Seniors Use Reverse Mortgage for Purchasing Homes
Published in: MortgageLoan.com
by: Tom Kerr
Saturday, May 23, 2009
The new Home Equity Conversion Mortgage (HECM) lets seniors use a reverse mortgage to pay for the purchase of a home or condo. Many are taking advantage of this to get a purchase mortgage and then downsize into affordable homes.
Thanks to new provisions that were added as part of the 2008 Housing and Economic Recovery Act, it's now possible to take advantage of a reverse mortgage program and use it as a purchase mortgage. The introduction of the HECM was part of several financial incentives and stimulus ideas passed by Congress late last year in response to the collapse of the economy and paralysis in the credit markets.
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Reverse Mortgages Get Budget Boost
Published in: The Wallstreet Journal
by: Nick Timiraos
Friday, May 8, 2009
President Barack Obama’s budget includes an $800 million request to fund a government-backed reverse mortgage program through the Federal Housing Administration. That program hasn’t required taxpayer money in the past, but the Department of Housing and Urban Development says that declining home values will increase costs for the government.
At a minimum, the taxpayer subsidy means that costs won’t be rising on reverse mortgages, and that the government plans to make sure there’s still a liquid market for the loans.
Reverse mortgages allow homeowners aged 62 and up to borrow against their home’s value. The loan is paid back with interest when the homeowner sells the property or dies. These mortgages boomed as home prices hit new highs earlier this decade, but the market for those loans has largely disappeared now as home prices have fallen, leaving the FHA as one of the last sources for reverse mortgages. Such loans are “significantly more sensitive to house prices and what happens to those prices” than the FHA’s traditional business, says HUD Secretary Shaun Donovan.
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Reverse Mortgages Good Option for Some Seniors
Published in: ChicagoTribune.com Web site
by: Lew Sichelman
Friday, April 24, 2009
That Ralph and Plum Smith bought a house last month in Brookings, Ore., is not terribly remarkable, at least not until you learn that he's 84 and she's 77. But what is even more noteworthy is that the couple didn't pay cash for their new $240,000 home, yet they will have no mortgage payments.
The Smiths are among the first seniors in the country to close on a Home Equity Conversion Mortgage (HECM) for purchase, a form of federally insured reverse mortgage authorized by Congress in the Housing and Economic Recovery Act of 2008. The law took effect Jan. 1. The program is aimed largely at people 62 years or older who want to move down the housing ladder. The idea is to allow them to sell their current residence and use a reverse mortgage to buy a new one, all in a single transaction.
HECMs for purchase, the type of reverse mortgage the Smiths have, are not exactly a new product. Fannie Mae has been buying them from originators for about a dozen years. But the troubled secondary-mortgage-market institution didn't do a roaring business in it, and when it got out of the market altogether at the end of last year, lawmakers gave the Federal Housing Administration the OK to back them.
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Reverse Mortgage Loans Are Highly Regulated
Published in: Daytona News Journal Community Voices, Page B03
by: Randee E. Saffer
Sunday, June 15, 2008
An article on reverse mortgages (‘‘Beware pitfalls in reverse mortgages,’’ June 10), especially the headline, was misleading. Reverse mortgages are one of the most federally scrutinized and regulated loan programs available. All prospective borrowers must receive independent counseling from federal-sanctioned counselors before even applying for this type of loan to make sure that they understand the program and to determine if this is their best alternative.
Fees include federally mandated insurance to make sure that the homeowner and heirs will never owe more on the mortgage than the house is worth. Many seniors are having trouble with maintaining their lifestyles because of increased costs and limited cash income. This loan has literally been a lifesaver for the many seniors I have had the pleasure to work with in our community who can now enjoy their lives to the fullest. The program is ideal for cash-strapped seniors who are struggling to pay property taxes, monthly home maintenance bills, home repair bills or for basic living expenses.
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2009 FannieMae National Loan Limits are now at $625,500. Please contact your ARM Advisor for additional information.
Through May 31, 2009, more than 529,197 Senior Americans have taken advantage of an FHA Home Equity Conversion Mortgage (HECM). Stay tuned for next month's total!
History:
The Reverse Mortgage became a valuable and safe tool for Senior Americans when the United States Congress authorized the Department of Housing and Urban Development (HUD) through the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM).
1) The United States Congress passes FHA Reverse Mortgage Legislation, the Housing and Community Development Act of 1987, (S. 825) on December 22, 1987.
2) President Ronald W. Reagan signs FHA Reverse Mortgage Legislation (S. 825) on February 5, 1988.
3) First FHA Reverse Mortgage made to Marjorie Mason, of Fairway, KS by James B. Nutter & Company on October 19, 1989.
Another program became available in 1996 when the Federal National Mortgage Association (FannieMae) created the Home Keeper.
These two Reverse Mortgages offer the opportunity for virtually all Senior Citizens to utilize the equity in their homes to provide needed financial security. Since 1989, more than 529,197 Seniors have obtained an FHA HECM.
Company Commitment:
Most lenders offer conventional or "forward" mortgages as their primary means of doing business. This may indicate a reduced level of commitment to Reverse Mortgages and therefore a lower level of customer service to the borrower. On the other hand, we devote 100% of our business efforts to providing Reverse Mortgages. All of our staff are specifically trained to provide the best customer care through the entire process.
Company Experience:
Expert knowledge of the product offered by any company is a critically important consideration by every potential customer of that company. Experienced providers can better counsel customers and suggest the appropriate options available utilizing all available programs. We meet this high level of expertise with more Reverse Mortgage experience than anyone else.
Hablamos Español y Falamos Português:
We have several Reverse Mortgage Advisors who are fluent in Creole, Dutch, Farsi, French, German, Korean, Portuguese, Russian, Spanish and of course English. Please notify us if you need one of our bi-lingual or tri-lingual Reverse Mortgage Advisors.
Information Sources:
The American Association of Retired Persons (AARP) publishes a book (52 pages) titled "Home Made Money: A Consumers Guide to Reverse Mortgages". It is also available in Spanish, "Dinero Hecho En Casa". They also provide a fourty-four (44) page publication titled "Reverse Mortgage Loans: Borrowing Against Your Home".
The American Bar Association (ABA) publishes a book (292 pages) titled "Reverse Mortgages - A Lawyer's Guide to Housing and Income Alternatives".
The Federal National Mortgage Association (FannieMae) publishes a book (96 pages) titled "Money From Home - A Guide to Understanding Reverse Mortgages". FannieMae provides a four (4) page "Home Equity Conversion Mortgage (HECM) Consumer Fact Sheet". FannieMae provides a (4) page document titled "Considering a Reverse Mortgage? Review These 5 Steps to See if One is Right for You".
The National Council on Aging (NCOA) publishes a study (104 pages) titled, "Use Your Home to Stay at Home", and two new booklets "Use Your Home to Stay at Home: A Planning Guide for Older Consumers" (20 pages) and "Use Your Home to Stay at Home: A Guide for Homeowners Who Need Help Now" (24 pages)
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