Reverse Mortgage Resources & Information

National Aging in Place Week

2006-09-12T06:50:00.000-07:00

NRMA reports that activities the commemorate National Aging in Place Week are starting to take shape in communities around the country. It was first celebrated in 2003 and is scheduled this year from October 8-14.
read more...

Is There A Cost For Couseling?

2006-09-08T10:43:00.000-07:00

Currently, there is no cost to the consumer for counseling. However, HUD is considering a proposal to make counseling a borrower-paid expense to be disclosed on the HUD-1 (escrow closing statement).

Who Provides HECM Counseling?

2006-09-06T07:12:00.000-07:00

According to the NRMLA Summer publication, HUD has approved approximately 800 non-profit organizations nationwide to provide HECM counseling. There are counselors who do mostly face-to-face counseling,and then there are individuals who are part of HUD's nationwide telephone counseling network.

Either type of counselor can advise a prospective borrower in-person. Except in special circumstances, only counselors who are part of the telephone counseling network can conduct nationwide (except North Carolina which permits face-to-face only) phone counseling.

Non-network counselors may only counsel over the phone if the client resides in the same state as the counselor or a contiguous state, and if the client has a mobility or medical problem which restricts travel, or if no counseling is located within 50 miles of the client's home.

Most telephone counseling is conducted by one of three entities approved by HUD in Mortgagee letter 2005-44: National Foundation for Credit Counseling, Money Management International and AARP.

When a senior calls AARP, a he/she is given a list of counselors and their telephone numbers. The other agencies automatically route the senior to the next available telephone counselor, no matter where that counselor is located, or to the nearest branch if the person requests a face-to-face counseling session.

HECM Counseling

2006-08-29T21:33:00.000-07:00

Arguably the most important consumer protection built into the reverse mortgage program is the requirement that the prospective borrower must first meet with an independent third party counselor approved by the U.S. Department of Housing and Urban Development (HUD) before signing a loan application or incurring any fees for the reverse mortgage. Each counselor is trained thoroughly and test to assist a senior interested in obtaining this product.

NRMLA states that by law, a couselor must review other options, with the senior, that are available including housing, social services, health and financial alternatives such as sale-leaseback financing or property tax deferral programs. They also need to inform the borrower of the tax consequences affecting eligibility under state or federal programs and the impact on the estate and their heirs.

HUD Proposes Program Changes

2006-08-23T13:09:00.000-07:00

The U.S. Department of Housing and Urban Development will be issuing several mortgagee letters in the near future that make beneficial changes to the FHA reverse mortgage program, according to Meg Burns, Director of HUD's Single Family Program Development Division.

Addressing a luncheon crowd at the fifth annual Reverse Mortgage Day of Texas, held in Austin, on July 26, Burns noted the following program changes that HUD is in the final stages of reviewing:

A mortgagee letter to make counseling a borrower-paid expense disclosed on the HUD-1 form.
A mortgagee letter to extend the principal limit lock period from 60 days to 120 days
A mortgagee letter to eliminate an existing requirement that borrowers present a Photo ID.
HUD has already implemented a new policy whereby the department provides 10 days advance notice of any FHA loan limit increases. This, in turn, gives lenders an opportunity to obtain more funds for their clients.

Both Burns and FHA Commissioner Brian Montgomery are speaking at NRMLA's Annual Meeting & Expo in San Francisco, September 28-30. Attendees will have an opportunity to ask more detailed questions about the HECM program, and other FHA issues. To learn more about the Annual Meeting visit NRMLAOnline.org.

HECM volume Cap Removed

2006-08-22T11:28:00.000-07:00

The Reverse Mortgage Advisor Volume 9.2, Summer 2006 reads "House Passes Legislation that Removes HEVM Volume Cap, Implements National Loan Limit". The the article states that the U.S. House of Representatives passed legislation, with a vote of 415-7, known as the Expanding American Homeownership Act of 2006 (H.R. 5121), which would make substantial improvements to the FHA HECM program. President Bush issued an immediate statement thanking the House and urged the Senate to pass its own version, S.3535.

