As I have often chronicled on this site, the Big Boys of Mortgage Banking, (Wells Fargo, Bank of America, Countrywide, etc.) are just warming up with their push to grow and win over the reverse mortgage market. The most intriguing trait of these big banks is their innate ability to cut out the costs that are found in government backed HEMC loans and create their own proprietary products that are much more consumer friendly. Whether you are for or against reverse mortgages, it is clear to see that banking competition is helping to drive down fat broker fees that have been a large part of critics’ argument against them. The Real Estate Journal had this to say in a recent article.
For instance, Bank of America, which recently acquired the reverse-mortgage business of Seattle Mortgage Company, said it will soon launch nationwide a reverse-mortgage product it’s offered to customers in Arizona since November. The product, called Senior Equity Maximizer, offers loans on up to $10 million of home equity, said Colin McCormick, reverse-mortgage product executive at Bank of America.
Bank of America’s product allows you to set aside a portion of your home’s equity to be preserved for your heirs, and the fees charged are a lower percentage of the home’s value than those charged on traditional reverse-mortgage loans. But the interest rate on the bank’s new product is generally higher, McCormick said.
Today about 90% of reverse mortgages are the traditional government-backed product, the most prevalent of which is the Federal Housing Administration’s home equity conversion mortgage, according to the National Reverse Mortgage Lenders Association, a trade group.
Borrowers have taken out about 71,500 new FHA-based reverse mortgages so far this fiscal year (which began Oct. 1), a 49% jump from about 48,000 loans in the same period a year earlier. From 1990 through to the present, about 310,000 such loans have been taken out, according to the NRMLA. Full Story
Written by charles dennis on June 27th, 2007 with no comments.
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This story was first posted at Army Times.
The proposal — currently pending before the House Veterans’ Affairs Committee — would allow the Veterans Affairs Department to provide a home equity conversion mortgage, or HECM, to U.S. veterans. Under the plans, sponsored by Rep. Michael Michaud (D-Maine), veterans age 62 and older could receive monthly payments from the VA that would be based on how much equity they have in their home and how long they would like to receive monthly payments. The payments would have to be repaid, with a fee, when the home is sold either by the veteran or by survivors.
Opponents say the bill does not provide anything that the existing Federal Housing Administration loan program doesn’t. Keith Pedigo, the VA’s loan guaranty service director, said the FHA program may be better, he said, because it fully insures lenders against “all losses,” while the VA only guarantees a percentage of a mortgage, generally one-quarter of the full amount. Full Story
Written by charles dennis on June 27th, 2007 with no comments.
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Listed here you will find the top HECM lenders of 2007… as of (06/2007). Remember that this list doesn’t include any proprietary products. Also note that Seattle Mortgage Company is now Bank of America.
|
Lender |
# of Endorsed Loans |
| 1. |
Wells Fargo Bank NA |
7210 |
| 2. |
Financial Freedom Senior Funding |
4461 |
| 3. |
Seattle Mortgage Company |
1134 |
| 4. |
Liberty Reverse Mortgage Inc |
874 |
| 5. |
American Reverse Mortgage Corp |
686 |
| 6. |
Vertical Lending Inc |
608 |
| 7. |
Omni Home Financing Inc |
462 |
| 8. |
Urban Financial Group |
452 |
| 9. |
Academy Mortgage LLC |
427 |
| 10. |
M and T Bank |
421 |
Written by charles dennis on June 20th, 2007 with no comments.
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John Gosselin, a Massachusetts attorney who deals in elder law, offers the case for reverse mortgages on his Gosselin Law Blog.
Gosselin suggests that one reason for reluctant public acceptance of reverse mortgages was initial misunderstanding of the product:
“Reverse mortgage lenders, the elder law bar and the public did not get off on the right foot when reverse mortgages became generally available,” says Gosselin. “There were many confusing features to the initial loans and the government and banks did little to help borrowers understand their transactions. Reverse mortgages became known as the estate planning tool of last resort for truly financially needy elders. The elder law bar was hesitant to recommend reverse mortgages, estate planning lawyers put their heads in the sand and real estate lawyers, at least many of the real estate lawyers in Massachusetts that my law firm deals with, were completely in the dark on the workings and benefits of reverse mortgages. So what has changed? In a word, education. The reverse mortgage industry made it their mission to educate the market place, not only consumers but also lenders about the powerful benefits of reverse mortgages.”
Read More of Gosselin’s perspectives here.
Please note this website does is not affiliated with endorsed by or endorses Gosselin Law in any way. Please read our disclosure.
Written by charles dennis on June 16th, 2007 with no comments.
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After you have secured finances through a reverse mortgage, a home equity line of credit or solid retirement planning and you are happy with your current residence, now is the time to consider making alterations for the convenience of elder living. Rails on the porches, bathtubs and hallways may be a welcome addition. Also considering an electronic stair lift or elevator for those of us with the access to such exceptions. Karen Shan’s spotlights how many aging Americans are preparing for the 2nd half of their lives.
Yet the council states 35.9 percent of households aged 55 to 64 living in single-family detached homes reported difficulty with at least one physical activity, including dressing (9 percent), vision or hearing (11 percent), going out (11.9 percent), getting around the house (27.1 percent), remembering (12.7 percent) and working (23.8 percent). (more…)
Written by charles dennis on June 15th, 2007 with no comments.
