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Integrity in Property Valuation: The Introduction of Appraiser Independence In 2010, the Department of Housing and Urban Development (HUD) launched the "Appraiser Independence" initiative. This program was designed to protect appraisers from potential coercion by reverse mortgage lenders and borrowers, thereby preventing the inflation of property values that could affect market stability. Legislative Response to the Housing Bubble The impetus for this program was a widespread belief among lawmakers that undue influence on appraisers contributed to the housing bubble. By insulating appraisers from such pressures, HUD sought to promote a... Read Full Article
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In a landmark decision that's set to impact the reverse mortgage market significantly, the Federal Housing Administration (FHA) has announced an upward revision of the maximum claim amount for Home Equity Conversion Mortgages (HECM) in 2024. This change, which increases the limit from $1,089,300 to $1,149,825, will come into effect for case numbers assigned on or after January 1, 2024. The revision affects the mainland U.S. and extends to Freddie Mac’s special exception areas like Alaska, Hawaii, Guam, and the Virgin Islands. This move, as outlined in Mortgagee Letter... Read Full Article
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If you have decided a reverse mortgage is right for you, you'll naturally want to determine which lending institution to go with, especially regarding the most beneficial terms and the associated costs. One of the easiest things you can do is to go to the bank you already transact with for daily financial tasks to see if they offer reverse mortgages, but chances are that your bank may not offer such reverse mortgage loans to its senior customers. Many internet searches may also yield inaccurate information concerning banks... Read Full Article
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Over the past several years, several television commercials with spokespeople have pitched reverse mortgages. However, it is still not a term that most people understand for an excellent reason. Mortgages come from lenders and are what people use to purchase homes, not earn money. However, the reverse mortgage is a unique arrangement that allows people who own their homes to acquire money while using their property as collateral. In a simple explanation, a reverse mortgage is a loan that is secured by your property and designed to defer the mortgage... Read Full Article
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The reverse mortgage is a great product. But like all products, it is not a fit for every consumer. And while the product brings many advantages to aging homeowners, there can also be downsides depending on the prospective borrower's situation. Here is a look at six reverse mortgage disadvantages to weigh if you are considering a home equity conversion mortgage (HECM) loan. 1. A reverse mortgage is not for everyone. A reverse mortgage is a loan for homeowners aged 62 and over, allowing them to borrow against home equity.... Read Full Article
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Like all loans, reverse mortgages come with some one-time costs and fees that all borrowers will face during the loan closing process, as well as some ongoing costs they will incur throughout the course of the loan. Many of the closing costs are the same as the costs that forward borrowers incur, such as recording fees. There are a few reverse mortgage-specific costs to be aware of, as well, in order to get a full picture of the costs associated with getting a reverse mortgage. In this article, you... Read Full Article
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1. You do not want to leave your home - ever. If you are comfortable in your current home and have no plans or desire to move, a reverse mortgage can help you stay. With a federally insured reverse mortgage (HECM), you still retain ownership of your house and may stay there for as long as you live. Your reverse mortgage doesn't need to be repaid until you pass away or move out of the home. One feature of HECMs that is great for borrowers is that they are... Read Full Article
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If You've Looked at a Reverse Mortgage in the Past, You May Want to Look Again! If you have ever investigated a reverse mortgage or have thought about it, especially in the past 24 months, and didn't think the numbers worked for your needs, it may be time to check again. We say this because one of the main factors determining how much money you will receive in your reverse mortgage is the interest rate. Since HUD changed the Floor Rate on the program, borrowers have received less money as... Read Full Article
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In 1961, banker Nelson Haynes of Deering Savings & Loan in Maine wanted to ensure that the widow of his high school football coach could remain in her lifelong house despite losing her husband's income. So, Haynes wrote what is believed to be the first reverse mortgage, which lent her money against the equity of her house. The reverse mortgage has evolved heavily since its inception nearly six decades ago and has evolved dramatically since Congress approved it as a federally insured product in the late 1980s. But the story... Read Full Article
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Today's seniors are sitting on an incredible amount of home equity: more than $11 trillion. For many, it's their largest asset. A HECM LOC lets older adult clients access that equity at a predictable growth rate, regardless of whether their home value increases or decreases. Borrowers with sufficient equity may have access to growth on their total credit facility. Here are two examples with and without a mortgage balance: Example 1: HECM line of credit growth with a mortgage balance Home Value: $550,000 Mortgage Balance: $100,000 Age: 65 Principal Limit: $207,900... Read Full Article