This initiative, passed on July 25, would create a single national loan limit for the HECM program equal to the conforming Freddit Mac loan limit ($417,000 in 2006); establish a "home purchase" option tha would allow people to use a reverse mortgage to purchase newer housing that better suits their needs; and remove the volume cap on the numbe rof HECM loans that FHA can insure. read more...

Access Greater Amounts of Equity

2006-08-18T11:40:00.000-07:00

Financial Freedom has Launched a new version of its "jumbo" product, called the Cash Account Advantage, as reported in the Reverse Mortgage Advisor Summer edition. This will enable them to be competitive with the federally insured Home Equity Conversion Mortgage by enabling homeowners living in properties valued between $450,000 and $750,000 to access greater amounts of equity. read more...

Reverse Mortgage Movie

2006-08-17T11:04:00.000-07:00

Signing Pro has been featuring their Reverse Mortgage movie titled "What About Me" at NRMLA conferences for the past two years. The movie includes a narration with real life scenerios played by seniors ranging in age from 63 to 93.

Your potential clients will enjoy the story lines and relate easily to the characters, while at the same time assisting seniors in understanding the benefits of what a Reverse Mortgage can do to enhance their future. For a nominal fee Reverse Mortgage Loan Agents can embed their logo, photo and phone number into the story line.
To view the movie trailer visit our Reverse Mortgage Resource Center at www.signingpro.com.

43% Not Saving Enough to Retire

2006-07-28T11:17:00.000-07:00

Study: 43% not saving enough to retire well

On June 6, 2006 an article written by Kathy Chu with USA Today stated that a new retirement study provides further evidence that a growing number of Americans are at risk of a diminished standard of living once they stop working.

The Center for Retirement Research's new retirement-risk index, released Tuesday, shows 43% of working households were in danger in 2004 of having too little income to fund their retirement.

But the study probably understates the proportion of retirees at risk. Its projections assume that people retire at age 65, cash in on their home equity through a "reverse mortgage" and exchange their assets for a stream of income by buying an immediate annuity. read more...

Take a Break in Maui, Hawaii

2006-07-27T14:14:00.000-07:00

One of the most important comments that every seminar leader suggests you do is take some time for you. Take a Vacation! And Maui is the greatest place to do this. There's nothing better than some rest and relxation to refresh your state of mind and develop creative ideas. The flights are amazingly low if you search around on the web and until November you can catch low season condo rates to make your stay more comfortable. Bring a loved one who has been waiting for you to give them your special time.

I've included a website where you can preview fun activities and get an idea of what's going on around the island of Maui, Hawaii. vacationinwailea.com

Kiplinger Speaks Out

2006-07-27T11:01:00.000-07:00

Kiplinger's Finance Report states that reverse mortgages allow homeowners 62 and older to borrow a portion of the equity and receive payments in a lump sum, as monthly income or via a line of credit. No repayment is due until you move, die or sell the house. But a reverse mortgage, which involves heavy up-front fees, makes no sense if a senior has to move into a nursing home after only a few years.

To stay at home longer and make the best use of a reverse mortgage, seniors could use the money to add ramps or refit bathrooms to accommodate a wheelchair. Home equity can also pay for in-home assistance. As a result, says Peter Bell, president of the National Reverse Mortgage Lenders Association, the law may create greater demand for quality home-care services and help keep seniors out of nursing homes. read more...

U.S. News & World Report

2006-07-27T10:41:00.000-07:00

For seniors with little cash and lots of value socked away in their home, the reverse mortgage is rapidly gaining popularity as a way to raise money without having to move.

From July 2005 through March of this year, the federal government insured 48,088 reverse mortgages, up more than 20,000 from the previous year. And in May alone, a record 8,414 reverse mortgages were approved.

