Reverse Your Mortgage

Reverse Mortgage Lending Limits Scheduled to Lower

Currently borrowers can attain a FHA insured reverse mortgage based on home values up to $625,000. Unless Congress takes some action, the lending limits for reverse mortgages will lower in over 600 counties across the United States. Congress temporarily increased the lending limits to $625,500 in 2008. On October 1, 2011 they will revert back to the old limits of $417,000 in those counties. After that time, if you have a home valued over your county limits (maximum $417,000), the reverse mortgage proceeds will only be calculated on values up to $417,000. For many homeowners this will disqualify them altogether.

Example: 68 year old reverse mortgage borrower with home value of $525,000 would currently qualify for approximately $323,000. When the value limits revert back to a maximum of $417,000, that same home owner will only qualify for approximately $255,000.

If you are a homeowner with a home value exceeding $417,000 and a reverse mortgage is part of your financial plan, you may want to consider this information as to moving forward with your reverse mortgage sooner than later.

I f you have a reverse mortgage question, Call Angella Conrard, Reverse Mortgage Adviser and Certified Reverse Mortgage Professional at 866-949-7030. No sales, just great information and outstanding service.

 

Reverse Mortgage Defaults - New Reverse Mortgage Qualifications

Yes, you can default on a reverse mortgage. When a borrower attains a reverse mortgage, they agree to pay and keep current their property taxes and homeowner’s insurance policies. Failure to do so puts the homeowner in default to the contract with their lender. It’s not widely known but tens of thousands of reverse mortgage homeowners are in default of their contract. This is causing reverse mortgage defaults and ultimately foreclosures.

How will this effect reverse mortgages in the future? More qualifications. HUD has been concerned about suitability and defaults for some time. Consumer credit counseling surveys show less than 25% of those counseled have any budget training and less than 40% use any kind of budget. In an effort to circumvent this knowledge challenge, HUD and the reverse mortgage industry have required all reverse mortgage borrowers to participate in HUD approved third party counseling appointments. This process certifies that the homeowner has demonstrated knowledge in understanding these loans.

Income qualifications will be the next step in HUDs efforts to set borrower’s up for success in the decision of whether or not a reverse mortgage is an appropriate cash flow tool for older homeowners. By requiring income qualifications HUD hopes to minimize tax and insurance defaults. My hopes is that the industry will not do hold backs in proceeds to reverse mortgage borrowers but perhaps adopt escrow accounts that borrowers can pay into on a monthly basis. This in my opinion is a friendlier approach to setting reverse mortgage borrowers up for success vs. disqualifying them by lowering proceeds and holding back funds. 

I f you have a reverse mortgage question, Call Angella Conrard, Reverse Mortgage Adviser and Certified Reverse Mortgage Professional at 866-949-7030. No sales, just great information and outstanding service.

 

 

Reverse Mortgages Change - Big Banks Leave

Big Banks Leave

Potential reverse mortgage borrowers may be concerned with big banks such as Wells Fargo and Bank of America leaving the reverse mortgage business. Both HUD and the National Reverse Mortgage Lender’s Association assure consumers have nothing to fear and reverse mortgages are here to stay. With Baby Boomers aging and being underfunded funded for retirement, Boomers will be working longer, sharing housing and looking toward resources like reverse mortgages to supplement retirement income. The reverse mortgage market is sure to expand with new products and more choices.

Wells Fargo and B of A will continue to service their portfolio of reverse mortgages, nothing will change. Consumers will continue to have multiple choices of reverse mortgage lenders. FHA insures these loans against lenders going under and consumer’s loan balance exceeding their home value when the loan becomes due. By law the FHA insurance fund must operate at least at par (balanced budget anyone? Make sense?) for added assurance.

I f you have a reverse mortgage question, Call Angella Conrard, Reverse Mortgage Adviser and Certified Reverse Mortgage Professional at 866-949-7030. No sales, just great information and outstanding service.