Banks are still suffering

6 more bank closings forced by the FDIC so far in 2009. Continued market weakness. If seniors still have a need for more cash flow in retirement we may have an answer for them.

Update on Reverse Mortgage

The rule changes we have been waiting for have been implemented. Horray!!
the new national maximum lending limit has been increased to at least $417,000 with some selected high cost areas currently at $625,000. This means that many more people can currently qualify for a reverse mortgage than ever before. The downside is that some home values have fallen enough that the equity ratio may no qualify for a Reverse Mortgage.
Determining if they are right for you is a simple process that lenders like myself can walk a client through. They are not credit driven they are equity driven. All homeowners must be over age 62, the house owner must have a reasonable equity position to be eligible, the zip code must be residential not agricultural or commercial. Generally with the answers to about 5 questions we can determine if you are likely to be able to get a HUD HECM Reverse Mortgage.

The new rule changes have reduced the fees a bank or lender can charge. The up front charges are minimal and typically are well under $600.

The Economic Crisis Is Driving Up Interest Rates

Credit markets are still tight LIBOR Rates have increased this week to 6.88% up from less than 2.6% a week ago. LIBOR Rates and other similar Rate Indexes are used in the banking markets for things like mortgages and Reverse Mortgages. Other loans like car loans will also trend upwards in cost as a result of these index rate increases.  All of these loans will cost more in the near future. Traditional mortgage loans will be more expensive if a customer can get one at all.  Reverse Mortgages are not Credit driven so qualifying is easier if a family has credit blemishes on their record.

Wall Street Journal Interesting Article on Reverse Mortgages

The Wall  Street  Journal recently ran a short article that talked about the current bank credit  crunch and its impact on reverse mortgages.  Basically it  said that if you stick with a HUH HECM Reverse Mortgage that you are protected from the impact of the  credit crunch.  Your income stream is protected. Most of the Reverse Mortgages are  HUD guaranteed loans. There are some alternatives to the HUD HECM loans and according to the  article so far the income stream is still flowing to the loan holders. Hopefully, this will continue to be the case. If you stick with a government-backed reverse mortgage, your payments are guaranteed. And if you take your reverse mortgage as an up front one time  payment, there is no risk at all.  The government only guarantees a certain number of these loans per year so if you are interested don’t wait.

I dont know much about the  non  fererally  guaranteed products because I have not  sold them.

Reverse mortgages  most often are used to help older homeowners over age 62 that  are struggling with  mortgage payments, home maintenance or property taxes, paying for medical expenses or the costs related  to Long Term Care among other expenses. Instead of the borrower making payments to the lender, as with a regular mortgage, the lender makes a payment, or payments, to the borrower. Your cash flow improves dramatically as soon as the loan originates and your expenses decrease dramatically as well.  The borrower keeps control of the house and doesn’t have to pay back the loan as long as he or she lives there. When the homeowner dies, sells the house  or moves out, the loan comes due and must be paid within 12 months.  It is typically paid  off by selling the house, and any money left over goes to the homeowner or the homeowner’s estate. If the loan exceeds the value of the home at time of sale the HUD guarantees kick in and pay the lender the amount of the shortfall. The homeowner and the  estate are not liable for any shortfall. Of course if the house appreciates the homeowner reaps the rewards of the increase in value.

Fees are typically steep — up to about 6% of the home’s value but upfront costs are very reasonable ussually under $500.  Keep in  mind in many  cases these are loans of last resort for people who don’t have current income or do not have good  credit. They need to be evaluated from that perspective.   The HUD Guaranteed loans are  limited to people who are age 62 or older, and borrowing limits are capped. There’s a  good reference source  at www.reversemortgage.org.

The most common type of reverse mortgage is a  HUD Home-Equity Conversion Mortgage, or HUD-HECM, in which the Federal Housing Administration insures lenders’ and borrowers’ risk. Those loans, backed by federal-government insurance, are secure. But if you’re considering taking out such a loan, try to wait a few weeks: A housing law enacted earlier this year raised the lending limits for the HECM product. On or about Oct. 1, the Department of Housing and Urban Development is expected to announce those limits and start using them, says Peter Bell, president of the National Reverse Mortgage Lenders Association, a trade group in Washington, D.C.

There are also proprietary reverse mortgages — often with higher lending limits (and, sometimes, a minimum-age requirement of 60)  that aren’t government-backed but which get bundled and sold to investors.  It is getting tough to find any lenders offering the proprietary reverse-mortgage products. A year ago, there were about a dozen such products. At the present time there are only to one or two lenders who are offering the alternatives.