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Seth Sutal
Associated Press
Jun. 12, 2007 09:41 AM
Q. What is a reverse mortgage?
A. A reverse mortgage is a financial tool that lets you take money out of your home to help fund your retirement. However, financial advisers caution that they’re not for everybody, and should probably not be your first choice for supplementing your income.
They’re called “reverse” mortgages because instead of paying back a loan to a bank and building up equity, or ownership, in your house, the bank is paying you out part of the equity in your home in cash, either in a lump sum, regular payments, a line of credit or some combination. The debt incurred would be paid off once the home is eventually sold, typically once the person who took out the loan moves out, sells the home or dies.
These types of loans are relatively new, but more people are using them.
Darryl Hicks, spokesman for the National Reverse Mortgage Lenders Association, an industry group, says Congress passed a law in 1988 creating a reverse mortgage loan program that was guaranteed by the U.S. Department of Housing and Urban Development, or HUD.
Issuance of those loans has grown since then from a few thousand a year to 85,639 in 2006, up from 48,493 the year before, according to data compiled by the association from HUD.
Taking out a reverse mortgage is an option some people choose if they have a fair amount of equity in their home, need income, are at retirement age, and don’t want to sell or leave their home.
John Rother, the policy director for AARP in Washington, cautions that the fees involved with getting a reverse mortgage can be high - some $20,000 to $25,000. He also says you’re likely to get more money in your pocket if you sell the home.
“If your only objective is getting money, you’re better off selling,” Rother said. “This is not something you want to do casually - this is really more of a last resort.”
Rother also pointed out a factor referred to as “longevity risk.” If you elect to receive monthly payments over a fixed period of time and that span runs out while you’re still alive, you could suddenly lose that income while still being liable for upkeep on the house, taxes and insurance.
Bob Jazwinski, a CPA and financial planner based in Hermitage, PA, says he also counsels clients to think of reverse mortgages only as a last resort. He recommends considering alternatives such as selling the home and investing the proceeds in a way to generate income.
Jazwinski says that even if you do take out a reverse mortgage, in many cases you can only draw down some 40 percent to 50 percent of the equity value in the home. The rest will go to cover interest costs as well giving the lender a cushion in case the value of the home declines.
“There is a price to be paid - and that is the interest cost of the funds borrowed, and that accumulates over time,” Jazwinski said.
Written by charles dennis on June 14th, 2007 with no comments.
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Whenever I consider retirement from a good career, unless I put on my thinking cap I always thought about it as leaving the workforce cold turkey and riding off into the sun set. If not cold turkey, then going from working a 9-5 in April with a paycheck to living in a beach front condo in May with a full pension. But for most Americans, myself included thats not retirement, thats what we call winning the lotto. The San Diego Tribune gives a great picture of what a normal near term retiree will look like. While the article is long anyone considering retirement and using their home equity as a part of the strategy, should read closely here.
Bonnie Daly has a pretty long list of “to-do’s.”
First, she’d like to work as a docent for a local art museum. Then, it’s off to get some training to further her nursing skills. Later, she’d like to do some pro bono therapy work and maybe even join the Peace Corps at some point.
When exactly the 71-year-old San Diego resident will be able to get started on all this is a big question. Full Story here.
Written by charles dennis on June 11th, 2007 with no comments.
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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.
| Top Nevada HECM Lenders |
HECM
Loans
2007 |
| WELLS FARGO BANK NA |
185 |
| FINANCIAL FREEDOM SENIOR FUNDI |
60 |
| LIBERTYSTREET FINANCIAL GROUP |
37 |
| SEATTLE MORTGAGE COMPANY |
32 |
| AMERICAN MORTGAGE PROFESSIONAL |
27 |
| HURST FINANCIAL CORP |
23 |
| OMNI HOME FINANCING INC |
21 |
| OAK HILL MORTGAGE INC |
21 |
| SKOFED MORTGAGE FUNDING CORP |
19 |
| FIRST NATIONS HOME FINANCE COR |
13 |
| ACCELERATED FUNDING GOVT LOANS |
12 |
| EQUIPOINT FINANCIAL NETWORK IN |
12 |
| SUN AMERICAN MORTGAGE CO |
7 |
| PARADISE FINANCIAL GROUP INC |
7 |
| CUSTOM HOME LOAN INC |
7 |
| ACADEMY MORTGAGE CORPORATION |
7 |
| FIRST MARINER BANK |
6 |
| HARBORSIDE FINANCIAL NETWORK I |
6 |
| SUNPOINT CORPORATION |
6 |
| CITY FINANCIAL MORTGAGE SERVIC |
5 |
| AMWEST CAPITAL MORTGAGE INC |
5 |
| U.S. FINANCIAL MORTGAGE CORPOR |
4 |
| JAYNA INC |
4 |
| GORDON & ASSOCIATES INC |
4 |
| PACIFIC REVERSE MORTGAGE INC |
3 |
Written by charles dennis on June 4th, 2007 with no comments.
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Congress passed a law in 1988 creating a reverse mortgage loan program that was guaranteed by the U.S. Department of Housing and Urban Development.
Written by charles dennis on June 2nd, 2007 with no comments.
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If you are in a position to take a loan, I would surmise that the best loan has the most benefits. Of course you want to strive for the best interest rate, lowest fees and best general terms but everyone wants perks. Perks like a a gift card, or cash or even a trip are all nice, but the biggest perk of all is the ability to deduct interest paid. I came across an insightful question in the San Francisco Chronicle asking whether or not Reverse Mortgage interest is deductible or not: (more…)
Written by charles dennis on May 23rd, 2007 with no comments.
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