Reverse Mortgage Michigan

FHA Increases Proceeds for Many Borrowers

2010-11-01T13:59:00.001-04:00

Starting October 4, 2010, HUD is also lowering the effective interest rate floor from 5.50 to 5.00 percent. Because interest rates are so low, many reverse mortgage borrowers will receive more money than previously available, despite the principal limit reductions.

According to IBIS Software, a 70-year old borrower with an expected interest rate of 5.06% or less will receive $10,750 more on a $250,000 home compared to the previous principal limit factors.

Reverse Mortgage Applications Surge 39% in September

2010-11-01T13:06:00.000-04:00

Reverse mortgage applications rose to the highest levels all year in September, up 39.1% from October according to a report from the Federal Housing Administration.

In September, 5,966 HECM loans were insured, with 5,587 being traditional reverse mortgages and the remainder as refinance or purchase transactions. For the year,79,106 HECM loans were endorsed with a max claim amount of $21.1 billion.

New Reverse Mortgage Product Available from FHA

2010-09-30T15:36:00.002-04:00

The Federal Housing administration (FHA) has announced a new and modified version of its Home Equity Conversion Mortgage (HECM) product today. Effective October 4, 2010 borrowers will have the option of choosing the HECM Saver or the HECM Standard.
The HECM Saver is a second reverse mortgage option that will allow lowering upfront loan closing costs. The upfront Mortgage Insurance Premium (2% of the appraised value) has been essentially eliminated. Homeowners will qualify for a smaller amount than with the HECM Standard loan. The loan option is available for all HECM case numbers that are or will be assigned on October 4, 2010.

Congress Extends Higher HECM Loan Limits

2010-09-30T15:19:00.001-04:00

Congress, last night, passed a continuing resolution that keeps the federal government funded through early December and extends the current maximum HECM loan limit of $625,500 through September 30, 2011.

The current maximum FHA single-family mortgage limit of $729,750 was also extended. Had the extension not been approved, the HECM loan limit would have reverted back to $417,000 after December 31.

FHA Raises Annual Premiums Charged to Reverse Mortgage Borrowers

2010-09-02T10:54:00.001-04:00

The Department of Housing and Urban Development announced new changes to the mortgage insurance premiums for the Federal Housing Administration’s reverse mortgage program on Wednesday.

For all Home Equity Conversion Mortgages (HECM) with a case number assigned on or after October 4th, 2010, FHA will raise the annual mortgage insurance premium (MIP) charged to borrowers from 0.5% to 1.25%.

HUD Shares Plans for New Reverse Mortgage Option

2010-08-30T10:05:00.000-04:00

HUD Deputy Assistant Secretary Vicky Bott shared the Department's plans to implement a new variant of the reverse mortgage, referred to as the "HECM Saver," that will provide seniors with a reverse mortgage option that significantly lowers upfront costs by virtually eliminating the upfront Mortgage Insurance Premium that is required under the standard HECM option. Bott also reported accompanying changes intended for the existing HECM product, now referred to as a "HECM Standard." The introduction of the HECM Saver and changes to the HECM Standard are expected to be effective shortly after the new federal fiscal year begins this October.

The primary difference between the two HECM options will be in the cost of the upfront Mortgage Insurance Premium (MIP) and the amount of the funds, or "principal limit," available to borrowers. The upfront Mortgage Insurance Premium is charged by the Federal Housing Administration to support its insurance fund. Under the HECM Standard option, the upfront MIP will remain at 2% of the value of the property (or 2% of the maximum FHA loan limit of $625,500, if the property has a value greater than that.) HECM Saver will have an upfront MIP of only .01% of the property's value, significantly reducing upfront costs.

