The national FHA loan limit for the HECM program in 2010 remains at $625,500 (150 percent of the national conforming limit). In the special exception areas (AK/HI/GU/VI), the maximum claim amount on HECM mortgages is the same $625,500 limit as in all other areas. The loan limit shall be effective for all HECMs that have been assigned a FHA case number on or after the effective date of this Mortgagee Letter.

As an attorney, Cannon has advised banks, bank regulators and individuals, especially regarding Home Equity Conversion Mortgages, commonly known as “HECMs”. He has overseen nearly 2,000 reverse mortgage closings. Prior to joining NGFS, Cannon was a principal of The Equitas Group, a group of companies he founded that develop private label reverse mortgage programs for community banks and conduct reverse mortgage title closings. Cannon is also a Lecturer at Suffolk University’s Sawyer Business School in Boston.

“Rob is an ideal fit for NGFS,” said Daniel Schmedlen, General Counsel for NGFS parent company LTC Global, Inc. “He has comprehensive knowledge of the increasing regulatory compliance demands the industry faces and has experience in improving the operational efficiency and service quality of reverse mortgage operations, particularly through automation of workflow processes. Cannon has a solid vision of where the industry is heading and how NGFS can play a leading role.”

About NGFS NGFS, headquartered in Baltimore, is a national distributor of reverse mortgage products. NGFS was founded in 2001 and currently operates as a division of 1st Mariner Bank.

“Ginnie Mae – whose securities carry the full faith and credit of the U.S. government – has been quick to modify and create securitization products that provide additional liquidity to help stabilize the U.S. housing market,” said Thomas R. Weakland, Ginnie Mae’s Acting Executive Vice President. “And for the past 11 months we’ve consistently shown – with industry-wide low Single-Family delinquency rates – that our conservative approach to risk-taking is working for U.S. taxpayers.”

The Governor has signed the following bills:

* AB 329 by Assemblymember Mike Feuer (D-Los Angeles) to establish the Reverse Mortgage Elder Protection Act of 2009 to provide senior homeowners with greater consumer protections, ensuring they are fully informed of the consequences of entering into a reverse mortgage agreement. Specifically, lenders are required to provide prospective borrowers with a clear and informative written disclosure statement, including a written checklist pertaining to the risks and suitability of a reverse mortgage, prior to borrower attending loan counseling.

The Commissioner offered to attend a meeting, or series of meetings, with a delegation from NRMLA to discuss the future of the HECM program and reiterated that policy changes can be made as needed, so we can revisit the principal limit issue and other issues, such as re-engineering the MIP over the months ahead. However, he made clear that they needed to make the change that they are making right now and there is nothing else to be done about it.

Call 1-888-973-8377 to see if the limit change could effect how much you would receive from a Reverse Mortgage.

According to the ML, the new principal limit factors must be used for all HECMs which the FHA case number is assigned on or after October 1, 2009.

All loans for which the FHA case number has already been assigned as of September 30, 2009 may be processed as usual. The lender need not change any of the calculations of principal limit or re-disclose to borrowers any changes in the HECM proceeds that the borrower will receive.

The announcement comes after the National Reverse Mortgage Lenders Association worked directly alongside AARP and FHA about what the industry’s options were. FHA felt that since the appropriations process is unlikely to provide credit subsidy, program changes are the only viable route for keeping the program operating past September 30, said a statement from NRMLA.

Source: HUD

Passed by a vote of 49-29, SB 660 requires that a checklist be provided to the consumer prior to the mandatory counseling session and states that any person who recommends a reverse mortgage, with anticipation of financial gain, owes a duty of honesty, good faith, and fair dealing to the consumer.

Senator Lois Wolk, D-Davis, told the Daily Democrat that, “These loans, while appropriate in some instances, can have devastating financial consequences. Because the amount due can fairly quickly exceed the value of the home, borrowers get trapped. They lose their equity and their ability to move into assisted living or other supportive housing, or otherwise provide for long-term care. This measure ensures that seniors have the information they need when making important financial decisions involving their homes.”

The new version of SB 660 includes the following amendments:

1. Specify that a lender, broker, person, or entity shall not be deemed to have breeched the duty set forth by this bill solely based on the actions or omissions of the counseling agency.
2. Provide that compliance with existing law may be cited by a lender, broker, person, or entity as evidence demonstrating compliance with the duties of this bill.
3. Requires the counseling agency to provide the prospective borrower with a written checklist of issues and problems that could arise in the transaction if the prospective borrower seeks counseling prior to requesting a reverse mortgage.
4. Require that the notice that must be delivered to reverse mortgage borrowers highlight certain risks associated with reverse mortgages.