Essentially, seniors are borrowing against the value of their homes without needing to pay the money back until they move out or die. read more...

Seniors Stay At Home with Chronic Conditions

2006-07-26T13:42:00.000-07:00

The National Council on aging says that Seniors with a chronic health condition have unique needs when deciding to take out a reverse mortgage. I s the impaired elder able to stay at home and for how long? A person's level of impairment will affect how long the loan funds will last that will pay for the services that assist in maintiaining an at home status. For a severly impaired elder, it may be best to sell the house and move them to a place that offers more support.

Key Facts

By the year 2030, 20% of all U.S. Residents will be over age 65. According to the U.S. Bureau of the Census 1996, 32 states will have populations the size of Florida.
The National Council on Aging states that 13% of households where the youngest owner is age 62 and older (2.5 million) need help with ADLs (Activities of Daily Living) or IADLs (Instrumental ADLs). 16% have difficulty with these activities, but can still do them on their own.
The U.S. Department of Health and Human Services 2003, Alzheimer's Association 2005 noted that more than 2/3s of all older people who need help with everyday tasks live at home, including more than 70% of those with Alzheimer's disease.

Medicaid and private long-term care insurance companies typically use this measurement to determine and define losses in ability that may qualify a person for benefits. People who are unable to perform two or mor ADLs without help are regarded as having a sever impairment and usually quality for benefits. Measuring the functionality of physical ability reflects a person's ability to manage their environment and take care of themselves.

IADLs - Limitations with activities such as shopping, cleaning, cooking, using the telephone, and money management. Often these activities can be accomplished with a minimum of outside help. Difficulties with household activities is often a sign that the elder is becoming frail and will need more help in the near future.
ADLs- Limitations that require daily attendtion for aging at home. This might include feeding oneself, bathing, dressing, transferring from a bed to a chair, and using the bathroom safely.

NRMLA Washington Report

2006-07-26T10:35:00.000-07:00

Another Big Month in June
The U.S. Department of Housing and Urban Development endorsed 7,572 reverse mortgages in June and 55,659 thru the nine months of fiscal year 2006. FHA endorsed 43,131 loans for all of FY2005. Year-to-date totals represent a 83 percent increase over the 30,404 loans endorsed during the same period last year. To view the latest HECM Activity Report, please visit NRMLAOnline.org.

Roll of Reverse Mortgages

2006-07-20T09:05:00.000-07:00

The reverse mortgage is a valuable "safety net" for seniors with low incomes, and those who need hight levels of care. Lenders can play a key role to help ensure that older homeowners have the resources they need to assist seniors in aging at home by:

Filling the public funding gaps - Older homeowners have an extremely difficult time pulling together funding from public programs that currently do not work together.
Expanding funding options - Most public programs target seniors who have limited financial resources or run out of money paying for care.
Providing rapid access to funds - Public services are often overburdened. Many programs have large waiting lists because the available funds aren't able to meet required demands.

It is so difficult to make financial decisions when a senior reaches the crisis point. Older homeowners must learn to plan ahead to ensure that reverse mortgage funds for living at home will be available when they need them. Planning ahead with a reverse mortgage assists a senior by:

Utilizing planning solutions - Borrowers have more options to deal with the risk of needing help at home, even if they have not been able to plan far in advance.
Reducing the fear of an empty bank account - Additional cash from reverse mortgages gives impaired elders the flesxibility to fill unanticipated needs and avoid a cash crunch.
Providing the "glue" that holds financial plans together - These loans can assist in putting seniors back in a position to use their existing financial resources strategically.

Thinking strategically into the future with a reverse mortgage is the best support a senior can utilize to reduce the fears connected with leaving or losing their home. Many seniors have worked all of their lives to pay off their home. Today, utilizing their home as their bank will assist in their future peace of mind.

Loan Agents Are You Thinking In Reverse

2006-07-19T14:12:00.000-07:00

For Loan Agents who would like to learn more about to work with Reverse Mortgages visit these sites.

