Shake Up in Reverse Mortgage Lending?

Recently Wells Fargo departed from the Reverse Mortgage Market. This after B of A pulled the plug not too long ago.  The facts of the matter are; Reverse Mortgages are still plentiful and will remain available to seniors unless HUD (unlikely) cancels the insurance program.

However they may be tweaked in two specific areasFirst, the loan limits will most likely drop from $625,500 (high cost areas like LA/Orange counties) to $417,000.  Secondly, there is an effort and need to protect lenders from T&I default.  (Property Taxes and Homeowner’s Insurance)  This is primarily what has been the bone of contention for those leaving the arena. FHA guidelines have not made income or credit a “qualifying criteria” for obtaining a reverse mortgage. (exceptions being liens, judgments, etc.)   After all, there are no mortgage payments required by the homeowner until you no longer occupy the property and then you or your heirs must refinance or sell the property to pay off the mortgage.  The solution to this does not need to be complicated or layered with reams of new guidelines as only the government can invent, but rather some common sense underwriting by the lenders themselves.

Probably the important focus currently is that with each congressional budget comes the squeeze for dollars; senior programs are always targets.  The reverse mortgage will be no different.  While I believe some common ground can be found to solve the tax and insurance defaults, the loan limit reductions are a more serious situation in my opinion.  Innumerable seniors will not qualify for the lower limits program due to existing loan balances/lack of equity.  That means many who have had their IRA’s or 401k’s ravaged by the markets the last several years will be drawing down their retirement dollars much faster and will end up out of money, possibly having to sell their home and move in with family or a small apartment, unless they can access a program like the Reverse Mortgage with high enough loan limits.

There is a rare “jumbo product” available, at least currently, but at a much higher interest rate and is not near as good a solution.  IF YOU KNOW SOMEONE THINKING OF APPLYING FOR A REVERSE MORTGAGE AND WAITING, WE NEED TO DO AN IMMEDIATE ANALYSIS BEFORE THE LIMITS CHANGE.

Lastly, never before has experience and skill in this industry meant so much for clients struggling and trying to navigate safely in these financial times, whether it be real estate or mortgages.  Fully 1/4 of my time is voluntarily invested in taking calls of folks referred to me who do not know what to do with their home or mortgage. “I just had a cousin get in the business…” I have this guy or gal I just met in my networking group who does this…..” I heard this ad on the radio where……”  “I was online and found….”
STOP!!! STOP!!!  Run, don’t walk from this, as fast as you can and call and EXPERT! This is not the time to give out 3 names to CYA or refer a “nice guy”.  This market is for experts only.  Little to no experience?  Don’t apply, sorry.  We have had enough bad advice and ‘used car sales tactics selling rates and fees”  by so called lenders.  The financial success or failure of humans is at risk!

Reverse Mortgages – Dream Loan or Equity Pit?

The Reverse Mortgage Purchase Option

This link goes takes you to a 2 page document that discusses briefly using a Reverse Mortgage to purchase a property.

Often seniors (those 62 and over)  will consider placing a Reverse Mortgage on their home for a multitude of reasons, many of which are the same if you use the Reverse Mortgage to “Purchase” a home.  Click on the link above for a brief summary of the FHA HECM Reverse Purchase Mortgage.  Many who have lost homes and had some liquid assets can still buy a home using the “Reverse Mortgage” without the 2-4 year waiting period which is required in normal mortgage loans.  Feel free to contact my office at 949-428-3099 for additional information or a meeting to discuss your or a family members possible needs for this specific type of product.