Reverse mortgages are loans that enable senior homeowners, typically 62 years and older, to convert the equity in their home into income. Seniors turn to these types of products to help supplement Social Security income or pay for unexpected expenses. A reverse mortgage lender typically lends the borrower money based on several factors, including the value of the property, the age of the borrower and the accumulated equity in the home. Borrowers have a choice of various payment options, including a lump sum payment at settlement, monthly installments or a line-of-credit that enables a borrower to draw money when he or she chooses, until the line of credit is exhausted. Repayment on the loan is generally not required until the borrower is deceased or does not permanently reside at the property.

“Reverse mortgages are extremely complicated products and consumers, beyond the required counseling, should make every effort to obtain independent legal and financial advice when considering one,” said Daniel C. Crane, Undersecretary of Consumer Affairs and Business Regulation. “It is important to appreciate the costs associated with these loans and that, over time, the loan will deplete the accumulated equity in your home.”

“There are many services available for Massachusetts elders who wish to continue to live in their homes. Seniors should contact their local elder service provider at 1-800-AGE-INFO to learn about what programs and services are available before entering into a complex and expensive reverse mortgage,” said Secretary of Elder Affairs Michael E. Festa. “We remind all consumers that, before they close on a reverse mortgage loan, they must get reverse mortgage counseling from an agency that is approved by the Executive Office of Elder Affairs.”

Consumers who are considering a reverse mortgage are strongly encouraged to:

· Review all aspects of the loan — lump sum, term loan, line of credit — to determine if any of these reverse mortgage options are well suited to their needs.

· Obtain independent legal and financial advice to understand the impact of the transaction including any factors that may trigger repayment of the loan.

· Explore alternative products and resources with a reverse mortgage counselor and independent financial representatives. Often the availability of no-cost or low-cost programs and benefits for home repairs and energy assistance can reduce or eliminate the need for a reverse mortgage.

· Understand all obligations under the loan including the responsibility to pay homeowners insurance and property taxes.

Massachusetts Law provides seniors obtaining a reverse mortgage with some unique protections:

· Mandatory Counseling: All reverse mortgage borrowers must obtain counseling from a counselor approved by the Executive Office of Elder Affairs. Borrowers are strongly encouraged to participate in face-to-face counseling. “Comprehensive in-home or face-to-face counseling is invaluable to both borrowers and their families,” said Undersecretary Crane.

· “Cooling off” Period: Massachusetts law provides all reverse mortgage borrowers with a cooling off period which gives them the right not to proceed with the transaction for seven days after a loan commitment is issued by the mortgage lender.

· Program Approval: Massachusetts law requires all reverse mortgage programs to be approved by the Division of Banks. A list of approved reverse mortgage programs is available at www.mass.gov/reversemortgage. “It is important for all consumers who are considering obtaining a reverse mortgage to ensure that their mortgage lender’s program has been approved by the Division of Banks,” said Commissioner of Banks Steven L. Antonakes.

Len Raymond, executive director of homeowner options for Massachusetts Elders (H.O.M.E.), an approved reverse mortgage counseling agency in Massachusetts, stated, “A reverse mortgage should be the last resort for seniors. In-depth counseling is critical for any senior who is experiencing financial hardship. While all seniors can benefit by careful long-range planning, they should also be wary of high pressure sales tactics to obtain a reverse mortgage or to use the proceeds of a reverse mortgage to purchase annuities or other financial products.”

Additional information and resources can be found at the new web site ww.mass.gov/reversemortgage. Reverse mortgages are complicated products and Massachusetts consumers are encouraged to consult the web site.

Find a Reverse Mortgage Professional in Massachusetts:
Massachusetts Reverse Mortgage

Our most current interpretation is that the loan limit will go to $417,000 once HUD issues a Mortgagee Letter, and that the high cost area adjustments to a max of $625,500 will take effect on January 1.

In addition to raising loan limits, HR 3221 includes:

* Home Purchase product authority.
* Co-op product provisions.
* Origination fees of 2% on the initial $200,000 in maximum claim amount and 1% on the balance thereafter with a cap of $6,000
* Prohibitions on requiring the purchase of annuities and other financial products.
* Restrictions around cross selling financial products.
* Requirements on counseling protocols, funding and practices that promote independence and quality in counseling.

