Reverse Mortgage Information

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Anaheim Reverse Mortgage Question - Spouse Too Young For A Reverse

My spouse is not 62 years old yet - can I get a reverse mortgage?

That is an important question.  Technically, if your spouse is willing to go off of title you could get a reverse mortgage, but it is rarely, if ever a good idea.

Why? The answer is simple.  When the borrower on a reverse mortgage no longer lives in the home due to death, illness or sale, the loan becomes due and payable.  As the elder spouse if you should die first, your partner would then have to figure out a way to payoff the loan.  How would he or she handle that obligation?  Would they have a large inheritance from you that would be enough to payoff the loan or would they be facing foreclosure and eviction. That’s the dilemna you could be placing them in if you chose to proceed as the sole borrower and asked them to deed their interest in the property to you.  I don’t think that is ever a good idea even if it means more money now - and I recommend you talk with a knowledgeable, expert financial advisor or attorney.  When a borrower is married, both spouses may be required to receive HECM Counseling even if one of them is currently not on title or planning to go off of title.Caution

It is always imperative that you understand the obligations and terms of any real estate loan that you wish to become obligated to.  Don’t be shy about asking hard questions and make sure you understand your responsibilities completely. Don't be rushed, and deal with a professional, ethical reverse mortgage professional.

  

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Deborah Nance

Your Local Southern California Reverse Mortgage Professional

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8 comments • Deborah Nance - Reverse Mortgage Consultant in Southern California • November 13 2011 05:54AM

Riverside Reverse Mortgage Question - Can you help me to find a HUD Approved HECM Counselor?

 

Bear Cub




Absolutely!





Prior to processing a loan application, all borrowers must submit a signed certificate of HECM Counseling provided by a HUD Approved Counselor.  Here’s an easy and convenient way to find a qualified counselor.  Use FHA’s counselor search tool to find a counseling agency close to you or call one of the following Nationwide counseling agencies.  
The agency will schedule a counseling appointment for you to be held either over the phone or at their office.   All borrowers on the loan must be counseled and both the lenders and counseling agencies encourage you to also invite a child or trusted advisor to attend. (They will come up with questions you may not think of!)

The counseling agency, your lender or both will send you a copy of the National Council On Aging’s booklet “Use Your Home to Stay At Home” along with a reverse mortgage analyst report.
This report is a guide to understanding the common “numbers” pages of a reverse mortgage proposal that include a Comparison Page, an Amortization Schedule, a TALC (Total Annual Loan Cost) Sheet.  The report also helps the homeowner to understand the basic terms and conditions of the HECM loan. The counselor will also talk to you about other options that might work for you besides a reverse mortgage.
Expect counseling to last approximately an hour to an hour and a half.  You will want to be prepared for the session with your basic financial information (income, expenses, assets).
When you have completed the counseling, your counselor will hand (or mail) you a HECM Counseling Certificate that expires after 180 days.  All borrowers must sign the counseling certificate, then give the original to your reverse mortgage consultant.

You can expect the loan process to last approximately 30 days from the date you submit the counseling certificate and loan application.  I’ll review the process in a future post.

Thanks for reading, I appreciate your comments and suggestions!

 

  

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Deborah Nance

Your Local Southern California Reverse Mortgage Professional

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0 comments • Deborah Nance - Reverse Mortgage Consultant in Southern California • May 10 2011 11:55PM

Reverse Mortgages - Summarized??

 

esrever

 

The daughter of a potential client of mine asked me today to send her "something that summaries the features and benefits of all of these different reverse mortgage programs". When I finished simplifying and summarizing to send it to her, I thought this would be good to share. So here it is.

 

I've listed the features below... and the benefits? Increased cash flow and access to funds & all that may bring to the quality of life. 

Borrower responsibilities

  • Live in the home.
  • Maintain the home.
  • Keep the home insured.
  • Keep property taxes and property owners association dues current.

All HECM reverse mortgage products

  • No mortgage payments. 
  • No minimum credit score requirements.
  • No income requirement.*
  • Non-recourse Loan - Borrower & Heirs protected - Borrower or Estate are not responsible to pay any shortage if home is sold at market value for less than loan balance.
  • Loan proceeds are not taxable income.
  • No prepayment penalties.
  • Up-front Mortgage Insurance Premium
  • Monthly Mortgage Insurance of 1.25% of loan amount per annum, accrued monthly.
  • Due & payable when the last borrower no longer lives permanently in the home

*Sufficient income to cover the costs of property taxes and hazard insurance are required when obtaining a HECM for Purchase.  