Thinking In Reverse
Make the transition from being a "forward" mortgage loan originator to being a reverse mortgage loan originator. read more...

Reverse Mortgages: A Business Opportunity
Lender interest in the reverse mortgage program has grown dramatically as rising interest rates have dampened conventional home loan originations and refinance activity. read more...

Another thought for Loan Agents

2006-07-18T08:32:00.000-07:00

For many years loan agents have enjoyed prosperity due to lower interest rates and vast amounts of borrowers who wanted to drop the interest rates on their homes. "Refi Mania" we called it. Now, as the interest rates climb gradually, the loan industry is beginning to get tougher and tougher for loan agents. New business is difficult to find but there are a few options to keep in mind and possibly pursue.

Marketing Real Estate Agents
Some loan agents are marketing real estate agents to assist in producing loans for new buyers. This is not easy. Real estate agents are constantly wooed by everyone looking for business; title companies, insurance companies and extremely competative loan agents with big company backing.

There was a time when loan agents would pick up a realtor's child from day care and then swing by to pick up the realtor's clothing at the cleaners on their return trip to deliver the child. Pretty demeaning, but it was cheap marketing and the loan agent was frequently remembered and referred when a borrower wanted to buy a home.

Today, real estate agents are not allowed to take gifts from vendors, leaving only the most expensive ideas for marketing their business. Some realtors ask loan agents to co-market buy splitting advertising, holding new buyer seminars, buying advertising in movie houses on the big screen, developing and producing flyers or buying space on shopping carts and billboards. This develops a relationship only ONE real estate agent and is not at all cost effective for the loan agent. Many times loan agents don't get any business at all for the expense they put forth. A marketing like this will enhance the relationship with only one agent. In order to survive a tough market a loan agent must find a way to develop a relationship with many real estate agents easily and quickly.

Niche Marketing with Reverse Mortgages
Learning about and developing a niche market might be a better idea. This is why we suggest reverse mortgages. 95% of the loan agents in today's market still have not discovered this great niche market and know nothing about it. You still have time to get in on the ground floor.

There are a number of companies offering reverse mortgage training such as; Wells Fargo, Financial Freedom, American Reverse Mortgage in Florida, Liberty Street in San Diego and Seattle Mortgage. In the reverse mortgage arena your market is all about the "Baby Boomers" which opens up a vast array of clients. Your money is well spent on marketing you instead of begging for business from realtors.

When you think about your own client database, how many of them are seniors? Look at your 1003's and see how many are 62 or older and still live in their home. Even if one is older and one is younger there is a strategy. (Review our blog on Reverse Mortgages & Trust Documents) These are people who already know and trust you. Review their loans and ask them, contact them and simply ask, "Would prefer to receive a check every month from the bank rather than write a check?" I wonder how many would say yes. Perhaps their situation has changed and they are having difficult making their payments. Maybe they've retired or lost a spouse.

'D' Paper Loan Agents
The last idea is not much fun but it does pay well. Most loan agents want only to work with 'A' or 'B' paper borrowers. Few want to work with 'D' paper. So, this would be another niche. There are a vast amount of borrowers with 'D' paper. These are the ones with tons of debt and bad credit. Beware that you could put in many hours and lots of credit counciling and still not fund the deal. No funding means no income for your pocketbook.

The odds are in the numbers. The more you turn the more money you make. Many loan agents who work these deals carry paper and charge high interest rates for 'hard money'. The best part is that suddenly real estate agents call you and you don't need to chase them.

Out of the 3 suggestions the Reverse Mortgage niche might be the best route. The Baby Boomers are savy, you already know their background, they already know you and all you have to do is develop a plan and learn to work it. Good Luck!

