tell any lender you talk with what your objectives are. The freedom of no mortgage payments can be a huge relief for many people. A reverse mortgage can provide that freedom.

Will mortgage rates help us escape from the recession
Pub Date: Wed, 23 Jan 2008 10:00:00 EST

If you want to truly attempt to escape from the recession we are entering then everyone needs to contact their local and state governments demanding real estate tax reform. The sub-prime mortgage market created a huge boom in real estate and new home construction. They gave home ownership to people who never were truly qualified. They also created a swell of speculators who bought multiple homes with little to no money down, sometimes leveraging one home against another to make the purchase. The demand for homes sky rocketed, inflating the price of homes.

Then the government raises interest rates to slow down the economy. Suddenly people can no longer afford their sub-prime mortgages. Inventory levels of homes for sale listings grow and eventually the speculators can’t sell anything. Foreclosures hit record levels and mortgage companies go out of business and with them jobs.

Finally the crisis wakes up Washington and the government begins to reduce interest rates to bolster home buying but the new qualifications for mortgage loans become out of reach for too many people. Suddenly you can’t pick up the phone and be given $250,000.

So now many people are leveraged in homes that are not worth what they paid or have strong equity stakes that they can’t access. The inflated price of homes prevents any option for people to downgrade into smaller more affordable homes because the real estate taxes are too expensive. It even prevents people from upgrading. They can afford the mortgage payment but not the new more expensive tax bill.

Every Governor in the United States needs to make it their priority to fix the real estate tax issue so people can afford to buy homes again. Mortgage rates and tax rebates are not the answer. Real estate tax reform is. 

Will local and state governments finally wake up to the realities of the economy
Pub Date: Tue, 22 Jan 2008 10:00:00 EST
In what could only be described as a reactionary move, the Fed cut the federal funds rate and the discount rate by three-quarters of a percentage point today. The Fed announced only last week that they would wait until their end of the month meeting and that the rate cuts would not be more than one-half of a percentage point. With the U.S. markets already losing all of its profits from last year and a worldwide decline in the markets the Fed is attempting to stop the inevitable recession that some believe are already upon us.

In the U.S., the meltdown of the mortgage and housing markets has taken a real toll on the economy. Even though mortgage rates are at an all time low with expected lower rates after the Fed’s decision today, inventory levels of home for sale listings are still increasing. It seems that only real estate tax reform can stimulate economic growth but it is not coming. Will local and state governments finally wake up to the realities of the economy and help get the housing market moving again?

Understand your current financial situation before you decide on a reverse mortgage
Pub Date: Mon, 21 Jan 2008 10:00:00 EST
It can be a difficult decision to make when deciding between a conventional loan and a reverse mortgage. Before you can make that decision it is important to understand your current financial situation and how the future could affect or change that for better or worse. If it is difficult for you to determine that on your own, it is important to find someone you can trust to help you evaluate your finances. HUD has approved a list of housing counseling agencies to help people with advice on buying a home, credit issues and reverse mortgages. HUD also has a National HECM Counseling Network. These counselors are permitted to provided face-to-face and telephone counseling. Even though these people have been approved by HUD it is important to still do your due diligence before committing to meeting with anyone.

Reverse mortgage numbers for 2007 are in by the FHA
Pub Date: Fri, 18 Jan 2008 10:00:00 EST 

The FHA released their numbers for HECM reverse mortgage loans. As expected there was a significant increase in the number of HECM cases issued from the prior year. The FHA is reporting a 40.23% increase for 2007 with a total number of HECM cases reaching 107,103 at years end. In 2006 the number of cases reached 76,375.

Other interesting notes in the report:

Since the inception of the program, FHA has insured 335,798 HECM loans with a maximum claim amount of $67 billion.

Of these 335,798 HECM loans insured by FHA, 259,365 loans with a maximum claim amount of $57 billion are still active

As of September 30, 2007 the insurance in force (the outstanding balance of active loans) was 30 billion.