HECM Adjustable Products 

  • Interest rate is based upon the 1 Mo. LIBOR rate (1MLB)
  • Interest rate adjusts monthly.
  • Interest rate is capped at 10% over the initial rate. 
  • FHA Insurance protects the borrower by guaranteeing continuing payments (term or tenure) and credit line availability, including growtheven if lender fails. 
  • Ability to receive loan proceeds in various ways.
  • Tenure (monthly payments for life while in home)
  • Term (monthly payments for specific time period)
  • Line of Credit with a guaranteed growth rate**
  • Lump sum
  • Combination of any or all of the above
  • Ability to change style of payout even after closing for a $20 recalculation fee)

**Growth rate on Line of Credit is equal to the note rate plus 1.25%, and not dependent upon future home value or income or loan balance. 

HECM-Fixed Products

  • Higher loan amount available. (At this time)
  • May only receive funds as lump sum.
  • Accurate prediction of future balance.

HECM Standard Reverse (fixed or adjustable)

  • Highest Loan amounts.
  • Up-front Mortgage Insurance Premium is 2% of Home Value.

HECM Saver Reverse (fixed or adjustable)

  • Lower Loan amounts (means lower risk for investor)
  • Lower Up-front Mortgage Insurance Premium .01% of Home Value

Did I miss anything??

  

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Deborah Nance

Your Local Southern California Reverse Mortgage Professional

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3 comments • Deborah Nance - Reverse Mortgage Consultant in Southern California • April 23 2011 01:21AM

Reverse Mortgage Quiz - Have fun with this new quiz!

 

QuizReverse Mortgage Quiz - Have fun with this new quiz!

1) What is the minimum age allowed for a reverse mortgage? borrower?
a) 55
b) 60
c) 62
d) 65

2) What does HECM stand for?
a) Home Equity Conversion Mortgage
b) Housing for Elder Community Mortgage
c) Housing Equality Cooperative Mortgage
d) Help for Elders Community Mortgage

3) True/False - Reverse Mortgage proceeds are considered taxable income.


4) Loan to Value ratios on Reverse Mortgages are based upon these three factors:
a) Home Value,  FHA Lending Limit, Age of oldest borrower.
b) Home Value or FHA Lending Limit (whichever is least), current expected interest rate, and the age of youngest borrower.
c) Home Value or FHA Lending Limit (whichever is less), Average age of borrowers, current expected interest rate.
d) Home Value, current expected interest rate, Age of Youngest borrower.

5) HECM Reverse Mortgage Loans are insured by:
a) They are not insured.
b) VA
c) Social Security
d) FHA

6) True/False - You cannot get a reverse mortgage on investment property.


7) True/False - Reverse Mortgages may be used as purchase money loans on a primary residence.

8) True/False - Proceeds from a reverse mortgage may be used to buy a vacation home.

9) Once you have a reverse mortgage and you are taking monthly payments -  if you wish to change the method of payment you must:
a) Refinance the loan
b) Request a Change and Recalculation and pay .01% of the current loan balance.
c) Request a Change and Recalculation and pay $20
d) You cannot change the distribution method of a reverse once it’s in place.

10) Reverse Mortgage Counseling is
a) Optional, but recommended and  provided by HUD Approved HECM counselors
b)Mandatory, provided by HUD Approved HECM counselors and must be completed prior to closing the reverse mortgage loan.
c) Mandatory and provided free of charge by the lender or originator.
d) Mandatory,  provided by HUD Approved HECM counselors, and must be completed prior applying for a reverse mortgage.

Answer Key























Answers: 1=C, 2=A, 3=False, 4=B, 5=D, 6=True, 7=True, 8=True, 9=C, 10=D

 

  

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Deborah Nance

Your Local Southern California Reverse Mortgage Professional

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1 comment • Deborah Nance - Reverse Mortgage Consultant in Southern California • February 08 2011 11:47AM

Riverside Reverse Mortgage Question? Why is HUD taking over my loan?

Riverside Reverse Mortgage Question?  Why is HUD taking over my reverse mortgage?

Over time, the loan balance on a reverse mortgage increases.  This is due to accrued interest and may also be due to line of credit withdrawals, or payments (loan advances) made to the borrower.  A part of the security built into the product for the benefit of the lender is that when the principal balance of the loan reaches 98% of the maximum claim amount.  The lender can assign* the loan servicing to HUD.  This does not change any of the benefits to the borrower.  If they are receiving monthly payments, they continue to receive them.  If the have a line of credit, those funds are still available to them.  It's just that now they are dealing with HUD and not the bank.

