Available proceeds likely less starting in October
Aug 13th
Currently the FHA insurance fund is short. The House has approved a 150 million subsidy that we are now waiting for the Senate to approve.
Even with approval from the Senate the Principle Limit (what the borrower qualifies for) will most likely be reduced 1-10% to help further reduce the risk to the insurance fund.
Here is an article from the Reverse Review Magazine….
Seniors should be informed that the budget proposals working their way through both the House and Senate, as currently drafted, bring a 150 percent increase in annual FHA (Federal Housing Authority) insurance premiums, as well as reductions in available proceeds on FHA-insured HECM (Home Equity Conversion Mortgage) reverse mortgage loans.
“Now is a good time for seniors to take advantage of low rates on reverse mortgages and get the maximum return on the product before the new fiscal year starts this fall,” said Jeff Lewis, Chairman of Generation Mortgage Company.
According to Lewis, starting October 1st, both bills will change the HECM value proposition if approved in their current form. “With the upcoming Senate vote, seniors have limited time to take advantage of the current pricing on reverse mortgages,” commented Lewis. “Reverse mortgages provide financial independence to thousands of seniors struggling to sustain their retirement. A majority of our borrowers use reverse mortgages to pay off existing traditional mortgages, and free up much-needed income.”
In early July, the Transportation Housing and Urban Development, and Related Agencies Appropriations Subcommittee met and provided $150 million in funding for the Federal Housing Administration’s reverse mortgage program. The bill passed the full House Appropriations Committee late last month and went to the House of Representatives two weeks ago. In the house, the appropriation was lowered to $140 million, and later passed by a vote of 251 to 167. It is not yet clear when the bill is headed to the Senate.
New- No Origination or Service Fee charges on FHA HECM Fixed rate program
Mar 26th
Starting next week there will be a new twist rolled out by one lender on the FHA HECM Fixed rate reverse mortgage program. They will be offering a zero origination fee and zero service fee program. This is one of the most significant changes to this loan program in its history. What this means to a borrower is lower closing costs and more net proceeds. An example of this would be a 70 year old borrower with a $300,000 valued home would currently see about $175,000 in available net proceeds after costs. Under the new program the borrower would see closer to $186,000 net proceeds an $11,000 improvement.
This will be a great benefit for all borrowers, especially ones that have existing mortgages that need to be payed off, it could make the differnce of qualifying or not.
If you would like more information please call 1-877-307-6454 or visit our web site www.reversemortgagesupport.net and fill out a request more information form.
New FHA Appraisal Rules in Effect
Feb 26th
Starting on the 15Th of February, all FHA loans requiring an appraisal (including HECM Reveres Mortgages) must be ordered through an appraisal management company (AMC). I would strongly encourage the borrower to work with their loan officer and order a preliminary electronic evaluation of their property first, commonly referred to as a AVM. These are electronically generated reports using sold properties of similar age,size, type, and location. They generally cost between 20-40 dollars depending on the detail.
While these can be useful in giving you a possible range of value it will never replace the traditional appraisal done by licensed appraiser who actually comes to the property and does a full site inspection and researches all the sold and listed comparables in the area. It’s important to know these reports from the AVM’s are strictly an estimate of value and not a guarantee.
New Appraisal Rules Take Effect – February 15th
Feb 1st
Borrower’s should be prepared for some appraisal changes taking effect on February 15th 2010. All FHA loans, including Reverse Mortgages, will be required to comply and adopt the Appraial Independence rules that took affect in 2009 for all non FHA loans.
After the 15th of February all appraisals will be required to be ordered through an AMC ( Appraisal Management Company) the AMC will then contact a local appraiser and request the appraisal. The appraisal is then completed and submitted directly to the underwriter working on the loan. The loan officer and borrower are not allowed to have any direct contact with the appraiser. The idea behind the new rules is to eliminate any possibility of manipulating the appraisers estimation of value
Borrowers will want to make sure they have done thier homework on what similar homes are selling for in their neighborhood. Working with an experienced loan officer will be helpful in gathering this information.
New Reverse Mortgage Counseling Protocols
Jan 21st
Within the next 60-90 days HUD approved counselors will be required to utilize a new financial interview protocol that is designed to help counselors determine that borrowers interested in a reverse mortgage loan will have the financial ability to maintain property taxes, homeowners insurance and maintenance of the home once the loan is in place. If the counselor concludes that there is not sufficient income to support these obligations they can, at their discretion withhold the certificate of completion preventing the loan from moving forward.
Potential borrowers will want to make sure they have taken some time prior to the counceling session to gather up some basic information about thier monthly overhead.