When Equity Won’t Land a Reverse Mortgage

What happens when a senior has equity in his home but can’t qualify for a reverse mortgage?  A traditional line of credit you may say?  But what if you have no real means of paying the HELOC back?  Then you share a situation with 64 year old John Thiel.

“He didn’t qualify for a reverse mortgage because he didn’t have enough equity in his property, because the market value went down and because from one year to the next, his loan for $112,000 jumped to $121,000 for the payoff,” Dunbar said.

Dunbar said the value of Thiel’s home dropped 32 percent from last year, when he applied for a refinance loan in May 2007. The lower market value and Thiel’s age means the most he can get in a reverse mortgage loan is $70,406.

“In his situation, he could lose his house. Unless he can come up with $650 on a monthly basis, and that’s all but roughly $240 of his income,” Dunbar said.

Thiel’s story was told in the April 17 edition of the Record-Bee. He said despite community response to his story, not a drop of money has landed in a WestAmerica bank account named “Save our home” that he opened. Lake County Bee Record.

Written by charles dennis on May 1st, 2008 with no comments.
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Reverse Mortgage Loan Limits still trail their conventional bretheren

Is it a good idea to raise mortgage limits across the country during the same time when home values are falling?  Depends on which side of the financial aisle you live on?  While conventional rates have increased, reverse mortgage rates still lag behind.  That could be a good thing in that it will afford seniors and their advisers to become better versed in reverse mortgages and their uses.

While loan limits for conventional mortgages recently were raised with the passage of the Economic Stimulus Act of 2008, those seniors hoping to tap into additional home equity via the nation’s most popular reverse mortgage are stuck with the same loan ceilings — at least for now.

The Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development, insures the Home Equity Conversion Mortgage program, which accounts for nearly 85 percent of the reverse market. The program has insured more than 240,000 reverse mortgages since 1990, while private jumbo reverse plans also have been available.  Full Article.

Written by charles dennis on May 1st, 2008 with no comments.
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