PJ's Reverse Mortgage Blog

Seniors considering a Reverse Mortgage should not wait long as the talk around Washington DC is for future changes that will cost borrowers dollars.

HUD Secretary Donovan reported today, there would be long term reforms in the reverse mortgage program down the line, but that the $250 million subsidy “is a reaction to last year’s adjustments to make sure the program does not limit its availability to seniors.”

Also the 2011 Budget requests an increase in the ongoing annual Mortgage Insurance Premium (MIP) from .5% to 1.25% and a low-to-mid single digit cut in the principal loan limit with the higher end affecting older borrowers.

HUD has posted a Mortgagee Letter implementing the 10% haircut in principal limit factors, effective for all loans on which applications are taken on or after October 1, 2009.

The bottom line is, if you are thinking of getting a reverse mortgage, Get your application in before the 1st of October, or lose 10% of your principal limit.

 I believe there may be more changes to come in the Reverse MOrtgage industry.

It has come to my attention, that a large Title Company has purposed in a inside bulliten, that it may no longer insure Reverse Mortgages that require a lump sum distribution at closing.  That would be ALL fixed rate HECMs, save the ones that, exactly, pays off a first lien mortgage already in place.

Not good news.  I'll keep you posted. PJ :)

What an opportunity we have right NOW in TEXAS. As senior citizens, think of the possibility for a retirement with financial freedom and independence.

As I type this post, I am wondering how  the Reverse Mortgage business will change in the next few years.  Are interest rates going to go up and will many senior citizens be wishing they had closed on a reverse mortgage sooner? 

Or will property values in Texas go the way of property values in other parts of the country?  Again, will many seniors wish they had gotten their equity out while values were still high in Texas?

Will retirement funds continue as ever dwindeling commodities? 

Savoy Seniors are looking into the reverse mortgages, to see IF they can benefit.  You will never know unless you ask.  There is no cost for a quote!

God bless, PJ :)

NRMLA MEMBER ALERT: HECM for PURCHASE IN TEXAS

We want to alert NRMLA members of concerns raised regarding the offering of a true HECM for purchase loan program in Texas. There are technicalities in the Texas Constitution and related homestead laws that must be met in order to obtain a valid lien in homestead property in Texas. It is presently unclear whether the provisions in the Texas State Constitution that authorize and govern reverse mortgage transactions in Texas contemplate a purchase money reverse mortgage transaction. Legislative changes (and related Constitutional amendments) or regulatory interpretive guidance may be desirable in order to address this issue. However, while enabling legislation (and related Constitutional amendments) may be prudent, given the nature of the Texas legislative process, unfortunately, currently it seems unlikely that the legislative process in Texas will allow us to address the matter this year.

What a great opportunity we have for the rest of 2009.  We have the new $625,000 FHA limits HUD approved for Reverse Mortgages, at least through the end of the year.  Interest rates in the fixed programs are lower than I have EVER seen them.

Seniors have a golden opportunity to access equity from their home and never have to pay it back, as long as they live in the home.  Where else can you get  a loan on the equity from your home without making any payments? 

I have thought a lot about that, and I come up with "No where".  It is Government insured too! 

OH my, sometimes our Government does do the right thing!

God bless. PJ :)

As far as I know there is only one mortgage bank willing to risk closing reverse mortgages for purchase in TX.  Out of all the banks closing triditional HECMs that seems a little suspect.  I guess someone has to  be the proverbial Guinea Pig. 

God bless 'em and you! :) PJ

Effective October 1, 2008 HUD has made changes to rules regarding who can originate or receive compensation for HECM (reverse mortgages) through FHA. Effective with that date, no reverse mortgage loan may be closed with a payment to a third party that is not an FHA approved lender.

FHA advises that mortgagees must not condition a HECM mortgage on the purchase of any other financial or insurance product, and should strive to establish, consistent with the new law, firewalls and other safeguards to ensure there is no undue pressure or appearance of pressure for a mortgagor to purchase another product of the mortgage originator or mortgage originator’s company.

Loan origination must be performed by FHA approved entities including: (1) a FHA-approved loan correspondent and sponsor; (2) a FHA approved mortgagee through its retail channel; or (3) a FHA-approved mortgagee working with another FHA-approved mortgagee.

MORTGAGEE LETTER 2008-14, WHICH PROVIDED GUIDANCE REGARDING THE WAYS IN WHICH A NON-APPROVED ENTITY OR THIRD PARTY MAY PARTICIPATE AND BE COMPENSATED, IS RESCINDED, EFFECTIVE ON OCTOBER 1, 2008. Beginning with case number assignments made on or after that date, only FHA-approved mortgagees, as described above, may participate and be compensated for the origination of HECMs to be insured by FHA.

I continue to receive calls form REALTORS asking about this reverse for purchase. 

There are television ads running in the Panhandle area as I type this.

So I called my sources in Austin and was told,  HUD has yet to issue a more detailed mortgagee letter for guidance on this issue.  That is the first stumbling block that I see. 

Second stumbling block is, we will most likely need to wait for the 2011 legislative session to get the votes we need to rectify the problems the investors have with buying these loans in TX.   PJ :(