Fannie Mae Bans Appraisal Cutting

2010-08-27T10:38:00.001-04:00

Effective Sept. 1, Fannie Mae is prohibiting lenders who sell it loans from changing appraisers’ numbers. In guidance issued June 30, Fannie Mae said lenders must contact appraisers to “resolve” any disagreements about the valuation. If that’s not possible, they should order a second appraisal – not just chop the value supporting the real estate contract.
Appraisers applauded the new rule. Pat Turner, an appraiser in Richmond, Va., said Fannie’s new requirement “is great news for consumers” because loan underwriters hundreds of miles from the property “no longer will be able to change the appraiser’s valuation” simply because they pulled a lower number off a computer.

Congressman and Reverse Mortgage Lender Work to Save Seniors Home

2010-08-19T15:19:00.000-04:00

When a Congressman, reverse mortgage lender, and a local church work together, good things can happen.

McLean approached Congressman Adam Schiff, who represents the 29th Congressional District, and requested his help to save the 80 year old woman’s home. Schiff immediately issued a Congressional Inquiry to Wachovia, outlining his concern that a senior homeowner with very little income could qualify for such a big loan.

Fed Says Reverse Mortgage Loans Pose Risks

2010-08-19T15:14:00.000-04:00

The Federal Reserve and other top regulators said on Monday reverse mortgages pose "compliance and reputation risks" for lenders, and offered guidance to financial firms on how to avoid such pitfalls.
"Reverse mortgages present substantial risks both to institutions and to consumers, and, as with any type of loan that is secured by a consumer's home, it is crucial that consumers understand the terms of the product and the nature of their obligations," the regulators said in a statement.
"Lenders must institute controls to protect consumers and to minimize the compliance and reputation risks for the institutions themselves," they said.

Senate Passes FHA Bill, Could Allow Two Product Reverse Mortgage Solution

2010-08-05T14:27:00.004-04:00

This could give HUD the ability to adjust premiums for a two reverse mortgage product approach outlined by Colin Cushman, Director of Portfolio Analysis at HUD earlier this year during a conference in Washington, DC.
The proposal includes the current HECM product with higher annual premiums and the “HECM Saver” would provide borrowers with less in proceeds but without an upfront premium. Designed to be a pay as you go product, Cushman said it would help lower the risk to the FHA insurance fund and offer borrowers an additional option not currently available.

Right Financial Plan: Reverse Mortgages

2010-08-05T14:21:00.001-04:00

Retirees are often house rich but cash poor, their homes being their largest assets. There used to be just three significant ways to get equity from a home:

- Sell it

- Rent it

- Borrow against it using either a cash-out refinance or a home-equity loan

- Reverse mortgages present a fourth option, allowing homeowners to receive some of the home’s equity without moving or making regular loan repayments. Reverse mortgages provide an alternative financing method (though an expensive one) that can help homeowners maintain their independence as well as an adequate standard of living.

Feds implement fingerprint/ID registration database for mortgage lenders

2010-08-02T16:29:00.010-04:00

The government is creating a national registry/fingerprint database for mortgage lenders in the U.S.. Mortgage loan originators employed by mortgage brokers, banks, credit unions and thrifts will also have to be fingerprinted and sign up to a central registry to do business in future, according to final rules issued on Wednesday by the Federal Reserve and other regulators.

The mortgage industry came under tough scrutiny after the 2007-09 financial crisis, with some lawmakers and regulators sharply critical of underwriting standards and practices that were seen as so loose they helped foster a housing price bubble.

Congress is is expected to address systemic problems with Fannie Mae and Freddie Mac after the November mid term elections.

Reverse Mortgages: Right for You?

2010-08-02T15:29:00.003-04:00

With the cost of living and life expectancy continuing to rise, senior citizens are facing a double whammy.

Add to that high insurance costs, medical expenses and mortgage payments, some retired individuals are struggling to keep their heads above water without a steady income coming in any more.

Looking for a revenue stream, some elderly homeowners are turning to reverse mortgages.

Reverse Mortgages: MSNBC ‘Consumer Man’ Gets It Wrong Says Industry Leader

2010-08-02T14:20:00.004-04:00

Michael G. Branson, CEO, All Reverse Mortgage Company

I just read an article on reverse mortgages and how they can lead to big trouble. After I read the entire article, I became enraged. Not just angry, but really, really mad due to the fact that the man who calls himself the "ConsumerMan" obviously has no real understanding of the product and is reporting several items as "fact" that are completely false.

