Florida Reverse Mortgage

Reverse Mortgage Lenders Changing Margins at Closing

2009-05-10T13:18:57-06:00

This week we saw an influx in reverse mortgage applications being transferred from other lenders to our company. Apparently many of the large banks offering reverse mortgages would rather change the rules on a Senior just before closing than give up any profit on the loans.

One Senior was surprised with needing thousands of dollars to close because of the elimination of the HECM LIBOR 250 PROGRAM margin that he had originally been quoted. Unwilling to close under these terms he sought out an alternative lender, he came across our website and we were able to match his original principal. As a smaller lender we are willing and able to make the decision at the local level to drop our profit on a loan to help a senior. With big banks this decision is made at a much higher level and they are unwilling to make changes to help one person, on the smaller side mortgage brokers do not have the ability to offer below market margins. As a smaller FHA Direct Endorsement Lender we are able to set our own rates and fees. This allows us to make a decision to lower our profit and offer a below market program when it's the right thing to do for the Senior.

This business philosophy is paying off because we are seeing a large increase in business with all of these files being transferred to us from other lenders.

Another important aspect of this is our loan officers being paid on Salary. In most situation the loan officers income is directly tied to the company profit on each loan in the form of commissions. In our company our corporate loan officers are paid a nice salary so they can offer the best possible loan and service to our customers without worrying about the impact on their pocket.

If these big banks can't figure out a way to put the customer first, particularly on Reverse Mortgage Loans, they are going to continue to lose loans to smaller lenders like us.

800 Million for Reverse Mortgages in Budget

2009-05-10T12:33:00-06:00

President Obama's new budget includes $800 million request for funding reverse mortgages. This is the first time that the Reverse Mortgage program has needed tax paying subsidisation. In the past the insurance premiums collected on each reverse mortgage was sufficient to cover the losses and projected losses in the program. The insurance premium is 2% of the Max Claim amount plus .5% of the accrued balance monthly. Many borrowers complain about this amount, it is one of the largest expenses in the transaction, but it is not currently enough to cover the programs losses.

A few things have changed the dynamic causing this shortfall for the first time ever: Extremely low interest rates and Dropping home values.

Low Interest Rates:

The reverse mortgage calculations are based on 10 Year Treasury (while the actual rate is based on the 1 year treasury). The idea behind this being that the 10 Year should reflect where interest rates will be over time to compensate for increases. In the last few years, interest rates were driven to such low levels that the 10 Year Treasury did not accurately reflect the rates that were most likely to occur over the life of the Reverse Mortgage. To compensate for this change in rates, FHA/HUD put a 'floor' into the HECM program by not increasing principal limit factors for any rate under 5.56%. This floor of 5.56% will help protect the long term stability of the fund by not allowing severe temporary drops in interest rates to set unrealistic principal limit models. You can see this in the HECM factor tables, as all rates below 5.56% (this highest rate that rounds down to 5.5%) are the same.

Dropping Home Prices:

When FHA/HUD designed the principal limit tables they used a long term average for property appreciation. The downside to this occurs in times like this where there is a temporary shift in property appreciation (in this case, negative appreciation). When property values drop and a HECM borrower passes away, HUD must make up the short fall. In the reverse though when a home has significant appreciation HUD does not get any of the upside, it all goes to the Homeowner's family. So in times of lowering values HUD takes all of the loss, but in times of property appreciation HUD is unable to take any of the gains. This has created a temporary situation where HUD is experiencing a higher than usual amount of claims.

Unfortunately for HECM borrowers, if this situation does not correct itself, HUD may have to revise the hecm factors using a lower amount of property appreciation. This would result in HECM borrowers receiving less of the equity from the reverse mortgage transaction.

Orlando Reverse Mortgage

2008-05-31T12:35:00-06:00

If you live in the greater Orlando area and are considering a reverse mortgage please contact our Orlando office located in Maitland. If you are looking for an Orlando Reverse Mortgage you can deal with a local company.

Orlando Reverse Mortgage Office:
2700 Westhall Lane, Suite 120
Maitland, Fl 32751
321-397-4420

Orlando is currently one of the hottest markets in Florida for reverse mortgages. We also have reverse mortgage specialists fluent in Spanish to serve the Orlando Hispanic Community. There is no better time to explore the potential of a reverse mortgage.

