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.

According to the Housing and Urban Development (HUD), HECM reverse mortgage volume increased nearly 7,000 loans from calendar year 2007 to calendar year 2008. Similarly, HUD data shows that endorsement volume in March 2009 increased 24 percent from February of 2009, and set a new monthly record at 11,261 endorsements.

This is great news, to explore a Reverse Mortgage simply call 1-888-973-8377 or request a FREE Reverse Mortgage Information Packet.

Do you qualify? Are you and any co-owner of the home at least 62 years old? Do you own your home and live in it as your primary residence? These qualifications need to be met before a reverse mortgage can even be considered.

Do you have equity built up in your home? For individuals and families who have diligently paid down mortgages for years, and have worked hard to maintain and improve their property, a reverse mortgage is a way to realize a portion of that financial value.

Are you satisfied with your current level of retirement income? Many individuals, in retirement or approaching retirement, are finding that traditional retirement tools, including IRAs, pensions, and 401(k)s, do not provide enough income to comfortably fund current or anticipated living and healthcare expenses. A reverse mortgage can provide greater peace of mind and improve one’s quality of life. Taking reverse mortgage proceeds in regular monthly payments (the “tenure” option) that last as long as one lives in the property is a way to boost cash flow each month, and usually will produce a lower loan balance than a lump sum distribution when the time comes to pay off the loan.

Do you want to retire your existing mortgage? Many retirees are still paying a conventional mortgage, and as a result, have less disposable income than they would like to have at the end of the month. Depending upon the amount, a reverse mortgage can pay off an existing mortgage, freeing up money for other things. To gain a better understanding of where you stand, the use our free reverse mortgage calculator.

Is a reverse mortgage a better option than a home equity loan? For many retirees, the income and credit requirements on a home equity loan may prove an obstacle to accessing that particular financial tool. A reverse mortgage doesn’t have these requirements.

Do you intend to pass your home on to your children or other loved ones? With a reverse mortgage loan, the outstanding balance needs to be repaid when the title changes hands. If one’s heirs wish to keep the home, they may be able to refinance the loan at that time, but it may be necessary to sell the property to repay the loan. Take the time to openly discuss this question with loved ones as an important first step when considering a reverse mortgage. Many families find that their children would prefer to see their parents experience a more comfortable retirement, rather than making the priority obtaining the family home, ‘free and clear.’

Source: Marketwire

Data reveals that many states with large populations of seniors have experienced significant self-reported drops in home values over the past year. This means that many seniors who previously stood to benefit from these new limits, can no longer realize the full potential of their home’s equity.

To find out how much qualify for a new HECM, call 1-888-973-8377 or request a free information packet.

The reduction in costs and the increased loan limits for a reverse mortgage will create additional consumer demand as previous prospects reticent to make a decision because of the perception of high costs, and lower values are now willing to move forward with a reverse mortgage with the lower cost structure and higher net benefits created by the new loan limits.

Brett Carter
Next Generation Financial Services

“As more seniors try to figure out how to cope with today’s economic conditions, the HECM program takes on increased significance,” said Peter Bell, President of NRMLA.

A detailed analysis of HUD data conducted by Reverse Market Insight, Inc., a consulting firm based in Aliso Viejo, CA. The top 10 FHA insured HECM loan markets in the country are:

Miami (9,561)
Los Angeles (4,126)
Tampa (3,956)
Santa Ana, CA (3,695)
Baltimore (3,595)
Phoenix (3,582)
Orlando (3,556)
Richmond, VA (3,493)
Philadelphia (3,317)
Chicago (3,184)

Call 1-888-973-8377 to speak with a Reverse Mortgage Loan Professional.

Depending upon the senior’s age and value of the home, a down payment of 25% to 50% is usually necessary to purchase the home. The older a senior is, the less needed for a down payment. For instance, a 75 year old could purchase a new home appraised at $200,000 by putting approximately $74,000 down and financed the remaining $126,000 with a Reverse Mortgage. The senior would make no payments until he or she permanently leaves the home.

For more details, or to request an free illustration and outline of the new reverse mortgage purchase option, please call 1-888-973-8377 or Request an Information Packet.

Now is the perfect time to see how much YOU qualify for. Use or free and easy online reverse mortgage calculator. It only takes a few minutes of your time to see how much cash a Reverse Mortgage can provide… CLICK HERE!