I received a phone call today from an elderly woman who has had a reverse mortgage for years.  She got a letter from the lender saying that they were transferring the servicing of her loan to HUD.  Then she received another letter from the servicing company that due to the fact that her loan balance had grown to over 98% of the maximum claim amount on her loan they were now servicing her loan.  They reminded her that she had to keep the taxes and insurance current.

She was worried that the government was going to take her house away from her. I'm was able to calm her and explain that nothing changes as far as she, the borrower, is concerned, and we set an appointment to meet face to face next week with her daughter to explain it to her.

I wish that when lenders with reverse loans that are going to be assigned to HUD would have their customer service departments give a phone call to the clients along with the letter and explain what is happening.  It would save some sleepless nights.

My explanation above is very simplistic, but I hope it provides peace of mind if you or a loved one has the same question.

*Here is some verbiage from HUD's Handbook on HECM, regarding this subject. HUD Logo

"8-1 PURPOSE.  This chapter explains the procedures for the lender to follow in assigning a mortgage to HUD.  Procedures for processing demand assignments by the local HUD Office are also included.  Refer to HUD Handbook 4330.1 for standard assignment procedures.  This chapter supersedes that handbook only as noted below.

8-2 ASSIGNMENT INSURANCE OPTION.  If the lender has chosen the assignment insurance option at closing,

         A.The mortgage may be assigned to HUD if:

                 1)The outstanding balance, including all payments made to or on behalf of the borrower, MIP and accrued interest, is equal to or greater than 98% of the maximum claim amount as reflected on Form HUD 59100, Mortgage Insurance Certificate,...."

 

  

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Deborah Nance

Your Local Southern California Reverse Mortgage Professional

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2 comments • Deborah Nance - Reverse Mortgage Consultant in Southern California • January 27 2011 07:36PM

Reverse Mortgage: Helping Young Families, Newlyweds & First Time Homebuyers.

Working exclusively with senior homeowners is such a rewarding and varied experience!

I took a reverse mortgage loan application from a young senior couple (only in their 70's) who are raising their 9 year old grandchild.   Parenting a 3rd grader on a fixed income of just Social Security isn't easy!  But they wouldn't have it any other way.  "It keeps us young!"

 Today, another "unexpected" expense!  The car broke down and had to be taken to the mechanic.  They told me that just knowing their reverse mortgage is in process, made dealing with the car repairs easy.   They are so excited to have the "breathing room" that this FHA loan will provide.   They are looking forward to the flexibility it will provide them as they raise another child.   I swear they look younger!

From Untitled Album

My newlywed clients (70 something), married just 3 years, closed their reverse mortgage yesterday.  They have put on a new 30 year roof, paid off a mortgage that had a balloon payment coming due in a couple of years (they were losing sleep over that one!)   What are their big plans?   The financial relief of no balloon, combined with monthly reverse payments coming in for the rest of their lives (as long as they live in the home) mean they can afford to travel twice a year on trips they only talked about.

Mr. and Mrs. W immigrated to the United States many years ago and raised their family.  Their children are successful, hardworking and all own their own homes.  After putting all the kids through school, helping with grandkids and saving, saving, saving.  They are now ready to buy their first home.  With a reverse mortgage for purchase of $270,000 and their savings of $180,000.00 as a down payment, they are purchasing their first home right here in Riverside County.  No monthly mortgage payments and bye bye tiny apartment.

Another fun, fulfilling week in the reverse mortgage business! 

  

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Deborah Nance

Your Local Southern California Reverse Mortgage Professional

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5 comments • Deborah Nance - Reverse Mortgage Consultant in Southern California • May 21 2010 12:28AM

SUBJECT: Home Equity Conversion Mortgage (HECM) – Principal Limit Factors (Lower Loan To Values on Reverse Mortgages effective October 1, 2009)

HUD Mortgagee Letter

The Department of HUD just issued Mortgagee Letter 2009-34 which effectively cuts by about 10% the amount of fund available to senior homeowners who wish to obtain a reverse mortgage.  This will effect all new reverse mortgage loan applications that do not have a case number issued prior to October1. 

How this impacts my realtor friends here in the Inland Empire is that any senior homebuyers interested in using a (HECM) Reverse Mortgage for Purchase will now have to put about 10% more down.

Here is the link to the mortgagee letter: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-34ml.doc

 

 

  

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Deborah Nance

Your Local Southern California Reverse Mortgage Professional

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3 comments • Deborah Nance - Reverse Mortgage Consultant in Southern California • September 23 2009 05:23PM