New Counseling Procedures Released For Reverse Mortgages

2010-07-28T14:06:00.004-04:00

The U.S. Department of Housing and Urban Development (HUD), after nearly 2 years of studying and revisions, recently published new procedures governing the process for seniors who are counseled for federally insured Home Equity Conversion Mortgages (HECMs).

Before meeting with a prospective reverse mortgage borrower, a counselor must first mail, fax or email an information packet that includes: a document titled Preparing for Your Counseling Session (attached to the protocol), copy of loan comparisons, copy of the Total Annual Loan Cost (TALC), loan amortization schedule, and a copy of NCOA’s booklet, Use Your Home to Stay at Home.

As part of the process, counselors must ask 10 questions to ensure that a senior comprehends the reverse mortgage’s key elements and if the senior fails to answer at least five of the questions, the counselor may withhold the counseling certificate or schedule a follow up meeting.

Not enough cash? Get your priorities straight

2010-07-28T13:43:00.002-04:00

Learn the art of compromise

What if you realize that you can't afford to pay for a home health aide to take care of Dad without doing serious damage to your own retirement plans? Rather than letting guilt subsume you, think about whether you can "massage your goal, and fulfill your need in a more creative way," suggests Nusbaum.

Is there another way to get to the same end result? If the goal is to get Dad the care he needs, you might look into whether he's eligible for government programs that would defray the costs; you might ask siblings to share the burden with you; or you might help him arrange a reverse mortgage.

5 Reasons To Secure a Reverse Mortgage Before October 1, 2010

2010-07-19T17:28:00.002-04:00

1. Lower Costs: Lenders have been reducing the upfront costs.
2. Principal Limit Reduction: On October 1st, 2009 HUD implemented a 10% reduction in principal limits for its Federal Housing Administration (FHA) insured reverse mortgage product, the first ever reduction. FHA may consider a second reduction October 1, 2010.
3. Increase in the Mortgage Insurance Premium (MIP) from .5 to 1.25%. What this means to homeowners that get their Reverse Mortgage after this change is an overall increase in the cost of the loan.
4. Reverse Mortgage Appropriation? Included in the Obama Administration’s FY 2011 budget is a $250 million appropriation request to offset projected losses for the Federal Housing Administration’s reverse mortgage program. If congress does not provide the $250 million, FHA will be forced to reduce the amount of money available to seniors through the program by 21% according to testimony from Commissioner David Stevens earlier this year.
5. FHA Lending Limits are temporary through the end of 2010. Homeowners with homes valued between $417,000.00 and $625,000.00 would lose significant proceeds if the $625,000.00 limit goes away.

Former FHA official predicts ‘pivotal’ year for reverse mortgages

2010-07-19T16:15:00.005-04:00

Former Federal Housing Administration Commissioner Brian Montgomery, who oversaw the nation’s most popular reverse mortgage product for nearly five years, sees a “pivotal” year ahead for the industry that allows seniors to tap the equity in their homes.

In 2009, the program’s fund suffered a $198 million shortfall that was generally attributed to the decline of home values, national media stories about unscrupulous lenders and a call by some legislators to keep reverse mortgages from becoming the next subprime debacle. In 2010, the shortfall is expected to be $250 million.

Because of the shortfalls, the principal limit factor has been tweaked to reduce the net amounts seniors can receive.

Financial Reform, Brings New Reverse Mortgage Oversight

2010-07-19T15:22:00.004-04:00

The broader legislation also takes on consumer issues, including a key Obama administration proposal to create an agency tasked with policing most financial products sold to consumers. Housed in the Federal Reserve, the Consumer Financial Protection Bureau has the independent authority to write and enforce rules for consumer lending in mortgages, credit cards and other financial products.

