Reverse Mortgage Bill Vetoed In Minnesota

5/22/2009

posted by N. Sioris

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Yesterday, Tim Pawlenty, governor of Minnesota vetoed SF 489, which would have had unintended and detrimental consequences for senior homeowners in Minnesota that would like to take advantage of accessing home equity through the use of a reverse mortgage loan.

If passed, the bill would have increased the right to rescind (cancel) period from the current three days, to ten days on the closing of a reverse mortgage loan. It also would have imposed a suitability requirement as well as added restrictions on the cross selling of other financial or insurance products at the time a person takes out a reverse mortgage.


National Oversight Is All Ready In Place - No Need For Over-Kill

HUD in conjunction with AARP and NRMLA (National Reverse Mortgage Lenders Association) have collectively taken action to strengthen the protections for seniors on a National basis. In some cases, when states step in and try to implement additional regulations, we see that what actually happens is that the regulations become more confusing and sometimes contradict each other. The so-called "unintended consequences" of meaning well, can backfire and actually cause less availability of a much need product, like a reverse mortgage. We saw that very thing happen in the state of Washington about a year ago. It took until just a couple of weeks ago to get that "unintended consequence" amended, so that now senior citizens in Washington state have full access to competitive reverse mortgage lenders and products.

Had it not been for Governor Tim Pawlenty wisely choosing to veto this bill, something similar could have happened to senior homeowners in the state of Minnesota. Take a look at his comments about his decision below.

Minnesota_Reverse_Mortgage_Veto

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Reverse Mortgage Loan Limit Increased To $625,500.

2/18/2009

posted by N. Sioris

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President Obama's $787 Billion economic stimulus package included a new higher national FHA - HECM Reverse Mortgage loan limit of $625,500. The previous loan limit was $417,000. nationally except in HI, Alaska and Puerto Rico.

The new higher loan limit of $625,500. is particularly good news for several reasons:

1. Due to the current financial meltdown on Wall Street there are no longer any lenders in the market that are willing to loan "Jumbo" loan amounts on a reverse mortgage. That left anyone with a high value home - (for example $450,000. or higher,) access to such a small amount of their equity, that it was hardly worth their while to even bother with an FHA/HECM reverse mortgage.

2. The new higher loan limit of $625,500. will now offer anyone with a home value of approximately $417,000. or higher access to substantially more money than under the previous limit.


Two Caveats To The New Lending Limit:

1. Under the new law, the higher loan limit will only be available for loans originated for the balance of 2009. (It is possible that Congress could request an extension of this time frame, but as of now, it will expire at the end of the year.)

2. Lenders will not be able to process or close loans based upon the higher loan limit until HUD issues an official "Mortgagee Letter" allowing the implementation of the new guidelines as set forth in President Obama's Stimulus Package.

As a side note, one would hope that since there is a possibility that the higher lending limit will permanently expire at the end of this year, that HUD will act quickly to get this provision implemented. After all it is not called a "Stimulus" package for nothing.

If you are interested in receiving a reverse mortgage loan estimate based upon the new higher lending limit, click here or call our offices toll free at: 1-888-269-1098

More Seniors Turn To Reverse Mortgages Due To Lost Dividend Income and Investment Assets

10/12/2008

posted by N. Sioris

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The unprecedented plunge of the U.S. stock market during the past week has unnerved every American regardless of age, or economic status. Anxiety is running high. No one seems to know what shoe will drop next. Each attempt by the Federal Reserve, the Secretary of the Treasury, the Congress, the coordinated interest rate cuts from the United States and other nations have not inspired the confidence needed to restore the paralyzed credit markets and get the cash flowing back into the banks and the economy.

Most of the talking heads on the financial news channels and most print reporters have been afraid to use the terms, "depression," "crash," or even admit that we are all ready in a recession. Some news organizations and investors have hesitated to use these words to describe Wall Street's terrifying sell off because they are afraid of causing panic.

However, by the end of the market close on Friday, October 10th, some notable statements were surfacing among analysts that were brave enough to speak frankly.


Is It A Crash?

A crash is commonly defined as a 20 percent decline in a single day or several days. The drop over the seven days ending Thursday, October 9, 2008 lopped 20.9 percent off the Dow Jones industrial average. On Friday, October 10th, after wildly whipsawing over 1000 points, finally settled down 128 points, or 1.5 percent for the day. For the eight day period the cumulative loss was 22 percent.

Howard Silverblatt, senior index analyst at Standard & Poor's, said "This quick, this amount, in these few days, obviously is a crash. The crash deals with the speed as well as the intensity of it."