Let mortgage lenders compete for your business
Pub Date: Wed, 16 Jan 2008 10:00:00 EST

By February mortgage rates may be at an all time low. If you have a mortgage with an interest rate in the 6% or higher range, now may be a great time to refinance. Be careful of the fees associated with a refinance. Though it may be the best time to pay discount points to get the lowest possible rate, make sure that you are not only getting a competitive rate but competitive fees. One quick way to check is by getting a couple of lenders involved and comparing the APR which can be found on your good faith estimate. This will give you a quick indication on which loan costs more. Application fees, title fees and sometimes interest rates can be negotiated. In many cases you can use your own title company. If you think the title rates are high, shop around and tell the lender you choose to use your own title company. Let lenders compete for your business and just don’t shop for the best rate, shop for the best loan.

Prepare now for the potential collapse of the economy
Pub Date: Tue, 15 Jan 2008 10:00:00 EST

If you haven’t heard already Citigroup announced a $10 billion dollar loss for the forth-quarter due to defaults on home loans. Bank Of America announced last week that they are purchasing Countrywide for $4 billion in stock. Normally this purchase would never be allowed but the mess created by Countrywide is too big and this prevents the need for a government bailout.

If all this activity in the mortgage space so early in the New Year hasn’t woken you up to what appears to be the beginning of a major collapse in the economy then what signs are you waiting for? It is always better to hope for the best and prepare for the worst. If you’re living off the equity in your home or even worse, from credit cards it is time to seriously evaluate your situation. I expect that it is going to get worse before it gets better. Prepare now while you can proactively for the next two years. Consider your worst situation and begin to evaluate what you can do to weather the storm.

Be Aware of Reverse Mortgage Costs
Pub Date: Mon, 14 Jan 2008 10:00:00 EST

You need to be aware of the costs you are paying to obtain a reverse mortgage. The size of the loan will determine the amount of the fees so you should only take what you need. By using the Good Faith Estimate given to you by a lender you can get insight into the costs. A lender might tell you not to worry about the costs because they are going to roll those them into the loan. Remember that at some point they need to be paid. The question is do you want to pay interest on those costs or not.

There are traditional costs like title documents, application fees, origination points and maybe even discount points. Some of these items are negotiable compare these items with different lenders.

The biggest cost to a HECM loan will be the Mortgage Insurance Premium or PIM. This is going to be 2% of the maximum claim amount or the home value. Plus every year you’re going to pay .5% of the loan balance. The insurance is there to protect your loan and basically your payments but depending on the size of the loan amount this can be tens of thousands of dollars.

Your Good Faith Estimate is a great place to start when comparing the costs of a reverse mortgage so make sure each lender you’re considering gives you one.

Reverse mortgages can be the answer for many seniors during a time of economic uncertainty
Pub Date: Fri, 11 Jan 2008 10:00:00 EST

The Fed announced that they will be dropping interest rates again and now Bank Of America is announcing that they are going to purchase Countrywide Home Mortgage to prevent their bankruptcy. In a normal market the government would not allow BOA to make this purchase but things are not normal. Home for sale listing inventories are at an all time high and this is not expected to correct itself until next year. Mortgage companies are closing their doors and the largest banking institutions are getting bigger. The mortgage meltdown is expected to last for another 1 to 3 years.

All of this is resulting in the reverse mortgage boom as people over the age of 62 are looking for new ways to refinance their homes for retirement and security. Selling a home and downgrading is no longer an option. Traditional loan products that require most stringent income and credit scores are no longer an option. A reverse mortgage can be an answer for many seniors during a time of economic uncertainty.

Negotiate your reverse mortgage with a few lenders
Pub Date: Thu, 10 Jan 2008 10:00:00 EST
When you decide to go shopping for a reverse mortgage there are two big ticket items that you can negotiate with the lender in an attempt to reduce the cost of the loan. The first item is the origination points and the second item is the yield spread premium. Both these items will be on your good faith estimate and if you can’t find them ask the lender.

The origination points will start out at 2% of the loan value. That is the maximum amount the lender is allowed to charge you on a HECM loan. This charge is there for the lender to cover administration and marketing related costs but on a $400,000 loan do you think the lender has $8000 worth of actual costs? Depending on the size of your loan the lender may be willing to reduce the origination points thus reducing your closing costs.

