With the subprime and nontraditional loan markets drying up, lenders are turning to a potential mother lode of new loans from older homeowners flush with home equity cash.
A bulge of some 78 million baby boomers is currently moving through the population heading toward the retirement years. The vast majority of baby boomers are home owners, many of them long timers with substantial equity nests.
Just as quickly as lenders are opening reverse mortgage shops, consumer advocates are warning seniors that the complexities of reverse mortgages make them ripe for predatory abuse. (more…)
On this site, there has been much attention given to the need for more regulation in the reverse mortgage industry to prevent major headaches in the future, including class action suits and large scale foreclosures. In Australia, industry regulatory groups are cracking down on misleading advertising on such terms as “no payments ever.”
The corporate watchdog has come down hard on the growing number of reverse mortgage providers, warning them to stop using misleading and unclear advertising.The Australian Securities and Investments Commission (ASIC) said it has reviewed suppliers and found five cases of misleading advertisements that made claims suggesting that reverse mortgages did not need to be repaid.
The reverse mortgage market has more than doubled in the last 12 months. (more…)
Virgin USA Acquires Majority Interest in Pioneering Financial Services Company
CircleLending Will Use Investment to Increase Awareness and Expand Product Line
New York, N.Y. May 15, 2007 Virgin USA, Sir Richard Branson’s North American investment group, announced today that it has acquired a majority stake in CircleLending, Inc., the innovative financial services company that pioneered the business of managing loans between relatives and friends. Terms of the transaction were not disclosed.
Virgin USA and CircleLending will work together to rebrand the company and expand financial service products for consumers and small-business owners. Launched in 2001, CircleLending is widely regarded as a trailblazer in the financial services industry for designing unique products that allow individuals to save money and keep wealth in the family by securing affordable loans from relatives and friends. CircleLending has helped first-time homebuyers, entrepreneurs, students and other individuals access credit at favorable terms. (more…)
Evaluation of the Home Equity Conversion Mortgage Insurance Demonstration (HECM) (March 15, 1995, 127 p.)
The Federal Housing Administration (FHA) has long been a pioneer in developing new mortgage products that enhance the affordability and accessibility of homeownership. Evaluation of the Home Equity Conversion Mortgage Insurance Demonstration (HECM) reports on a recent product of FHA’s 60-year tradition of innovation: insurance on reverse mortgages that help elderly homeowners remain independent by converting their home equity to cash. This second evaluation shows encouraging progress in meeting the major three objectives of the HECM Demonstration: to encourage the conversion of home equity to liquid assets, to promote participation in the reverse mortgage market by the private lending community, and to determine the demand for reverse mortgage products. Since the initial HECM evaluation in 1992, the number of HECM loans originated has tripled, and they are now available in 46 States plus the District of Columbia and Puerto Rico. This marked increase in activity reflects the growing familiarity and acceptance of HECM products among borrowers and lenders, the resolution of key legal impediments, and the growing number of qualified lenders and counselors.
One issue not addressed in the initial HECM evaluation was the adequacy of the HECM insurance premium and risk exposure for HUD, and ultimately for the American taxpayers. The results of an independent actuarial analysis indicate a substantial positive net worth for the present value of HECM insurance premiums paid to FHA — probably the result of the unexpectedly high percentage of borrowers with high-value homes who have taken out HECM loans. Although the (more…)
WASHINGTON - American International Group Inc. has settled allegations that it charged excessive mortgage fees and didn’t properly consider homeowners’ credit ratings. AIG, a New York insurance giant that also runs a home-mortgage business, said yesterday that it planned to take a $50 million charge in the second quarter to cover the cost of the settlement with the federal Office of Thrift Supervision. The company had taken a $128 million charge in the first quarter while the settlement was being negotiated.
AIG said yesterday that some of the money would be used to help borrowers with weak credit who face foreclosure after taking out mortgages from AIG Federal Savings Bank between July 2003 and May 2006. AIG Federal Savings is a Delaware-based unit of AIG. Some borrowers may qualify for a refund of mortgage fees instead of a new mortgage, the company said.
Under the terms of the settlement, AIG is required to identify the affected borrowers and provide aid to them. The company also must hire an independent consultant to monitor its process and report back to the government.
AIG also agreed to pay $15 million over three years to nonprofit groups that promote financial literacy and credit counseling.
Nevada’s top reverse mortgage lenders thru April 2007. Look for Wells Fargo’s lead to fall as the year goes on with Bank of America and Countrywide making noise at the party.
Think your kids are hard to deal with? Freeloading, borrowing money and not paying it back? Well what if your son took out a home equity line of credit in your name and fled the country?
Man charged in unauthorized sale of parents’ home
A New Windsor man who allegedly sold his parents’ home without their knowledge is facing larceny and forgery charges, town police said.
CircleLending is in the business of formalizing personal loans. Their website states, For centuries, individuals have been lending money to relatives, friends and business associates. Today the volume of these private loans in the U.S. is over $89 billion, according to the Federal Reserve. Despite this substantial volume, the process of managing private loans can be fraught with hassle, risk and concern. A documentary like view of CircleLending explains why borrowers and homeowners in the know may want to take advantage of this product instead of a reverse mortgage.
Download your CircleLending FREE GuideBorrowing money from family to help buy or refinance your home? Setting it up as an Intra-Family Mortgage keeps money where it belongs - in the family. Download your FREE Intra-Family Mortgage Guide from CircleLending now!
Is there anything that private equity can not do right now?[sarcasm alert] I heard that a couple of hedge funds were looking buy Puerto Rico to put an end to the long time statehood debate. I even heard that private equity was looking to purchase the word, “the” and charge a $.05, per use, copyright fee to authors. The New York times sheds some led on how private equity is swooping in to make some big bets on fallen or broke subprime lenders. Of note, banks and lenders focusing on reverse and other niche mortgages, that maintain good cash flow, can not be far behind.
Private equity is swooping in and taking over the subprime mortgage business, seeing opportunity amid the wreckage.
The subprime mortgage business is in tatters: loan volume is plummeting, defaults are rising and some of the biggest lenders have cut back or shut down.