CNBC host Dylan Ratigan was among those uttering the word "crash" on Thursday, calling the decline, "a cascading crash." The Wall Street Journal, the most influential publication in the financial world, hedged somewhat on Friday's front page, saying the scary drop over the past several days "amounts to a slow-motion crash."

Bob Doll, chief investment officer of BlackRock, Inc., the largest publicly traded U.S. money manager, being interviewed by CNBC anchor, Maria Bartiromo responded to her question about whether he thought this is a crash, replied: "Yeah, I guess we have to call it that, Maria. That's a lot of percents in a short period of time. We're down a bunch, and it's been relentless."

Johnathan Wald, senior vice president for business news at CNBC, said on Friday, "Anytime you do the math, when the Dow is down that much over a period of days, it's a crash. It's a word we don't like to use very often because nobody likes to see it, but when it happens, you can't avoid it."


How This Affects Seniors In Particular

If you are a senior currently in retirement or someone on the verge of retiring and have money in the stock market, pension funds and or 401K plans, you have been slamed by sharp losses in those portfolios. The total loss in the Dow over the last 12 months has been about 40 percent. Depending on your own personal diversification, your losses may be more or less than 40 percent. A top congressional budget analyst said that pension plans have lost as much as 2 Trillion dollars over the last 15 months.

Dividends which many retirees rely heavily upon for income, will be sharply lower starting right now and in the near term future. The latest quarterly statements have shocked many seniors who thought they had planned well and put in place a solid retirement strategy that would last them their lifetime. For some, the shock of seeing their lives suddenly altered regardless of careful planning is devastating.


Home Equity: A Partial Solution

Tapping home equity through the use of a reverse mortgage might become an option exercised for many who never thought they would consider using this type of financial instrument before. One of the payment options offered through a reverse mortgage allows for steady tax-free monthly supplemental income that can help offset stock market losses and keep a senior's household budget steady and manageable.

If you think a reverse mortgage might be right for your situation, you should consider looking into it sooner rather than later. A perfect storm has been brewing for quite some time now, and could get worse. What I mean by that is that home values across the entire country have been in a steady downward spiral, while market pressure has been affecting interest rates in an upward direction.

Reverse mortgage benefits are largely based upon the current market value of your home and the current interest rates. Consequently, you will receive less money from the equity in your home if housing values continue to decline and interest rates climb.

Seniors that closed a reverse mortgage a couple of years ago at the top of the housing market bubble, are sitting very pretty right now. Their monthly benefits or line of credit were locked in based upon the market value of their homes at the time they closed and the interest rates that were in effect at that time as well.

Sitting on the fence and doing nothing based upon fear and uncertainty is probably not the best decision if you are a person that feels that a reverse mortgage might benefit you.

Another thing to keep in mind is that if you get a reverse mortgage and your home increases in value in the future, you can always choose to refinance your reverse mortgage in order to access more funds at a later time. In the meanwhile, locking in a value and interest rate today, could be a lifesaver during this unprecedented economic meltdown.

Find out how much money you are eligible for by requesting a personalized reverse mortgage quote here.

Can I Be Forced To Move or Sell If I Get A Reverse Mortgage Loan?

9/07/2008

posted by N. Sioris

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You can never be forced from your home or required to sell your home if you have an FHA insured HECM reverse mortgage loan. A question that comes up frequently from folks that are considering a reverse mortgage is:

"If I live long enough to use up all the equity in my home, will I be forced to sell my home and pay off the reverse mortgage lender?"

The answer to this question is an unequivocal "NO."

As long as you continue living in your home as your primary residence, keep it properly maintained and pay your real estate taxes, you will never be forced from you home. If you live so long that all your equity has been paid out to you, or if your property value drops after the loan is in place, it is not your problem.

HECM reverse mortgages are non-recourse loans, which means that the house stands alone for the debt. When you take out a HECM reverse mortgage, one of the closing costs is the FHA insurance premium. The insurance fund is used to pay the difference to the lender, in the event of a shortfall at the time that you do leave your home permanently or sell. You or your estate are NEVER responsible for any shortfall at the end of the loan term.


HECM Reverse Mortgages Become Due:

* When the last borrower passes away.
* The borrower sells the home.
* The last borrower leaves the home for 12 consecutive months.
* The home is not properly maintained.
* Real estate taxes or property insurance are not paid.

A couple of the most attractive attributes of a HECM reverse mortgage loan is the guarantee of a payment free mortgage for as long as you live in your home.

If you elect the tenure income stream, you are guaranteed a fixed amount of money being paid to you on a monthly basis for as long as you live in your home. NO MATTER WHAT! This loan has the full faith and credit of HUD and FHA standing behind it.

Click here to read more about additional safeguards for HECM reverse mortgage loans.