The yield spread premium is a cash rebate paid to the lender for selling the loan above the wholesale par interest rate. Basically the lender has a group of banks they work with and every morning is given the wholesale par rate the banks are offering to the lenders. If the lender can sell any loan for above the wholesale par rate, they make a commission. Lowering the yield spread premium in effect is lowering the interest rate for the loan which saves you interest paid over the length of the loan.

Purchase a home with a reverse mortgage
Pub Date: Wed, 09 Jan 2008 10:00:00 EST
For seniors who have never owned their own home a reverse mortgage can be used for home purchases. The problem is finding an undervalued home with enough equity to satisfy the mortgage requirements. There are sites today like Homekeys, Zillow and ABC Real Estate that provide home value estimates called AVMs. An AVM stands for Automated Value Model which is a fancy way of saying an estimate based solely on computer algorithms. AVMs are never a substitute for an appraisal but are really good for getting a first glance at a homes worth.

Homekeys has something special called ValueSearch. ValueSearch is a patent pending technology that allows you to search for home for sale listings and sort those listings by the best deals. It takes the manual process of using several sites to find listings and AVMs out of the equation. In seconds you can find the best deals for any city or selected map area. Using ValueSearch a senior can begin to locate potential homes they could by with a reverse mortgage and enjoy the benefits of home ownership.

Common reverse mortgage loan terms
Pub Date: Tue, 08 Jan 2008 10:00:00 EST
When you go shopping for a reverse mortgage there are terms that you will see that you may not understand. Here are a few of the most common terms for all loans and a few you will most likely see when shopping for a reverse mortgage.

Interest Rate: Every loan comes with an interest rate. This is the amount of money you are being charged per year for the outstanding balance of the loan. Every type of loan has a different rate including some loans called variable rate loans where the rate changes periodically.

Annual Percentage Rate (APR): Lenders are required by law to disclose the APR of every loan. This rate is calculated by including any fees and costs you are required to pay to the loan amount. This rate will always be the same or higher than the interest rate. Use this rate to shop for the lowest price loan. You may find that a loan with a higher interest rate but lower upfront costs may be cheaper (have a lower APR) than buying the lowest interest rate loan on the market.

HUD-1 Statement: The HUD document is used to disclose to both the seller and the buyer the itemized list of closing costs payable at the time of closing. This will include things like commissions, loan fees, escrow payments, taxes and insurance. It is signed by both the buyer and the seller. The form comes from the Department of Housing and Urban Development.

Points: A point is 1 percent of the loan amount that is paid by the borrower. There are different types of points. You could be charged "origination points" by lenders when purchasing a government loan like a reverse mortgage. You could pay "discount points" to reduce the loan’s interest rate.

Yield Spread Premium: This is the cash rebate paid to a mortgage broker for selling a loan at an interest rate above the wholesale par rates they have access to from banks and lending institutions. This is how mortgage brokers make their money.

Origination Fee: The origination fee covers a lender's operating expenses for processing the mortgage. This could include administration costs, marketing costs, etc. Under the HECM program a lender can charge up to 2 percent of the loan amount but never more than $2000 in total.

Mortgage Insurance Premium: If you go with a HECM reverse mortgage loan you will be charged a mortgage insurance premium equal to 2 percent of the maximum claim amount, or home value, whichever is less, plus an annual premium thereafter equal to .5 percent of the loan balance. The insurance is used to protect you incase the company servicing the loan goes out of business or if the value of your home depreciates below the amount of money you have received when the loan is repaid.

When is the best time to use a reverse mortgage
Pub Date: Mon, 07 Jan 2008 10:00:00 EST
If you are a senior that does not have enough income pay your monthly expenses and live a quality life then financial change is required. Start by looking at your credit. Are you eligible for a traditional home equity line of credit or mortgage refinancing? These are the least expensive and easiest types of loans to apply for. If you have been denied this option because of your credit, then look at the equity in your home. Is there enough equity in the home so a reverse mortgage can provide you the cash you need for today and your future? Your credit score does not apply with a reverse mortgage but remember the fees can be expensive. You could pay as much as 5% of the loan amount to cover the loan costs. Another option is always to sell the home and move to a less expensive home or apartment. In today’s real estate market that may be harder than you think with inventory levels at an all time high. Always research all your options before you make a decision and finding a long term solution that has the least cost will most likely be your best bet.