NRMLA will issue a more detailed memo next week. In the meantime, rejoice.

Darryl Hicks, VP, Communications

Here is what we found…

Reverse Mortgages

These mortgages let people 62 and older borrow money against their home equity and remain in the home. Repayment is deferred until the owner dies, sells the home or enters a nursing home. Borrowers can take out their equity in a lump sum, in installments or when needed, like a line of credit.

Some seniors have been wondering how the FDIC’s takeover of IndyMac will affect their reverse mortgages, particularly any unused portion of their loan.

Gray says, “It should be business as usual for these folks. We are honoring all existing terms and conditions.”

Financial Freedom “is an independent subsidiary. It’s still running. It has franchise value. We would expect to sell it off. But those contracts in place will continue,” he said.

IndyMac customers can get more information at (866) 806-5919

As the leader in Reverse Mortgages, we strive to provide you the highest levels of customer service, value-added products, marketing support, training and competitive pricing. Unfortunately, due to economic conditions impacting property values and the lack of secondary market interest for jumbo reverse mortgage products, we find it necessary to suspend the Cash Account Advantage product.

Pasadena’s IndyMac Bancorp Inc., which runs its mortgage operations from Irvine, said on Monday it will stop accepting loan submissions and slash its workforce by nearly 4,000 people.

The cuts will reduce the company’s workforce to 3,400 positions from 7,200.

The company didn’t say how many Orange County jobs would be cut but did say it plans to keep 350 workers in its servicing retention group in Irvine and Kansas City, and 800 at its Financial Freedom Senior Funding Corp. in Financial Freedom in Irvine, Sacramento and Atlanta.

In a letter to shareholders, the company said the cuts have become necessary as it has been unable to raise money as a result of the mortgage downturn and ensuing credit crisis.

By closing its new mortgage business and cutting its workforce by more than half, the company expects to reduce operating expenses by approximately 60%.

The company plans to focus its efforts on its reverse-mortgage subsidiary, Irvine-based Financial Freedom.

The unit is a leading reverse-mortgage lender, producing more than $5 billion in new loans annually.

IndyMac, which has been wracked by the mortgage meltdown and credit crunch, said it has fallen below the level that regulators consider “well capitalized” and expects to take a significant loss when it reports its second-quarter earnings.

“We have been working with our investment bankers to raise additional capital,” said IndyMac Chief Executive Michael Perry said in the letter. “To date, we have not been successful with these efforts, and, while we will continue these efforts with our bankers and others, we don’t expect to be able to raise capital until there is more stability and less uncertainty in the housing and mortgage markets.”

Here are the steps for becoming employed with NGFS as a Loan Consultant in Training (”LCIT”):

Go to our website at:www.ngfs.net

1. Click on “How to Join NGFS”
2. Click on “Employment Forms”
3. Click on “Employment Application (PDF)” and print form
4. Go back and Click on “Non-Disclosure Agreement (PDF)” and print form
5. Complete both forms in their entirety and mail to:

Frank Neubauer
Next Generation Financial Services
3301 Boston Street
Baltimore, MD 21224

If you have a current mortgage prospect, complete a Prospect Profile with the information on the prospet.

Once your application and Non-Disclosure Agreement have been received in Baltimore, they will be sent to our Human Resource Department, which will conduct a background check. If no issues come to light that affect your possible employment with NGFS, a drug test package will be sent to your home address.

IMPORTANT: You will have only 24 hours from the date you receive the drug test package to arrange for and undergo the test. If you do not complete the test within the specified period, you will forfeit your opportunity for employment with NGFS.

Once acceptable drug test results are received, we will send you a welcome letter outlining any other information we might need to complete the employment process, along with an Employee Handbook and other required forms, such as I-9, W-4, etc. The letter will also identify your mortgage professional “Mentor,” who will help you get started in the Mentor Program as an LCIT.