The bill also includes new consumer protections for reverse mortgages.
Within the first year, the bureau is tasked with conducting a reverse mortgage study to determine any deceptive or abusive practices. It will also determine whether suitability standards are necessary, as well as safeguards to protect consumers from being sold reverse mortgages to fund inappropriate annuities, investments, and other financial products.

The bureau has the authority to issue regulations, orders, or guidance that apply to reverse mortgages prior to the completion of the study.

TIME Admits Using Old "Study" for New Reverse Mortgage Article

2010-07-12T10:19:00.002-04:00

Last week Time Magazine posted a very inflammatory article on the reverse mortgage industry. Then, they print a correction. In our day we were taught to measure twice; cut once.

"The original version of this story relied on a study of reverse mortgage fees that was three years old. Since then, new federal guidelines have brought down the expense of reverse mortgages."

Time Magazine: Another ignorant smear piece on reverse mortgages

2010-07-08T15:31:00.002-04:00

Shannon Hicks; "I couldn’t read this “journalistic” (too use the term loosely) hit piece (Six Problems the Consumer Financial Protection Bureau Should Tackle First) and not respond. Below is my letter to the editor of Time Magazine requesting a retraction…"

Dear Editor,

As a reverse mortgage professional I am writing about your publication’s recent story published July 6th highlighting reverse mortgages as one of the six problem areas that the new Consumer Financial Protection Bureau needs to address. After reading my comments I would ask that your publication publish a retraction or correction in fairness to your readers who deserve the truth. Unfortunately, such retractions are much like trying to pick up feathers scattered in the wind.

ABC News Runs Reverse Mortgage Feature

2010-07-08T14:23:00.007-04:00

ABC News Good Money ran a segment on reverse mortgages earlier this week. ABC’s Tanya Rivero talks with Eric Tyson, author of personal finance for seniors for dummies and asks him loads of questions.

Specifically Tyson says a borrower needs to look at how many years they plan to remain in the home. ”If you end up not holding onto the reverse mortgage for many years, the effective interest rate can be quite high,” he said.

MarketWatch: Reverse Mortgage to Help Adult Children?

2010-07-06T10:21:00.003-04:00

Question: My parents are 83 and 88 years old and live in a home that is paid for in full. They are considering a reverse mortgage because we children need the funds now. Can you please advise us how to go about this, and the pros and cons?

Here are a few questions to start: Will our parents be taxed? Can they give funds to their children as a gift, and would we be taxed? How does a reverse mortgage affect getting Medicare later on with no equity? Or better said, how would this affect them if they need to go into a care facility?

When you meet a Veteran, shake their hand and thank them for their service.

2010-07-03T00:01:00.012-04:00

Reverse Mortgages Look Better

2010-06-30T10:13:00.000-04:00

The Wall Street Journal published an article that was right on the facts regarding reverse mortgages.

Reverse Mortgages Look Better, is informative, balanced and timely.

Barbara Stucki, a well-respected expert in reverse mortgage counseling, makes several good points in the article and comes off as being very honest and impartial.

MarketWatch: Reverse mortgages now a less-costly lifeline

2010-06-28T11:16:00.002-04:00

Upfront fees on reverse mortgages have fallen substantially in recent months, giving homeowners interested in this product a new challenge: how to best compare offers to find the best one.

Reverse Mortgages: Seniors Now Expected to Pay Taxes and Insurance

2010-06-25T11:23:00.000-04:00

The FHA, which holds most of the reverse mortgages, saw a $798-million loss in the program in the last fiscal year. While most of that loss was caused by the decline in property values nationwide, another key factor was tax and insurance delinquencies that the FHA paid on the properties.

In the past, the FHA did not move to collect these delinquencies because they didn't want to toss seniors out on the street. But Fannie Mae has begun telling servicers of reverse mortgages to initiate foreclosure when taxes and insurance payments have not been paid on a home for an extended period.