An increase in reverse mortgages does not indicate a problem with the economy
Pub Date: Fri, 04 Jan 2008 12:00:00 EST
Even though reverse mortgages cost more in points and closing costs, the industry is seeing an increase in the number of these types of loans. Some argue that the surge in reverse mortgages has to do with a failing economy and not with this type of loan product being the best choice for many seniors. Seniors who don’t have the credit to be approved for a traditional home loan whether because their spouse has pasted away or they don’t have the income does not indicate a problem with the economy. Without this type of loan product these seniors would most likely lose their homes. The knowledge in knowing that they will have the income they need for old age and a home to live in that can be passed onto their children is comforting. Sure some percentage of these loans are being used to combat foreclosures but what is wrong with that if it saved someone's home. Let's not begin to think that reverse mortgages only have a place when we have a failing economy.

Do your homework before choosing a reverse mortgage
Pub Date: Thu, 03 Jan 2008 11:00:00 EST 
It is always important to do your homework before making any type of financial decision. These days, it's hard to trust information coming from only one place, and it is smart to research different sources for information. For example, the Department of Housing and Urban Development doesn't provide enough funding to pay for sufficient trained counselors to educate seniors about reverse mortgage loans. Training isn't required for individual counselors, and many are compensated by lenders. This is why it is important to reach out to different places for information, not just settle on one.

Reverse Mortgages and the New Year
Pub Date: Wed, 02 Jan 2008 11:30:00 EST

In the New Year expect to read a lot about reverse mortgages. The Senate committee on Aging will spend more hours this year than ever before in hearings. Banking institutions will be figuring out how to get more reverse mortgage products and services out into the market. That is a goal of the FHA. The year has just started and already LIBOR, (London InterBank Offered Rate. Many adjustable rate mortgages are tied to this index), based mortgage products are being announced by some lenders. A by the end of this year expect new legislation to come from not only Congress but State governments as well dealing with best practices, rates and commission, and homeowner protections and security.

Senate Committee on Aging keeps eye on Reverse Mortgages
Pub Date: Fri, 28 Dec 2007 12:20:00 EST
In February 2007 the Special Senate Committee on Aging met to discuss how programs and services for seniors would be impacted by the President's budget.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_senate_hearings&docid=f:34648.wais

The Assistant Secretary Brian Montgomery at the Department of Housing and Urban Development was there to talk. In his opening statement he said:

"The senior population today represents a greater portion of the overall population than at any time in our history. I want to add that that number is not on the decline. As such, the housing needs of seniors are ever-increasing and ever-expanding."

About reverse mortgages he stated:

"Now, since fiscal year 2000, when we insured just 6,600 loans, the HECM program has been experiencing double-digit growth each year. In fiscal year 2005, we endorsed 43,000 loans, representing a 14-percent increase over the prior year. In fiscal year 2006, volume really exploded. It increased by 77 percent to more than 76,000 loans. Endorsements continue to accelerate with nearly 35,000 so far this fiscal year, which puts us on a pace to insure about 90,000 loans."

He also talked about proposing legislation that would eliminate the caps which just happened a few weeks ago. The Senate, HUD and the FHA are gearing up to handle the demand that is coming for reverse mortgages. There have been several committee meetings this year and we can expect more next year.

Reverse Mortgages to the foreclosure resuce
Pub Date: Thu, 27 Dec 2007 11:00:00 EST
Seniors over the age of 62 who have refinanced their home with a subprime mortgage in the past few years and are now cash strapped have hope. A reverse mortgage can be used to get them out of their financial distress and recover what will most certainly be the loss of their home. The reality is that the senior probably should never have taken out the subprime loan to begin with. When you live on a fixed income and your mortgage payment is not fixed that is a warning sign of bad things to come. If there is enough equity in the home then a reverse mortgage can be used to refinance the home before foreclosure. Today more lenders are willing to accept a reverse mortgage payoff because of the current real estate market. The lender will look to see if a reverse mortgage will yield more money than a foreclosure sale, and in this market that is a real possibility for many properties. If you or someone you know has already received a foreclosure warning it's not too late. Find a housing attorney or lender who specializes in foreclosures and reverse mortgages.

