HUD Shares Plans for New Reverse Mortgage Option

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

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

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

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

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

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

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?

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

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.