I offer  HUD HECM Reverse Mortgages in all 50 states.  I would be happy to discuss whether  a HUD HECM Reverse Mortgage might be right for your or a senior friend or family member.    How can I help you?

financial-services@live.com

Congressional Action on the Economic Bailout

Wow In less than a week  both houses of congress in a rare show of bipartisan support hve wourked out most of the kinks for a bill to support the economic bailout. Both the democrats and the republicans have given something up but there is a good chance that the  US as a whole will be in better financial shape after the bill is passed and signed by the president.

The result of passage will make it easier for homebuyers or owners to get credit or complete a mortgage process. This will help traditional mortgage seekers and Reverse mortgage holders as well.

financial-services@live.com

HUD HECM Reverse Mortgages; The Rules are Changing

With the new Federal rules on Reverse Mortgages many more people will be able to qualify for a Reverse Mortgage. The maximum loanable value is increasing to a national minimum of $417,000. In Ohio, just to provide an example, the former lending limits were between $210,000-236,000. In several high home price cities or areas the loanable value will actually go up to over $600,000. The maximum fees that can be charged are actually decreasing to 2% of the first $200,000 and 1% on the lendable limit above the $200,000 up to a maximum fee of$6,000. Last year over 104,000 homeowners took out a reverse mortgage and this year the number of HUD HECM Reverse Mortgage loans is approaching 10,000 loans per month.

You can determine if a HUD HECM reverse mortgage is right for you, if you are eligible and how much of a loan you are eligible to get. Referrals to a HUD certified counselor who will verify your suitability for a loan.

financial-services@live.com

Who can get a reverse Mortgage?

The government only guarantees a certain number of Reverse Mortgages. Annual Reverse Mortgage volume is growing rapidly. Something short of 500,000 loans are written a year.

In my experience only about 70% of people who want one can get a Reverse Mortgage. Rule outs are not based on income or on credit scores. They are because of issues like limited home equity, zoning of the property, ages of one owner, or type of house and title. Predetermining eligibility does not even require your social security number. Qualifying for a Reverse Mortgage, does not require any particular income, and it is not dependent on any particular credit score. You may qualify with good credit, bad credit or no credit.

What is necessary to find out if you can get a reverse mortgage and how much you might qualify for. 1. All owners of the property must be 62 years of age or older. 2. Your City, State and Zip Code Zip 3. The equity you have in your house (current estimated value minus first mortgage and any second liens) 4. Zoning must be residential

Then after we determine if you might be eligible you have a counseling session. This is a HUD requirement. I provide a list of at least 5 certified counselors working in your state. You get a counseling certification after the counseling session. You cannot actually apply for the Reverse Mortgage until we have the counseling certificate. You can start the pre application process at anytime.

e-mail financial-services@live.com

Hello world!

Welcome to my http://reversemortgageweblog.WordPress.com. This is the first post.

There are a lot of misconceptions out their in the marketplace on reverse mortgages. Many peoples perception is based on the original private funded reverse mortgages that were available 10-20 years ago.

The new generation of Reverse Mortgages are HUD guaranteed HECM mortgages. These clearly are a horse of a different color. Although they are not available to everyone and are not suitable for everyone thay can be a very helpful product for the right client and in the right situation. All owners on the loan and title must be age 62 or over.

Just a personal example. I had an 84 year old client in St Louis, MO with late stage Alzheimer Disease. She could not be left on her own even for an hour. Her daughter was a full time care giver and couldn’t work to earn a living because she was taking care of her mother. They basically were trying to live on Social Security as their only income. I can only imagine how difficult that would be. They were behind on their condo fee’s and behind on taxes. The Bank and Condo association were beginning foreclosure actions.

Let me summarize what a Reverse Mortgage accomplished.

1. It stopped the foreclosure process after I talked to the Condo Association and bank.

2. It paid off the back taxes and back condo fees.

3. It stopped mortgage payments immediately improving their cash flow to help pay for medical expenses.

4. It left a cash reserve line of credit to pay for future taxes and condo fees

5. It let her stay in her home which is where she wanted to be.

I have not been able to find any bad results in this case! It isn’t a perfect alternative but it was nearly perfect for them. Up front costs are minimal and usually are less than $500. There are some internal costs amortized into the loan amount. I would be happy to discuss how a reverse mortgage might be right for you.

Hope to see you in future posts. How can we help you?

financial-services@live.com