Reverse mortgages are NOT a threat to seniors
Pub Date: Mon, 24 Dec 2007 10:30:00 EST
If I read one more article this year from someone irresponsibly spewing gloom and doom about unscrupulous sales agents in the reverse mortgage industry I am going to scream. The fact is that reverse mortgages are helping many seniors who otherwise would not have access to the cash buried in their homes. The number of reverse mortgages being purchased year after year increase in record numbers and the FHA wants the private sector to get more involved. This doesn’t sound like there are widespread problems but a proven track record of our senior population having an opportunity to live a quality life well into their old age. Regulation and oversight is the key and needs to be continued. Lenders and sales agents need to be ethical and make sure our seniors are always purchasing the right vehicle for their retirement. Maybe most of all, seniors need to do their due diligence and make sure they get financial counseling and education from someone they can trust. 
 

Reverse Mortgages are expensive today but how about tomorrow
Pub Date: Fri, 21 Dec 2007 15:12:00 EST
A reverse mortgage is more expensive than a conventional mortgage loan. Many state and local governments offer low-cost reverse mortgages but that is the exception and not the rule. With the Federal government ready to open up the marketplace with new private reverse mortgage loan products, I expect the cost of reverse mortgages to fall in line with conventional loans. How quickly depends on the level of competition and the demand. This does not mean you should wait to purchase a reverse mortgage loan if it is the best loan product for your current situation and you need the cash now. Always look at all your options before choosing any financing plan. Make sure it is the right solution for both your short and long term goals, and remember sometimes no financing is the best option of all.
 

Reverse Mortgages: Polishing not Tarnishing the Golden Years
Pub Date: Thu, 20 Dec 2007 11:30:00 EST
Meg Burns the director of FHA Single Family Program Development at HUD wrote a statement paper titled "Reverse Mortgages: Polishing not Tarnishing the Golden Years" on December 12th, 2007. She writes on page 4,

"I have one last comment on HECMs: we at FHA are trying to change the public perception about this product. While HECMs have often been viewed as a means for "house-rich, but cash-poor" seniors to meet their most basic living expenses, we are trying to move the public away from that perception and toward a recognition that this program could be utilized as a financial planning tool – as a way to help seniors move into their golden years with a sensible and clear strategy for funding household and personal expenses."

The white paper is a positive look on reverse mortgages by someone in the trenches. Someone who has seen first hand how reverse mortgages has helped seniors and their families. She is not ignorant to think improvements don’t need to be made and is working with industry groups like the NRMLA and AARP to improve the HECM program and help more private programs to be developed to meet the future demand.

Kudos Meg and thanks for the hard work.

Reverse mortgages are ignored by the Federal Reserve
Pub Date: Wed, 19 Dec 2007 12:50:00 EST
So the Board of Governors of the Federal Reserve System division of Consumer and Community Affairs published this document on December 12, 2007. The document is a proposal for amendment changes to the regulations on Truth in Lending, also know as Regulation Z. The purpose of the proposal is to tighten down the screws on disclosure requirements and when those disclosures must be presented. Unfortunately throughout the proposal, reverse mortgages are made an exception to these new rules. All of the new recommended amendment changes seem valid and appropriate for reverse mortgage loans. Here are a few:

• The prohibition on creditors' engaging in a pattern or practice of making higher-priced mortgage loans based on the collateral without regard to consumers’ repayment ability [Pg. 16]
• The prohibition on creditors' making an individual higher-priced mortgage loan without verifying by third-party documents the consumer income and assets the creditor relied upon to make the loan [Pg. 16]
• 
  The requirement to establish an escrow account for property taxes and homeowners' insurance for first-lien mortgage loans [Pg. 16]
• The prohibition on prepayment penalties except under certain conditions [Pg. 16]

Please tell me why these proposals are not valid for reverse mortgage loans. Anyone?
 