Senior Equity Income, LLC Unveils New Reverse Mortgage Pricing Option that Allows Seniors Ability to Unlock More Equity at a Lower Cost

2010-04-05T11:36:00.002-04:00

Senior Equity Income, LLC one of Michigan's leading providers of reverse mortgages, today announced a new pricing option for homeowners, which will make thousands more dollars available to many borrowers at a lower cost, allowing them to fund a more comfortable retirement.

Midwest Home Sales Up Nearly 10 Pct in February

2010-04-05T11:31:00.000-04:00

Midwest home sales improved nearly 10 percent over last year as tax credits and low interest rates continued to motivate buyers.

Three whose houses were auctioned still have their homes

2010-03-31T14:57:00.000-04:00

The three owners whose houses were auctioned in the town’s tax sale last September have all paid up on delinquent taxes and will keep their homes.

Tax Collector Jane Berendsen-Hill said two weeks ago, all three homes were redeemed by the owners as allowed during the six-month period after the tax sale. She reported the news to the Board of Finance recently.

Social Security Paying Out More Than it Receives says CBO

2010-03-31T14:54:00.000-04:00

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security.
This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.

Now is the Time to Finance With a Reverse Mortgage!

2010-03-30T12:09:00.000-04:00

Now may be the best time for homeowners to take advantage of the Home Equity Conversion Mortgage or reverse mortgage. Soon, FHA will change the amount that borrowers qualify for under this program.
The principal limit factors (or PLFs), which determine the amount of money a homeowner can receive from his or her loan based on age and interest rates, were already reduced at the beginning of this year. David H. Stevens, assistant secretary of Housing for the Federal Housing Administration, said that in order for the program to successfully continue in 2011, the annual mortgage premium will have to increase from 0.5% to 1.25% and the principal limit factors will have to be reduced at least another 1-5%, depending on the homeowner’s age.

Urban Financial Group acquired by Knight Capital

2010-03-30T12:03:00.000-04:00

Urban Financial Group acquired by Knight Capital of Jersey City, New Jersey.
Knight Capital Group, Inc. (Nasdaq: NITE), today announced that it has agreed to acquire Urban Financial Group, Inc., an originator of direct and brokered home equity conversion mortgages (HECM), or reverse mortgages.

Reverse Mortgages Production to Drop 20%

2010-03-19T12:59:00.000-04:00

Reverse mortgage is projected to decrease by 20% in 2010 according to Torrey Larsen, President of Security One Lending, San Diego, CA. In 2009 reverse mortgages increased 25% to $30.2 billion. Larsen sees increasing popularity for reverse mortgages returning. "I am also encouraged by the Obama Administration requesting a $250 million in credit subsidy for the FHA's reverse mortgage program along with a contingency appropriation to meet all program demand, even if demand exceeds projections," said Larsen.

3 Ways You Can Rescue Your Retirement

2010-02-25T15:54:00.000-05:00

If you are retired and spending more than 10% of your nest egg every year, then you must recognize that this rate of spending may be unsustainable. Steps like a reverse mortgage or an annuity may provide additional income.

Reverse Mortgage applications down 54.2% from 2009

2010-02-25T15:27:00.000-05:00

The Federal Housing Administration announced that reverse mortgage application activity is down 54.2% compared to the same period 2009.

11.3 million homeowners underwater on mortgage

2010-02-24T14:05:00.000-05:00

Nearly 25% of all American homeowners with a mortgage owe more than the value of their homes. Over 10% owe more than 25% above the value.

Mortgage Delinquencies Improve 4th. Quarter 2009

2010-02-19T15:16:00.000-05:00

Mortgage delinquencies were lower in the 4th. Quarter 2009. This may be a sign that foreclosures will also decrease. The result may be that housing values will begin to stabilize.

Reverse Mortgage Applications Decrease

2010-02-19T13:44:00.000-05:00

Reverse mortgage application volume has dropped sharply since FHA lowered the principal limit October 2009. It is estimated that 2010 volume may be 20% to 30% less than 2009.

Are Reverse Mortgages Too Expensive?

