Savvy Consumer: Help is on the way for distressed homeowners [Texas],
The new housing law signed last week has some relief for virtually all homeowners:
For property-tax payers, it offers a new deduction, even if you don’t itemize.
For first-time home buyers, a new tax credit is available that acts as a 15-year no-interest loan.
For senior citizens, the new housing bill means lower fees on reverse mortgages, higher loan amounts and more protections.
And for homeowners fearing default, there is more money available for housing counseling and a new program for lenders to transfer failing mortgages to government-backed loans.
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Savvy Consumer: Help is on the way for distressed homeowners [Texas]
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Written by News & Feeds on August 13th, 2008 with no comments.
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Financial survival workshop for homeowners set [Florida],
Homeowners struggling with debt and the threat of foreclosure may sometimes face a third danger: financial predators looking for vulnerable targets.
Organizers of the Financial Survival Workshop planned for Saturday in Fort Myers plan to offer advice for tackling all of the above.
The event is sponsored by Reverse Mortgage Group, a Naples Classic Mortgage company, and presenters will include Sandee Rains, community relations manager with the Consumer Credit Counseling Service, Stephanie Kirch of Reverse Mortgage and Mac Moise, a certified financial planner in Fort Myers.
Rains said she plans to speak on the ABCs of avoiding foreclosure.
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Financial survival workshop for homeowners set [Florida]
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Written by News & Feeds on August 13th, 2008 with no comments.
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Seniors Get a Gift from the New Housing Law,
The law makes several significant changes to reverse mortgages.
When trying to figure out who benefits from the new housing law, don’t forget to count seniors who are in the market for a reverse mortgage. These mortgages let seniors convert some of their home equity into a stream of income, a line of credit or a lump sum. The money does not have to be paid back until the last borrower sells or dies. For retirees who are house-rich but cash-poor, the new law offers some significant changes.
Homeowners age 62 and older will now be able to tap a greater amount of their home’s equity. The maximum amount for a reverse mortgage has been upped nationwide by more than a quarter of a million dollars, to 5,500. That flat limit replaces the old rule that set limits from 0,160 to 2,790 depending on where the borrower lived.
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Seniors Get a Gift from the New Housing Law
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Written by News & Feeds on August 13th, 2008 with no comments.
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Homeowners should weigh options before choosing reverse mortgage,
Young families aren’t the only ones who might find themselves strapped for cash and wondering where their next house payment might come from. There have been a lot of older folks who decided the housing market was so open that they would take advantage of the good rates and easy money tied to reverse mortgages and just stay in their homes rather than move into more expensive housing. A good number of these elders are now caught in the crunch and are looking for solutions.
The popularity of the reverse mortgage is soaring. These loans are very complex, and several factors need to be considered before any senior rushes to sign on. The best thing to do is look for alternatives. In many cases, homeowners are better off downsizing to a less expensive dwelling or just taking out a conventional loan if that is available.
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Homeowners should weigh options before choosing reverse mortgage
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Written by News & Feeds on August 13th, 2008 with no comments.
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How the new housing bill affects reverse mortgages.,
The recent signing of the HOUSING AND ECONOMIC RECOVERY ACT OF 2008 (HR 3221) by President Bush puts into motion something that has been long in the making and that’s a modernization of FHA rules for reverse mortgages. Some of the changes facing potential reverse mortgage clients are an increase in the national lending limit from the individual county limits now in place. Folks in some parts of the country will see their lending limit rise from as low as 0,160 to an anticipated 7,000 and that’s good news for those with home values over their county lending limits since any equity access was determined from the lower of the appraised value or the respective county lending limit. In many cases where the reverse mortgage was to utilized to pay off an existing forward mortgage there wasn’t enough cash access to pay off that mortgage and the borrower either had to come to the table with money or look for alternative methods which often led to selling the home and in a down market, that’s neither easy or fun.
Another change is with the origination fee, currently capped at 2% of the lesser of the appraised value or the county lending limit. The new bill will keep the 2% up to 0,000 but cap the origination fee at 00 which is more than 00 less than some of the highest fees where county lending limits were as high as 2,790. In that case, 2% of that amount would have resulted in an origination fee of 55.80.
Higher lending limits combined with lower origination fees are great for those seniors whose circumstances have them looking at ways to increase their monthly cashflow without making risky investments in a roller coaster stock market.
Some new additions to the bill are for folks in co-ops and those looking to use the reverse mortgage as a finance tool to help them purchase a home, most likely in a downsizing event. Currently, only New York co-op owners are able to secure reverse mortgages because of their prevalence. There are other pockets of the country with co-ops and this will be a relief for those co-op owners as other means of financing have disappeared as most boutique programs are no longer available. In the event someone wants to downsize from a larger, more expensive home, the ability to purchase a home using a reverse mortgage is also a welcome addition. As an example, someone in a 0,000 home can sell the home, take a portion of the proceeds for purchase of a less expensive home, say 0,000, and instead of putting up the entire value in cash, they can put down a small portion, in this example, half of the value and finance the other half and not only do they eliminate monthly mortgage payments, they keep a larger portion of their cash in their pocket and in this market, cash is king. Instead of having 0,000 left over from the sale of the home, they now have 0,000 and no monthly payments as long as they live in the home. That’s also great for those that don’t currently qualify for a regular mortgage because of bad credit or insufficient fixed monthly income as those programs have gone the way of the other boutique programs once offered by most forward lending brokers.
