Reverse Mortgage Guide

HUD is reporting that for the first 15 days of January that it had 5,097 reverse mortgage applications — what it calls “HECM” financing. The number is up by nearly a thousand applications when compared with the last two weeks of December — however the last two weeks of December are a holiday period and typically a slower time.

During the January period, HUD insured 4,689 reverse mortgages, a 19.2 percent increase over the final period in December.

Given that there are 24 reporting periods during the year, HUD is again likely to insure more than 100,000 reverse mortgages. In fiscal 2008 — the period that began October 1st, HUD estimates it will insure 117,000 reverse mortgages. To date it has insured 29,375 HECMs, meaning that it’s projection is well within the realm of reason.

The latest figures from the Census Bureau show that homeownership is down. In fact, the homeownership rate in the last quarter of 2007 was back to where it was in 2002.
What does this have to do with reverse mortgages?
Many reverse mortgage programs assume that borrowers will be able to increase the number of dollars available […] read more

Robert asks if he is a good candidate for a reverse mortgage.
“My Florida condo is worth approximately $400,000. It has a $99,000 first mortgage and a $123,000 home equity loan. I would like to pay off both and have about $20,000 to save as a reserve. Can I get a reverse mortgage?”
The answer, I […] read more

The Pittsburgh Post-Gazette had an excellent story over the weekend regarding reverse mortgages and Medicaid.
Quoting Zoran Basich, an elder law attorney and operator of Nursing Home Solutions, the article offered the following comment:
“Depending on where you live, Mr. Basich says the proceeds from a reverse loan could prove a barrier to qualifying for Medicaid, which […] read more

You say your parents are considering a reverse mortgage and they have asked you to research it for them?
Don’t worry; I hear that story at least a couple of times a week. Of course they want you to do the up front research and they will trust your recommendation.
Your parents have probably not taken out […] read more

It may happen in the next few weeks that the size of FHA-insured reverse mortgages could increase to more than $635,000. That’s a huge jump from today’s maximum size of $362,790.
The Congress is now considering an economic stimulus package to help the country avoid a recession or, at least, a bigger recession. Whether such a […] read more

Bill White writes and discusses the recent Wall Street Journal advice to someone able to pay off a $50,000 mortgage. Bill raises the idea of a reverse mortgage as a solution to the problem.
Bill says:
“This is a perfect example of how a reverse mortgage can be used as a retirement planning tool. My recommendation would […] read more

Insurance is a big cost for reverse mortgage borrowers, but is it too high?
In my Realty Times column today I note that of some 3750,000 reverse mortgages insured by HUD only 1609 resulted in claims against the program. These figures were current as of the time in December when I spoke with Meg Burns, the […] read more

Today’s emergency rate reduction by the Federal Reserve is great news if you have a home equity loan tied to the prime rate. That’s a lot of people — but that is not all people and certainly the rate reduction has little to do with mortgage rates in general or reverse mortgage borrowers in particular.
How […] read more

Over at the Wall Street Journal, a retired reader asks if he should pay off his mortgage early. The answer omits the use of reverse mortgages.
Question: “I retired five years ago at age 55 with a pension and a 401(k) from which I took fixed withdrawals through age 59½. Then, I rolled over the 401(k) […] read more

As with any financial product, you need to be armed with all the facts before making a decision. Be sure you are getting your information from a reputable source and weigh the pros and cons of each. A frequently asked question from both seniors and their family members is, “Shouldn’t we just take out a […] read more

We wrote the other day about reverse mortgages and annuities — and how the two should not be sold together. Several of our lender readers wrote in to say that their companies literally ban such related sales.
Now we have still-another tale-of-woe relating reverse mortgage pitches to annuity sales, this time from USA Today.
“After her husband […] read more

Gary writes and asks about getting a reverse mortgage:
“I have a balance of 170K on a house that was appraised almost 2 years ago for 450K. I am 63, 3 lenders have indicated that I would need 9k to close. 170 less the 200k max leaves 30k plus the 9k to close. Soooo, it’s going […] read more

We have been regularly covering reverse mortgage growth during the past year by following HUD reports. Now the National Reverse Mortgage Lenders Association offers a year-end round-up which shows that 2007 was a banner year.
In looking at these figures it is important to recognize that the market for reverse mortgage is relatively young and […] read more

You hear about reverse mortgage horror stories with some frequency — more frequency than ought to be the case. An elderly person gets a reverse mortgage and then gets scammed into an “annuity” with weak terms and terrible prepayment penalties.
There ought to be a solution to these problems, so let me outline an idea.
Long ago […] read more

New figures from HUD show that HECMs — reverse mortgages to everyone else — did enormously well in December.
“So far this fiscal year,” says HUD, “FHA has received 297,625 applications under the single family programs. Most of these (93%) involved existing home transactions. In addition, looking at mortgages by type, 113,098 were purchase money applications […] read more

The folks at the Charlotte News & Observer have come up with a really good reverse mortgage summary.
A reverse mortgage, says the newspaper, “is the exact opposite of a traditional mortgage. Rather than the borrower making monthly mortgage payments, the lender pays the borrower. Income and credit history are irrelevant.
“Instead, the mortgage is based on […] read more

(This is the first installment in a series of reverse mortgage educational postings by Sue Haviland, a Maryland-based reverse mortgage specialist. Please check back each Monday for more.)
With the rise in popularity of reverse mortgages, specifically HUD’s HECM (Home Equity Conversion Mortgage) it may seem surprising that there is still so much confusing information floating […] read more

Depending on who you ask, the current mortgage melt-down is destined to last until 2009, 2010 or 2011. I have no idea which projection is correct — if any — but such economic thinking raises an idea, the reverse mortgage as short-term financing.
I’m usually the last person who thinks positively about short-term financing because such […] read more

HUD has come out with two interim rules which would impact the HECM program if finalized.
In general terms, the first new rule for federally-insured reverse mortgages “extends the date for calculating the maximum claim amount in the HECM program from the date of the underwriter’s receipt of the appraisal report to the date of closing. […] read more