Mortgage Loan Officers are required to be licensed in the state where they are doing business. Since 1st Mariner Bank is federally supervised, the requirement for an LCIT to carry a license on a state-by-state basis is waived. However, there are continuing education requirements, and LCIT must pass five tests each year to maintain his or her licensed status. We will give LCITs a list of the tests after the employment process has been completed, and they will be required to complete all five tests within 45 days of being notified. Each test consists of 25 multiple choice questions.

Compensation is paid per the terms outlined in the Employee Handbook. Commissions are paid in the month following a loan closing, e.g., if a loan closes on January 15, the commission check will be issued in the last pay period of February. Once a loan is closed, the LCIT will be paid at two-thirds of the Level I compensation. The Mentor will be paid the full compensation for the level achieved, less the amount paid to the LCIT for the loan.

We realized when an LCIT enters the Mentor Program, he or she is beginning the work of mastering a new field, either on a full or part-time basis. To help LCITs develop, we have created web based training modules that cover originating and processing both reverse and conventional mortgages. As LCITs learn from their Mentors, we also ask them to visit www.ngfs.net and complete the training modules. This free training serves as an additional benefit under the Mentor Program and dramatically improves the rate at which LCITs qualify to become fully-independent Loan Consultants with NGFS.

* NGFS refers to Next Generation Financial Services, a division of 1st Mariner Bank, a Maryland state-chartered bank.

General

Section 255: Home Equity Conversion Mortgages (Reverse Mortgages, a.k.a. HECM) allows a borrower aged 62 and older to borrow against the equity in a property that has limited outstanding debt. The subject property under this program must be an existing one-to four-unit dwelling in which the mortgagor occupies one of the units. It may be a condo if it is in a FHA approved project or it may be a manufactured home if the home complies with outstanding FHA guidelines for manufactured homes.

Appraisal & Conditions

The appraiser must perform the appraisal with the same standards and forms expected in an FHA single-family appraisal. This includes noting the same deficiencies and repair items. In certain instances, the borrower is not required to treat any defective paint surfaces after closing for properties built before 1978.

Please see: HUD Handbook 4235.1, Rev-1, Section 3 for requirements of appraisal and property.

Source: HUD.gov

As we have stated previously, rates have dropped rapidly creating scenarios in which the HECM 200 has provided greater financial benefit to the borrower in the form of a higher loan amount. NGFS will continue to compare the HECM 150 and the HECM 200 for each borrower for all loans dated before April 21, 2008. If the HECM 200 provides a greater benefit to the borrower, NGFS will close the loan at the HECM 200 after contacting the loan officer and the borrower.

In addition, due the current interest rate environment the HEMC 200 is providing a similar or greater cash benefit to the borrower.

It is our company philosophy to act in the best interest of customer at all times. If you have a borrower in which the HECM 150 is the only alternative, please contact us for alternatives.

Call 1-888-973-8377 or to speak with a Reverse Mortgage Specialist, or fill out a form to have a local representative contact you.

Increasing demand for HUD’s HECM product by senior citizens, has put pressure on the counseling industry to meet the demand for the required counseling. To make sufficient quality Home Equity Conversion Mortgage (HECM) counseling available, HECM counselors from the below agencies are permitted to provide face-to-face and telephone counseling nationally. Please contact them to obtain HECM counseling.

National Foundation for Credit Counseling (NFCC) - 1-866-698-6322

Money Management International (MMI) - 1-877-908-2227

American Association of Retired Persons (AARP) - 1-800-209-8085

Source: hud.gov/offices/hsg/sfh/hcc/hccprof18.cfm

Call 1-888-973-8377 to speak with a Reverse Mortgage Specialist today! 

Increasing demand for HUD’s HECM product by senior citizens, has put pressure on the counseling industry to meet the demand for the required counseling. To make sufficient quality Home Equity Conversion Mortgage (HECM) counseling available, HECM counselors from the below agencies are permitted to provide face-to-face and telephone counseling nationally. Please contact them to obtain HECM counseling.

National Foundation for Credit Counseling (NFCC) - 1-866-698-6322

Money Management International (MMI) - 1-877-908-2227

American Association of Retired Persons (AARP) - 1-800-209-8085

Source: hud.gov/offices/hsg/sfh/hcc/hccprof18.cfm