You don't need to be a reverse mortgage loan exception
Pub Date: Tue, 18 Dec 2007 11:30:00 EST
There will always be people out just to make a buck. I don't care what the industry is. That is why we have government agencies that regulate business practices and provide consumers rights. It is unfortunate that at a time when seniors over the age of 62 have access to well insured and protected reverse mortgage loan products, we have a few lenders attempting to double dip and have these seniors invest their new income into investment products that put them and their families at risk. Believe me that this is not the norm but the exception. Unfortunately we all feel like we will be the exception. I think this is very simple. Purchase a reverse mortgage loan to tap into the wealth of your home for a lifetime of tax-free income. Use this money to live and support yourself into your golden years. Make sure your new income plus any existing income will cover your monthly expenses including real estate taxes, insurance and any other maintenance your home requires. Remember the cost of healthcare and prescription drugs increase every year. Once you know that a reverse mortgage can give you the proper cash flow you need today and tomorrow, enjoy your life knowing that your home is always going to be home.

Housing crisis will not be fixed by mortgage reform
Pub Date: Mon, 17 Dec 2007 10:20:00 EST
It seems almost every day I read something about Congress passing new legislation in an attempt to fix the current housing crisis. Their focus is always on mortgages and the rising foreclosures that are sure to continue well into next year. Interest rates are low though over the past week they have increased a little. The problem is really two fold and I am not sure it has much to do with mortgages, Taxes and Insurance.

The amount a new homeowner needs to pay in taxes because of the rise in home prices is causing much of the pain in inventory. If state and local governments would switch to a standard 1% millage rate for new home purchases, the tax burden wouldn't be a burden. This would give people the freedom to downgrade and upgrade their homes that were purchased prior to the housing boom a few years ago. This would also help old and new homeowners equally.

Homeowners insurance is the next culprit and requires a lot of reform. There is a whole group of people today who have decided to self insure their homes because of the ridiculous increase in cost just over the past two years. If we think we have a problem now with foreclosures, let's pray nothing happens to these homeowners who don't have insurance.

We need to get people buying homes again and reduce the current inventory. This will help reduce the number of foreclosures more than anything else. Give people an opportunity to downgrade and upgrade their current homes again without requiring a third mortgage. Reduce the tax burden and insurance burden and the buyers will come.

Reverse mortgage loans will never be the next subprime
Pub Date: Fri, 14 Dec 2007 11:36:00 EST
It is good that the U.S. Senate is taking the time to talk with the Department of Housing and Urban Development's Federal Housing Authority (FHA). It is important to make sure that the agency responsible for insuring Home Equity Conversion Mortgages (HECM) are doing their due diligence and is aware of what is happening in the market place. No one should take this over site as an indication that things are bad or there is widespread unethical behavior by brokers. HECM loans are going to help a lot of people and have helped a lot of people. Like everything in today’s society, only the bad news and infrequent problems rise to the top of the news food chain; Sensationalized to somehow appear like the end of the world is near. The demand for reverse mortgage loans, especially in Florida, is increasing every year. It is important that all the agencies and companies involved continue to review their policies, best practices and perform due diligence on a regular basis.

U.S. Senate worried about abuse in the reverse mortgage industry
Pub Date: Thu, 13 Dec 2007 17:06:00 EST
Every year we see an increase in the number of reverse mortgage loans being issued to seniors over the age of 62. In 2006 there was a 56% increase in the number of loans from the prior year. The Special Committee on Aging in the U.S. Senate held a hearing yesterday to discuss reverse mortgages. They are worried about abusive or aggressive marketing practices and the fees associated with these types of loans. What started this frenzy of discussion is the larger financial institutions now getting into the business and getting into the business hard. This year alone there have been several acquisitions most notably by Bank Of America. I am sure we will see more discussion and legislation put in place to protect the large number of homeowners who are becoming eligible to purchase a reverse mortgage loan next year. I welcome all of it.

Free Resources:

Save Money on Title Insurance