Under ARRA, the national FHA loan limit for HECM will increase from $417,000 to $625,500 (from 100 percent to 150 percent of the conforming limit).HECM loan mortgagors do not undergo the same procedures for credit approval as do mortgagors for forward mortgages. FHA does not deem the credit approval process to be complete until the HECM loan is closed.Therefore, HECM loans closed on or after the date of this Mortgagee Letter are subject to the higher maximum dollar amounts.
In those areas, the maximum claim payable by FHA is 150 percent of the Freddie Mac conforming limits.To avoid potential cases where a claim could be less than the national limit, as adjusted for the special exception areas, HUD had decided not to make the adjustment.Therefore, these few special exception areas will have the same $625,500 limit as all other areas.
FHA will, for a limited time, allow HECM loans that received case number assignments but did not close prior to the effective date of this mortgagee letter to be closed using either the old limit that was used to originally calculate the loan, or the new limits as prescribed herein. An option will be made available in FHA Connection for the lender to choose which rate to use. This option will be available until April 30, 2009.
Minnesota’s legislators and attorney general, concerned about disreputable mortgage brokers and lenders taking advantage of seniors, have introduced a bill that would allow borrowers to rescind a reverse mortgage for up to 30 days.
The legislation, introduced in both the state House of Representatives and Senate yesterday, states that borrowers would be able to rescind a reverse mortgage for up to 30 days after “execution,” a term that suggests rescission could occur after a loan has been made. Once seniors notify the lender that they want out of the loan, they have 15 days to return any money received, according to the legislation, and any mortgage filed in connection with the loan would be null and void upon rescission.
During a press conference yesterday, Minnesota Attorney General Lori Swanson told reporters that the bill was aimed at preventing another subprime crisis in the reverse mortgage industry, according to an account in the St. Paul Pioneer Press.
“Some brokers and lenders who contributed to the mortgage meltdown are now sliding over into the reverse mortgage business, and we need to make sure that history does not repeat itself with imprudent reverse mortgage loans made to seniors,” Swanson said during the press conference.
Beyond the controversial 30-day rescission period, Minnesota’s proposal would make buyers of reverse mortgages responsible for the actions of the originator. The bill also includes a broad suitability requirement, which would require lenders to reasonably believe that reverse mortgages were suitable for borrowers. In addition to requiring independent counseling, the bill would limit the sales of financial products in conjunction with a reverse mortgage.
Washington, DC – Federal Housing Finance Agency (FHFA) Director James B. Lockhart announced that Fannie Mae and Freddie Mac will implement a revised Home Valuation Code of Conduct (Code)effective May 1, 2009. The Code is based on an agreement between the Enterprises, the New York State Attorney General Andrew Cuomo and FHFA to improve the reliability of home appraisals. Following a comment period on the original Code, modifications were made by the Enterprises to reflect comments received. The revisions will facilitate implementation in the marketplace.
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In order to become a successful reverse mortgage loan originator you must start with the basics.
Master the basic function of the Reverse Mortgage loan origination process, including filling out the loan application; Understanding basic retirement planning; social security income; senior’s typical needs and goals; and what questions to ask and when to ask them.
In order to be a successful Reverse Mortgage originator you must take the time to master the basics of the reverse mortgage loan origination process.
This includes industry standards in:
Reverse Mortgage Training
Loan Documents
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Seniors needs
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If Congress enacts these reforms reverse mortgages could go mainstream. Here’s why.
Two U.S. Senators are sponsoring a bill that touches the dreaded third rail of politics. Semafor News reports a bipartisan group led by Senators. Angus King, I-Maine, and Bill Cassidy, R-La. are considering gradually raising the retirement age to about 70 as part of their discussions to overhaul Social Security, Semafor has learned from two people briefed
on their efforts.
If such reforms were to come to pass those who had planned on drawing Social Security benefits at younger ages below 70 may have to look to their home’s value as a source of cash flow. Of course, this is not how anyone would want to see the widespread acceptance of reverse mortgages, but then again, necessity is the mother of innovation, and future retirees may have to get creative to secure a decent retirement.
Increasing the minimum age at which one may begin drawing benefits is not the only proposal on the table. Other options include…
…revamping the formula that presently calculates monthly benefits based on a worker’s average earnings over 35 years to one that’s calculated on the actual number of years one is actually working and contributing to Social Security.
Both Senators King and Cassidy told Semafor, “there are no cuts for Americans currently receiving benefits in our plan”. What’s not said is just as important. Ultimately any postponement of Social Security eligibility or recasting the benefit formulas means most Americans in the future will receive less money during their lifetime. The Congressional Budget Office reports if Congress fails to enact needed reforms for the fund that Social Security benefits would be reduced by approximately 20% beginning in 2032.
Any future reduction of benefits or increases to the retirement age could create a perfect storm- one that could force millions to look to what is typically their lar
gest asset, their home.
Columnist Joseph Zeballos-Roig observes that any increase of the retirement age is likely a non-starter with Congressional Democrats who are more likely to support a Social Security tax on annual earnings above the current $160,000 cap. Regardless, our nation as a whole, elected officials and citizens alike, have a serious spending problem. And that applies to both parties. Until the federal government’s largesse with taxpayers’ dollars in discretionary spending is diminished, mandatory budget items such as Social Security and Medicare will be targeted for cuts or new sources of revenue. And with entitlements accounting for nearly one-third of U.S. federal spending citizens of all ages will want to stand up and take notice.
In the short term we can expect the usual, for Congress to kick the proverbial can down the road. After all, who wants to lose their seat for backing such reforms? Let the next guy or gal do it. However, at some point, Social Security benefits will have to either be reduced or postponed, neither of which is painless. When reforms eventually come to pass they likely will serve as a driving force for millions of older Americans to look to their home’s value as a potential stop-gap in their retirement income planning.
How do you think older Americans would respond if Social Security benefits were cut? Comment below and share your thoughts.
