The reverse mortgage industry has not been immune to the chaos of the housing market and the economy. Three years ago the FHA program appeared to be accomplishing what it set out to do, create a stable market for reverse mortgages.
Congress created the Federal Housing Administration (FHA) in 1934. When the FHA was created, the housing industry was flat on its back:
- Two million construction workers had lost their jobs.
- Terms were difficult to meet for homebuyers seeking mortgages.
- Mortgage loan terms were limited to 50 percent of the property's market value, with a repayment schedule spread over three to five years and ending with a balloon payment.
- America was primarily a nation of renters. Only four in 10 households owned homes.
During the 1940s, FHA programs helped finance military housing and homes for returning veterans and their families after the war.[1] These FHA programs promoted the home ownership market.
The motive is similar for FHA reverse mortgages. In 1988 President Reagan signed FHA reverse mortgage insurance legislation. Just three years ago, it appeared FHA had done its job. We had over 15 proprietary reverse mortgages available in addition to the FHA programs. Now as a result of declining home values and a contracted secondary market, we were again limited to offering just the FHA reverse mortgage programs until now.
1st Reverse a subsidiary of Wilmington Savings Fund Society, FSB has launched a jumbo reverse mortgage product called FLEX-XL. But before you get too excited, remember, “The proof of the pudding is in the eating.”
Here are some highlights:
· All borrowers must be 62 or older
· Eligible property types include single family homes, condos, PUD’s and 2-4 unit owner occupied multiplex
· Program offered in: AZ, CA, CO, CT, DOC, DE, FL, GA, HI, IL, MI, MD, NY, NC, NH, NJ, NM, MD, NY, NV, OH, OR, PA, RI, SC, VT, WA, VA, WI
· Can be used as refinance or PURCHASE
· Interest rate: 1 month LIBOR plus 5.5% margin
· All proceeds must be drawn at closing, no credit line is available
· No credit, or income qualifications
This is a very conservative product; borrowers can expect proceeds of 15-30% of home value. The product is best suited for homes valued at 1.5 million or more.
If you have a reverse mortgage question call Angella, 866-949-7030 or log onto www.reverse-your-mortgage.com.