2010-02-18T13:03:00.000-05:00

Are Reverse Mortgages Too Expensive? This argument is ubiquitous, yet it makes no sense. Too expensive relative to what? Right now there are no private programs to compare HECMs with, but when such programs existed, their costs were much the same. The instrument that most resembles the HECM is the forward home mortgage -- while they meet different needs, the delivery systems are very similar, the cost items are much the same, and therefore the total costs ought to be similar. And so they are, absent the mortgage insurance premium on HECMs.

Reverse Mortgage for Home Care

2010-02-17T14:36:00.001-05:00

Under our "system‚" of paying for long-term care, you may be able to qualify for Medicaid to pay for nursing home care, but in most states there's little public assistance for home care. Most people want to stay at home as long as possible, but few can afford the high cost of home care for very long. One solution, which is growing in popularity, is to tap into the equity built up in your home.

Reverse mortgages are a way of borrowing that transforms the equity in a home into liquid cash without having to either move or make regular loan repayments. They permit house-rich but cash-poor elders to use their housing equity to, for example, pay for home care while they remain in the home, or for nursing home care later on. The loans do not have to be repaid until the last surviving borrower dies, sells the home or permanently moves out.

Although it is often assumed that an elderly person would want to use the funds from a reverse mortgage loan for health care, there are no restrictions--the funds can be used in any way.

Reverse Mortgage Appraisal Independence

2010-02-12T09:07:00.006-05:00

The Department of Housing and Urban Development announced by email that the enactment of ML 2009-28 (Appraiser Independence) will be implemented as planned on February 15, 2010.

ML 09-28 prohibits mortgage brokers and commission based lender staff from the appraisal process and has lead to wholesale reverse mortgage lenders requiring the use of Appraisal Management Companies to ensure compliance with FHA.

Foreclosures Surge on Way?

2010-02-11T15:21:00.004-05:00

The number of U.S. households facing foreclosure in January increased 15 percent from the same month last year, and a surge in cash-strapped homeowners who've fallen behind on mortgages could be on the way.

Reverse Mortgage Through Family?

2010-02-08T15:58:00.003-05:00

The Wall Street Journal published the Case for Being Your Mom’s Banker where they discuss whether a reverse mortgage or a private mortgage between family is a better decision to help out your parents. In respect to reverse mortgages, WSJ contributor Kelly Green writes: But there are significant drawbacks.

Reverse Mortgage increased fees and reduced available principal limit

2010-02-04T21:15:00.003-05:00

Following the budget briefing on Monday, NRMLA (National Reverse Mortgage Lenders' Association) reported that the Administration’s proposed Fiscal Year 2011 budget for the U.S. Department of Housing and Urban Development would increase the annual mortgage insurance premium on Home Equity Conversion Mortgages from 0.5 percent to 1.25 and reduce principal limit factors by a small amount.

Reverse Mortgage Volume Grows 25% to $30.2 Billion in 2009

2010-02-04T21:08:00.002-05:00

Volume of the Federal Housing Administration’s reverse mortgage program, the Home Equity Conversion Mortgage (HECM) grew to $30.2 billion in FY 2009. According to data from Reverse Market Insight, 22% of the increase in volume comes from the lending limit increase and the remaining 3% stems from the additional units in FY 2009. In addition, the shift to the fixed rate product has also been a factor. “The shift to the fixed rate product further magnifies the increased dollar volumes spurred by higher lending limits, as the unpaid principal balance (UPB) is up 31% for FY 2009,” said John K. Lunde, President of RM Insight. Whether or not the industry will continue to grow in FY 2010 is another story. The Office of Management and Budget is predicting the industry will endorse 120,429 units in 2010 while FHA’s Outlook Report shows a prediction of 106,875 units for FY 2010.

