Reverse Mortgage Guide

For several months there have been persistent media reports regarding borrowers who have had home equity lines of credit (HELOCs) cut off by lenders — these are credit lines for which borrowers paid fees up-front, lines that in many cases were obtained for use in the event of an emergency need for cash.

As one example, MSNBC has reported that Countrywide suspended further credit advances to 122,000 HELOC borrowers. (See: Home equity loans drying up for some, March 24, 2008.)

The logic behind such suspensions — as discussed here in March — is that lenders are worried about falling equity and do not want to allow further credit advances when property values have declined.

What I have NOT found is a case where a reverse mortgage borrower has had a line of credit suspended or limited.

If it turns out to be true that no reverse mortgage line of credit has been suspended then that would be good news on a number of levels.

First, lenders and HUD would be seen as honoring their commitments.

Second, reverse mortgage lenders would have a legitimate marketplace advantage to promote.

Third, borrowers would have assured access to funds as needed, a significant advantage in today’s financial world.

As in all cases, reverse mortgages should always be considered with care and with the advice of independent professionals, such as attorneys who specialize in elder law.

AARP has come out with a statement regarding the “Foreclosure Prevention Act of 2008.”
It’s remarkable that AARP — a big power in Washington — has had so little success with reverse mortgage legislation. Provisions to lower reverse mortgage costs and to enhance borrower protections are routinely lost in the legislative process.
As an example, S. 2490: […] read more

A friend of ours, about age 60, just had a terrible accident. He apparently tripped in his own house, broke his leg and hip and the result was five hours of surgery.
Our friend was lucky, at least in a financial sense. He has insurance. Without insurance the cost of his treatment would bankrupt most households.
We […] read more

U.S. seniors have stashed away retirement assets worth $15 billion, according to a new study by Watson Wyatt, a major consulting firm.
This is a huge number, larger than the gross domestic product.
“In the United States,” said Watson Wyatt, “most retirement plan assets (59 percent) are invested in equities, while less than a quarter (23 percent) […] read more

My late father was a CPA to almost age 90, someone who could do complex math problems in his head with remarkable accuracy.
I think even he would be pleased with the development of electronic tax forms, pieces of computerized magic that allow you to navigate the tax system with great accuracy.
The good news is that […] read more

HUD has issued the mortgagee letter before regarding fixed-rate reverse mortgages. Essentially, it clarifies rules already in place, however for borrowers and counselors it provides basic guidelines regarding the home equity conversion mortgage (HECM) program.
This is the kind of simple, easy-to-understand stuff, that really should be distributed more widely.
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This Mortgagee Letter provides guidance to FHA-approved lenders choosing to […] read more

In wake of the annual report issued last week by the Social Security and Medicare Trustees, a grassroots advocacy organization predicts a shaky financial future for retiring Americans unless someone in our nation’s capital takes action before it is too late.
“The only shocking thing about the Social Security Trustees report is the glaring lack of […] read more

Applying for economic stimulus payments will now be easier for more than 20 million Americans who normally don’t have to file a tax return thanks to the development of a new, user-friendly online tool developed jointly by AARP Tax-Aide and the National Council on Aging.
People can access the tool either through NCOA’s BenefitsCheckUp(R) at www.BenefitsCheckUp.org/ […] read more

April 15th is almost here, reason enough to mention taxes.
This year, perhaps more than most, it’s wise to file a tax return even if no tax is due. The reason? Rebates from the economic stimulus package requires recipients to file a tax return to get anywhere from $300 to $1,200 or more.
“Millions of retirees, disabled […] read more

Confusion reigns supreme when one talks about reverse mortgages. So much has been written about this program that myth melds into fact and fact conflates myth. Where does truth start and falsehood end? Why can’t the media get it right?
The answer to these two seminal questions has its genesis in humankind’s penchant to fear […] read more

A few years ago on a visit to Bulgaria we had saw the 100-year-old home of a wealthy village merchant which had become a museum. The outstanding feature of this home, a residence with many rooms and excellent construction, was the bedroom — there was just one. Virtually the entire room was one mattress (maybe […] read more

Reverse mortgage originations slowed during the first two weeks of March, according to the latest figures from HUD.
The newest report shows that 4,888 Home Equity Conversion Mortgages (HECMs) were originated from March 1st through the 15th, a number which is down 14.3 percent when compared with the last half of February. In the last part […] read more

Millions of American homeowners have home equity lines of credit — HELOCs — with their lenders. This is money that can be accessed in times of emergency or to buy something large. Many HELOCs allow borrowers to withdraw as much as $100,000. As the money is paid back, it can be borrowed again and again […] read more

The National Association of Reverse Mortgages Lenders is reporting that property values for seniors fell by $27 billion in the last quarter of 2007.
Still, says the Association, $4.22 trillion in equity remains, a massive storehouse of wealth.
The group’s finding are not surprising. Real estate markets in most areas have stalled if not declined, and seniors […] read more

A new association for reverse mortgage counseling agencies has been formed to “support education initiatives and provide resources to improve the operational efficiency, consistency and financial sustainability of reverse mortgage counseling programs nationwide.”
While I am certain that operational efficiency, consistency and financial sustainability are important, I am vastly more concerned with a more prosaic issue: […] read more

When the president signed the stimulus package, the pundits hailed the results as a life saver. Included therein was a tax break for business to invest in capital; an increase in the loan amounts FHA and government sponsored entities like Fannie Mae & Freddie Mac could offer; a provision for a 168 million dollar shot […] read more

One of the most common questions from senior borrowers and their children alike is how the property value is determined on a reverse mortgage. This is a topic that requires a bit of discussion so I’ll try to unravel this great mystery here.
For most reverse mortgages (based on volume, over 90% of the reverse mortgages […] read more

J. R. Stevens writes and says that “I have applied and have approval for an HECM, but am most anxious for Congress to raise the loan lending limits for Reverse Mortgages. A possible national limit of $417,000 would enable me to obtain more from a RM.
“Bill S2338, the FHA Modernization Act of 2007 has been […] read more

While the financial world looks more-shaky than anyone would prefer, HUD says the HECM program continues to boom.
For the last half of February, the 16th through the 29th, HUD says it insured 5,703 reverse mortgages. This is a very good number in general and an especially good number considering that the month was short […] read more

You undoubtedly have read the thousands of print articles that have been circulated throughout the Internet along with disparate thoughts and ideas that are reflected in the thousands of blogs. Accordingly, I have come to realize that what people believe about reverse mortgages can be split into just a few categories.
Category #1 It is just […] read more