Some other features are a prohibition against requirements to purchase additional products as a condition for HECM eligibility such as annuities or life insurance policies. That is good news as the recent negative information about reverse mortgages has been because of this very practice. Folks short on cash flow that need a reverse mortgage should not have their money tied up in any annuity, be it immediate or deferred. The reverse mortgage provides more cash flow with less restrictions than the annuity could anyway in most situations where monthly cash flow is short. Another mention is about a study to determine consumer protections and underwriting standards for HECMs which will help to insure that purchase of any additional products by a consumer is appropriate for the consumer.
We like the new changes, they are consumer protection focused and open up opportunities to help save some homeowners from increasing monthly payments on their forward mortgages that were having a harder and harder time making that increased payment amount and the homebuying function is a great tool for credit challenged or those looking to downsize into more affordable housing.
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Written by News & Feeds on August 13th, 2008 with no comments.
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March HECM Production Falls From February Record,
Home Equity Conversion Mortgage (HECM) figures released by HUD show that 9,663 HECMs originated during March 2008, down 11% from the record 10,913 HECMs endorsed in February
The 12-moving average fell from a record high of 9,249 in February to 9,147. On an annualized basis, 109,765 HECMs were originated in the twelve months ended March 2008.
Still, March 2008 represents the sixth best month ever for HECM output.
For more HECM statistics and analysis, visit our HECM database tool.
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Written by News & Feeds on August 13th, 2008 with no comments.
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Monthly HECM Activity Nears 11,000 Mark,
Home Equity Conversion Mortgage (HECM) figures released by HUD show that 10,913 HECMs originated during February 2008 - making this the highest monthly production on record. The previous record month was March 2007 when 10,888 HECMs were recorded.
More important than the record, however, is the fact that February was the second consecutive strong month for HECMs reversing a four-month spell which saw monthly HECM activity fall below the moving 12-month average. February’s strong performance also brought the 12-moving average to a new record high of 9,249. On an annualized basis this represents out put of 110,988 HECMs for the twelve months ended February 2008.
For more HECM statistics and analysis, visit our HECM database tool.
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Written by News & Feeds on August 13th, 2008 with no comments.
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January HECM Activity Rebounds,
Rebounding from four consecutive months of below average performance, the number of HECM reverse mortgages originated rebounded in January posting the fourth best monthly performance on record. The 9,957 HECM’s approved in January represented a 24% increase over the 8,007 HECMs endorsed in the prior month (December 2007) and a 13% jump over the 8,824 endorsements made in January 2007.
January’s strong numbers represent the first time in four months that monthly performance has exceeded the “12-month moving average”. This is significant since it may indicate a reversal of declining growth spurred by the subprime/housing market crisis. Borrowers may be realizing that if we are in for a long period of housing price decline, it may be wise to “lock-in” value now by taking out a reverse mortgage at the extremely low HECM interest rates that are now available.
On an annualized basis, 109,426 HECMs were endorsed in the twelve months ended January 2008 - the best twelve month period ever for HECM reverse mortgages. The twelve month figures through January 2008 represent a 23% increase over the 88,906 HECM endorsed during the twelve months ended January 2007.
For more HECM statistics and analysis, visit our HECM database tool.
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Written by News & Feeds on August 13th, 2008 with no comments.
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203b Loan Limits Remain Largely Unchanged,
At the start of each year, HUD/FHA does a comprehensive update to the single-family mortgage limits that set the maximum amounts that can be loaned under the HECM reverse mortgage program. In 2007, 203b limits were,for the most part, left unchanged and this is again the case for 2008. Only 151 of 326 limits throughout the country were changed in 2008. The vast majority of 203b limits currently in effect date from 2006, as the following table shows:
According to the recently released HUD Mortgagee Letter 2008-02, the explanation for not changing 203b limits is as follows:
The National Housing Act provides that the mortgage limit for any given area shall be set at 95% of the median house price in that area, as determined by the Department of Housing and Urban Development, except that the FHA mortgage limit in any given area cannot exceed 87% of the Freddie Mac loan limit, nor be lower than 48% of the Freddie Mac loan limit for a residence of applicable size. As a result of Freddie Mac’s announcement that there is no change in their mortgage limits, FHA’s floor and ceiling loan limits will remain unchanged.
The bottomline for potential reverse mortgage borrowers is that, for now, many will continue to be limited in the amount of cash they can access via a HECM reverse mortgage. There is a push in Congress to set a higher national loan limit, but it is unclear when this might become a reality.
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Written by News & Feeds on August 13th, 2008 with no comments.
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Heatmap Compares HECM Activity: 2007 vs 2006,
The following heatmap shows how HECM reverse mortgage loan activity changed from 2006 to 2007:
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Written by News & Feeds on August 13th, 2008 with no comments.
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