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.

New Counseling Procedures Released For Reverse Mortgages

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

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

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

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

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

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

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

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?

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.

Reverse Mortgages Look Better

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

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

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

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

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