New Reverse Mortgage Condo Guidelines

2010-01-28T21:31:00.004-05:00

Jan. 29, 2010 This past Friday, Michael Branson of All Reverse Mortgage Company posted a very informative article on HUD changing the rules for seniors living in condos to obtain a reverse mortgage. Among the changes that RMOs should note: RMOs must now collect all condo docs, a very tall order. Prepare to wait at least 8 weeks for HUD to approve the project. Be leery of using the "Site Condo" designation, it could ruin your deal. Be aware that HUD plans to require that all condo projects be re-approved in January of 2011. The bottom line is for your seniors living in condos, they must be more patient, more responsive and more decisive in moving forward on going through with a reverse mortgage.

Free Reverse Mortgage Counseling

2010-01-23T16:10:00.002-05:00

As older adults continue to face financial challenges in the ongoing economic downturn, the National Council on Aging (NCOA) will offer free counseling for seniors through its Reverse Mortgage Counseling Services (RMCS) Network. For the next three months, RMCS counselors are waiving the usual $125 counseling fee in order to help more homeowners understand how reverse mortgage loans, along with community programs and other options, could help them to remain in their homes. Consumers age 62+ can schedule a free reverse mortgage counseling session through April 30, 2010 by calling 1-800-510-0301.

Reverse mortgages are not the next subprime

2010-01-23T08:34:00.002-05:00

Jack Guttentag is professor of finance emeritus at the Wharton School of the University of PennsylvaniaIn 2009, about 130,000 HECMs were written. Feedback from borrowers has been largely positive. In a 2006 survey of borrowers by AARP, 93 percent said their reverse mortgage had had a mostly positive effect on their lives, compared with 3 percent who said the effect was mostly negative. Some 93 percent of borrowers reported that they were satisfied with their experiences with lenders, and 95 percent reported that they were satisfied with their counselors. (All HECM borrowers must undergo counseling prior to the deal. Subprime loans imposed repayment obligations on borrowers, many of whom were woefully unprepared to assume them, and which tended to rise over time. The financial crisis actually began with the increasing inability of subprime borrowers to make their payments, and as a result, defaults and foreclosures ballooned to unprecedented levels.
But reverse-mortgage borrowers assume no repayment obligation at all. Their only obligations are to maintain their property and pay their property taxes, which they have to do as owners whether they take out a reverse mortgage or not. They cannot default on their mortgage because the obligation to make payments under an HECM is the lender's, not the borrower's. There are no reverse-mortgage foreclosures.
Subprime foreclosures imposed heavy losses on lenders and on investors in mortgage securities issued against subprime mortgages. Such securities were widely held by investors, which included Fannie Mae and Freddie Mac. Losses by the agencies on their subprime securities played a major role in their insolvency. In contrast, no lenders have suffered or will suffer losses on HECMs because they are insured against loss by the FHA. The FHA assumes the losses when HECM loan balances grow to the point where they exceed property values. In sum, the current state of the HECM market has no resemblance whatsoever to the conditions in the subprime market that led to disaster

Reverse Mortgages provide a cash cushion

2010-01-17T09:51:00.003-05:00

BY SAUL FRIEDMAN MCCLATCHY-TRIBUNE NEWS SERVICE
Many older homeowners are just getting by -- or worse. Retirement savings plans are down. Those 401(k)s have not grown enough to be counted on for retirement. Pension funds are hurting. But if you're an older homeowner with sufficient equity to qualify, there could be some relief in a Home Equity Conversion Mortgage, also known as a reverse mortgage.
This type of mortgage allows homeowners 62 and older to convert part of the equity in their homes into tax-free cash without having to sell the home, give up the title, or take on a new monthly mortgage payment. It's called a reverse mortgage because instead of the homeowner making a payment to the lender, the lender makes payments to the homeowner. The lender eventually gets its money back when the home is sold or the owner dies. Any excess cash made from the home sale is returned to the owner or the owner's estate. The Federal Housing Administration guarantees the mortgage, meaning the borrower is protected from losing the property, and the lender is protected from losing the money, if the value of the property declines below the worth of the loan.
The proceeds may be taken as a line of credit or as payments.
Few have taken advantage of it, partly because they don't like to mortgage a home that's free and clear, or they're concerned about heirs. For fiscal year 2009, which ended Sept. 30, there were 114,692 reverse mortgages done in the United States. For Michigan, there were 2,088 reverse mortgages done in that same period.