May Record Month for Reverse Mortgages

2006-07-17T13:57:00.000-07:00

Record Month in May
The U.S. Department of Housing and Urban Development endorsed 8,414 reverse mortgages in May and 48,088 thru the first three quarters of fiscal year 2006, both records. FHA endorsed 43,131 loans for all of FY2005. Year-to-date totals represent a 77 percent increase over the 27,186 loans endorsed during the same period last year. read more...

HUD Discusses Ways to Improve HECM Program's Appeal

2006-07-15T07:14:00.000-07:00

NRMLA Mid-Month Report: April 2006

For reverse mortgages to gain wider acceptance among mainstream consumers, the Department of Housing and Urban Development and the reverse mortgage industry must design a new HECM program that appeals to retirees of all ages and income brackets, according to senior HUD officials who addressed NRMLA's Western and Eastern Regional Meetings.

Ben Johnson, Acting Director of the Denver Home Ownership Center, and Engram Lloyd, Director of the Philadelphia Home Ownership Center, said in separate speeches that the HECM program has been viewed by the public as a product of last resort for low-income elderly widows far too long.

To help sustain the program, HUD proposed five reforms: 1) reduce upfront costs; 2) simplify the program by eliminating complex features, such as the servicing fee set-aside; 3) permit HECMs for Home Purchase; 4) increase the number of qualified telephone counselors; and 5) promote HECM as a financial planning tool.

Some of these reforms are already gaining traction. A HECM for Home Purchase option is contained in the FHA modernization bill discussed in the opening story. On the issue of counseling, HUD is planning to eventually issue a mortgagee letter that would establish a nationwide roster of approved HECM counselors and require all individual counselors who offer HECM counseling to pass an exam in order to be included on the roster. The remaining reforms will be discussed in greater detail when the Reverse Mortgage Working Group convenes later this spring.

The Reverse Mortgage Match Game

2006-07-14T08:30:00.000-07:00

One of the most upsetting and disturbing challenges for reverse mortgage borrowers and their lenders is when identification of a borrower does not match the signature line on the loan documents.

Recently a borrower was sitting at the closing table preparing to sign their loan documents. When the notary looked at the identification, the middle name on the ID did not match the signature line. In fact they were two different names. Apparently the woman had changed her middle name to her previous married name over 15 years ago when she bought the property. Many years later she put her given middle name on her ID.

This difference in names caused a challenge at the closing table and ultimately a delay in the funding of the loan. The law dictates that a notary must see an ID that matches exactly what is on the signature line and since the lenders require that the name is signed exactly the same as what is on the signature line the borrower could not be notarized.

To avoid delays and upset borrowers it is best to get a copy of the ID they intend to utilize during the closing. Give a copy of the ID to the escrow officer and follow up to make sure that the ID and the title on the property match exactly.

Reverse Mortgages in the News

2006-07-14T07:17:00.000-07:00

Reverse Mortgages in the News

Following is a small sampling of articles on reverse mortgages that have appeared in major news publications over the past couple weeks:

When Your Paycheck Stops - Newsweek

Reverse Mortgages: Stay Home, Make Money - MONEY Magazine

Getting Money Back From Your Home - Dallas Morning News

Securing the Nest: Retirement Planning Should Start Early, Be Well-Thought-Out - Pensacola News-Journal (Fla.)

Reverse Mortgage Programs

2006-07-13T11:52:00.000-07:00

With a Reverse Mortgage seniors keep the title to their house, receive payments and maintain the reverse mortgage as long as they live in the house and are never required to make payments on the reverse mortgage loan.

There are several reverse-mortgage programs. The most popular is the Home Equity conversion Mortgage, backed by the Federal Housing Administration (search "reverse mortgages" at www.hud.gov). Usually the senior will be offered four payout choices: a lump sum, an interest-earning credit line, monthly advances paid directly into the senior's designated account over a period of time, or smaller monthly payments that last as long as the senior lives in their home.

Many seniors prefer to roll the costs of their reverse mortgage into their loan. The senior or their heirs get to keep whatever equity has built up since the senior took out the mortgage. If the value of the house falls below the loan amount, the lender absorbs the difference.