“With the rise in abuses in the reverse mortgage market, this standard is not only appropriate, but also necessary to protect seniors from those who would take financial advantage of them,” said Wolk.

The Senate must now vote on the new amendments, then it can be sent to the Governor for his signature.

Source: Daily Democrat

Reverse mortgages provide a source of income or line of credit to elderly homeowners by allowing them to tap the equity in their home without having to sell or move out of the home. The underwriting on these loans is nontraditional since no repayment is required until the homeowner dies, permanently moves out of the home, or fails to maintain the property or pay property taxes. If the home is sold to repay the loan, the borrower is not responsible for any loan amount above the value of the home. Any remaining equity above the amount due belongs to the borrower or the borrower’s heirs.

While some lenders offer their own proprietary products, 90 percent of all reverse mortgages are insured by the Department of Housing and Urban Development’s Federal Housing Administration, and known as “home equity conversion mortgages,” or “HECMs.”

Mr. Dugan said the ability of consumers to access their home equity through immediate and large lump sum payments can pose substantial risks. For example, lenders may simultaneously and aggressively market investment, insurance, or annuity products or, worse, attempt to condition loan approval on the purchase of such products. Likewise, with access to large lump sums upon closing, elderly borrowers can be particularly vulnerable to coercive sales of annuity and long term care insurance products that are expensive and may not be appropriate to their needs.

Mr. Dugan said one area that deserves particular attention is whether to impose additional requirements with respect to escrows of taxes and insurance. Nonpayment of taxes or insurance can trigger foreclosure. However, the new Federal Reserve Board escrow requirements for “higher-priced” mortgages do not apply to reverse mortgages, and HUD does not require escrows to be established in connection with HECMs.

“Given the predominance of the HECM product in reverse mortgage lending, I think it would be a major step forward for HUD to issue guidelines or requirements addressing the escrow issue for HECMs, and I would like to begin a dialogue with them on the issue,” he said. “Once they set the standards for escrows, we would ensure that they are followed by national banks for HECM products, and would ensure – by regulation, if necessary – that comparable standards apply in connection with proprietary reverse mortgages offered by national banks.”

Source: Comptroller of the Currency Adminsitrator of National Banks

The administration has requested that Congress appropriate $798 million for the program, according to budget documents released by the White House Thursday. However, the FHA’s flagship single-family mortgage insurance program will remain self-funded, squelching concerns that it would need a taxpayer subsidy.

The FHA’s reverse-mortgage program allows borrowers 62 and older to convert equity in their home into monthly payments or a line of credit. The borrower pays back the loan when the property is sold with the proceeds of the sale. Where the sale proceeds fall short, the FHA steps in to pay the difference.

The Department of Housing and Urban Development, where FHA is located, cited falling home prices as the culprit prompting the request for the taxpayer subsidy. The agency projects that it will insure at least $30 billion in reverse mortgages under the program in 2010.

Some experts have questioned the policy rationale for federal backing of products that allow older Americans to take equity out of their home.

HUD is requesting $43.7 billion in budget authority for 2010, up from $40.7 billion that was authorized in 2009.

Call 1-888-973-8377 to find out if your qualify for assistance.

Source: Newswire

The Federal Housing Administration early this year approved such a deal as a form of reverse mortgage for home buyers who are 62 or older.

But in Texas, the only thing anyone can do is imagine. The home-equity-for-purchase deal is available in 49 states, but not Texas.

Here’s an example: A homeowner who is 62 or older can sell a $100,000 house and use $40,000 of the sale to buy another $100,000 house. The senior then receives a $60,000 loan from a reverse mortgage lender.

The loan accrues interest year by year until the homeowner sells the house or dies, at which time the heirs sell the house. When the house is purchased, the proceeds repay the loan. The seller receives any money left over. If the house has depreciated in value, and the sale does not fully repay the loan, the seller owes nothing.

Reverse mortgage loan interest rates are similar to mortgage interest rates. Some rates are below 5 percent now.

As in reverse mortgages, closing costs and fees must be paid when taking out a home-equity-for-purchase loan. Homeowners are required to have homeowners insurance coverage and to pay property taxes. Homeowners have titles to the house, with loan liens attached, just like a regular mortgage.