USA Today Examines New Appraisal Guideline

2010-01-14T16:53:00.002-05:00

USA Today recently examined the FHA’s forthcoming adoption of select HVCC guidelines, and how the change will affect consumers. The article voiced opinions from components of the change including quotes from the National Association of Realtors (NAR) and the Appraisal Institute (AI), as well as counter comments from the Title/Appraisal Vendor Management Association (TAVMA) who are largely in favor of the guidelines. The article specifies how members of NAR and AI feel the changes, and other efforts to reform the industry, are hurting consumers and appraisers alike. These entities feel forcing lenders to use third party appraisal management company’s causes two main problems. 1) Appraisal management companies are providing appraisers — often from outside the market where the house is located — who are less qualified than independent appraisers that brokers and Realtors might choose. 2) Turn times of the appraisal process have increased significantly as NAR explained a member survey found almost 70% saying appraisal times had risen by more than eight days under the new rules. In contrast, the article quoted Don Blanchard, former president of TAVMA who stated, “It is mistaken to say appraisal management companies a re the cause of these values. It's the market," Furthermore the article sited TAVMA’s support of third party appraisal parties as they feel these firms provide well-qualified appraisers on a regular basis.

Prosecutions of Reverse Mortgage Defrauder

2010-01-11T15:55:00.003-05:00

Written by Daily News
A former Southern California mortgage broker was sentenced to six years in prison last Friday, for defrauding an 86-year-old San Francisco woman out of $140,000. The woman responded to a mailing in February of 2008 from a company in Orange County that was advertising reverse mortgages. She then began working with employee John McTaggert and agreed to obtain a legitimate Reverse Mortgage.
In short, Mctaggert got the woman to sign over $140,000 from the reverse mortgage, promising to invest it and instead, deposited the money into his own bank account, quit his job, and moved to Memphis, Tennessee. After his arrest in March of 2009, prosecutors were able to charge McTaggart with one count of first-degree burglary because the mortgage and annuity deals were negotiated in the woman’s home.
Although these cases are few and far between, (only several hundred out 400,00+), it is never something that the industry looks forward to hearing about. Furthermore, it is clear that the reverse community is in full support of proper sentencing and punishment for all individuals even considering defrauding the very seniors that our product is meant to be helping.

Delinquent Mortgages Increase in Michigan

2009-12-12T15:00:00.001-05:00

By: Brittany Dunn In recent data released by Farmington Hills, Michigan-based GreenPath Debt Solutions, a nonprofit consumer credit counseling service, the company found there is an increasing amount of Michigan homeowners facing mortgage delinquency.
The number of Michigan residents with past due mortgages had trended upward throughout 2009. According to GreenPath, Michigan clients with past due mortgages soared 32 percent during the first 11 months of this year, compared to the same period in 2008.
“The increase is due, in part, to the adjustment in the Michigan foreclosure law that went into effect in early July,” said Kathy Conley, GreenPath housing counselor.
Conley explained that the law requires lenders to give delinquent homeowners a notice that includes a list of approved housing counselors. She said homeowners are now able to initiate a 90 day stay on a foreclosure by contacting a counselor for help. Counselors will then aid homeowners in working with a lender in an effort to save their home.
“Based on our findings, we also are projecting a 20 percent increase in clients with past due mortgages for the entire fourth quarter 2009, which is a sign that Michigan homeowners are still struggling in this trying economy,” Conley said.
With 25 offices across Michigan, GreenPath offers a variety of housing solutions to its clients including mortgage default and delinquency counseling, first-time homebuyer counseling, reverse mortgage counseling, and home equity loan counseling. Since 1961, the company has aimed to help people resolve financial problems and achieve goals through financial counseling, debt management, and education.