If a senior chooses to leave their home for one or more years the reverse mortgage will need to be paid. Seniors or their heirs my either sell the house or pay the money back including the accrued interest.

NRMLA Meets With HUD on Counseling Issues

2006-07-13T07:17:00.000-07:00

On April 13, NRMLA President Peter Bell and Associate Director Darryl Hicks met with representatives from the Department of Housing and Urban Development, AARP, National Foundation for Credit Counseling (NFCC), Money Management International (MMI) and National Council on Aging (NCOA) to review the status and performance of the HECM counselor network.

It has been six months since the publication of Mortgagee Letter 2005-44, which expanded the HECM Telephone Counseling Network to include counselors from NFCC and MMI. The various intermediaries reported on the number of counseling sessions completed since then and discussed other performance data. AARP said it has trained 396 counselors since last fall. Of that total, 247 individuals, or 56 percent, have passed AARP's exam, allowing those counselors to provide telephone counseling on a nationwide basis. To pass, a counselor must get 80 out of 100 questions correct.

On the issue of counselor funding, the Department is considering a long-term solution that would have FHA pay for counseling sessions out of its own operating budget as an FHA administrative expense. This solution would require Congressional approval in an appropriations bill for next year (FY 2008). In the interim, HUD is considering issuing a mortgagee letter that would permit a borrower-paid counseling fee to be disbursed out of loan proceeds.

Retirees vs Work

2006-07-12T17:50:00.000-07:00

If retirees need money and can't fathom the thought of working at a real job, there are a few cash-generating options.

One might be to sell the house and take their $250,000 for one and $500,00 for a couple, tax exemption. This would assist a senior couple in moving into a smaller residence or less expensive living situation.

Another might be to consider a Reverse Mortgage. If a senior has paid off most of their mortgage and is at least 62 they can qualify for a reverse mortgage that will pay them. This type of mortgage allows a senior to convert the equity in their home into a stream of monthly income. They can opt for a large lump sum if necessary or small monthly payments. Many seniors have medical bills or large credit card debt that would benefit from the one lump sum option.

Another Reverse Mortgage program will wire money into the seniors' account when they ask for it. This program acts as a security blanket and can be utilized for car repairs, vacations, or medical bills.

The amount the senior gets depends on their age, their home's value and the interest rates at the time the loan is generated. The lower the interest rate, the higher the loan amount.

Because interest rates have been low and home values have been rising, reverse mortgages have been growing in popularity. They're not for everyone, though. If a senior is planning to move in a couple of years, the up-front costs wouldn't make a reverse mortgage worthwhile. Even if they are planning to spend the rest of their lives in their home, they shouldn't jump into a reverse mortgage without first considering all of their options.

Reverse Mortgages & Trust Documents

2006-07-12T13:31:00.001-07:00

Yesterday the National Reverse Mortgage Lenders Association (NRMLA) met with experts regarding trusts, conservatorships and their relationship to Reverse Mortgage Documentation.

Experts indicated the importance of the following:

Providing the title company with a copy of the entire trust at the beginning of the application process. This allows for quick verification of how title on the property is held versus how the names of the borrowers are listed as Trustees on the trust.
The trust must be revocable to qualify for a reverse mortgage. Any irrevocable trusts will need to be changed to revocable before the reverse mortgage can be funded.
One of the most beneficial points discussed was how a couple can obtain a higher loan amount if one spouse is close to the age of 62 and the other is older.

In this senerio one borrower could be 80 and the other 62. To qualify for a higher loan amount the borrower who is 62 could be deeded off of the property, while at the same time maintaining their current status as trustee of the trust. Because the elder spouce would receive a much higher loan amount for the reverse mortgage, and the younger spouce would ultimately receive the benefit of the trust and inherit the property this strategy would benefit both borrowers.

If you wish to review more information about Reverse Mortgages visit the resource page listed in the 'Links' section.