We can quickly analyze your situation to determine if you qualify for a Reverse Mortgage on your Orlando Area Home. if So you could close and have your cash in as little as 3 weeks.

We locally serve reverse mortgage borrowers in Orlando, Maitland, Winter Park, Kissimmee, Oviedo, Lake Mary, Sanford and the rest of the greater Orlando Area for Florida Reverse Mortgages. If you live in one of these areas our reverse mortgage advisers can meet with you in person and explore all of your options with no obligation.

Orlando Florida Reverse Mortgages

Servicing Set Aside

2008-05-08T16:22:00-06:00

We get a lot of questions about the servicing set aside on HECM Mortgages. Each reverse mortgage has a servicing fee, usually $35 per month. This means that every month you have your mortgage the loan servicer earns a $35 fee, well someone has to pay this fee.

The whole idea behind having a reverse mortgage is to not make any payments. It would be pretty silly to bill a borrower every month for just $35! So they way FHA does this on HECM mortgages is to leave enough room in the loan for the $35 to be added to the balance every month to pay the servicing lender.

The way the calculation works is to add up all of the $35 charges from the time you get the reverse mortgage until age 100. But the fee doesn't get charged up front so you don't pay interest on all that at once. You only pay interest on it as it is charged every month. So the lender has to run a complex formula to figure out how much it will take to pay all of the $35 servicing fee but give you a credit back for the interest you don't pay on it.. Confusing huh? I think so, thank goodness for the computers that calculate it. This is why the amount isn't as simple as $35 times the number of months until your 100th birthday.

FHA Condos

2008-05-05T15:00:00-06:00

Getting a FHA Reverse Mortgage on a condominium requires a little more paperwork, but is a great option for many seniors. FHA has special guidelines for condominiums to help judge the stability of the condominium complex. In a few cases we have actually worked with borrowers and their condominium associations to have the condo rules changed in order to meet FHA Guidelines.

As an FHA Direct Endorsement Lender, we can actually issue "Spot Approval" on condominiums that are not already FHA Approved. This saves a lot of time since we issue these approvals without having to send the condo documents to FHA. There are still guidelines that the condominium has to meet in order for us to issue a spot approval:

90% of the Units must have been Sold
51% of the Units must be Owner Occupied (Not Rentals)
No single entity may own more than 10% of the units
No more than 10% of the units can have FHA Financing (20% if less than 30 units)
Control of the common areas must have been turned over to the association for 1 year
No ongoing or further addition of units, common elements or facilities anticipated
There can be no restriction on conveyance (i.e. first right of refusal at sale)

If you live in a condominium and are considering a reverse mortgage, call one of our reverse mortgage specialist today. They can check to see if your condominium association is approved and walk you through the approval and reverse mortgage process.

Jacksonville Reverse Mortgages

2008-05-05T14:46:00-06:00

Our Jacksonville Florida office has been seeing more and more reverse mortgage business. It seems there are many north Florida seniors who are taking advantage of the Reverse Mortgage. Most of the loans are FHA Insured HECMS although some have utilized our Jumbo Product.

Our Jacksonville Beach office serves the North Florida market. As a local company we understand whats going on with values in Florida and that values can change greatly from neighborhood to neighborhood. This understanding of local market trends allows us to serve our local customers much better than a company located out of state. Our employees have lived in many of the neighborhoods and areas where we now make loans which gives us a much better understanding of the values.

We have recently made loans in Jacksonville, Ponte Vedra, St. Augustine, Orange Park and many other North East Florida communities.

The Jacksonville office is located at:

340 3rd Ave South, Suite A

Jacksonville Beach, Fl 32250

To get the the office travel east on Beach Boulevard to Jacksonville Beaches. Turn left on 3rd Street/A1A and travel south three blocks to 3rd Ave South.

Fixed Rate Reverse Mortgage - Florida

2008-04-17T19:21:34-06:00

We are proud to offer a Fixed Rate Reverse Mortgage! Many Seniors have been hesitant to take advantage of the benefits of a reverse mortgage because of the adjustable rate. Not any more, we are glad to announce the Fixed Rate Reverse Mortgage.

As a Special Offer, the first 100 people who apply for a Fixed Rate Reverse Mortgage will receive a 1% origination fee - a 50% Discount! The offer is only available in Florida since that is where we are license. If you are interested in a Fixed Rate Reverse Mortgage in Florida call today to take advantage of this special offer. If you are one of the first 100 people you can really save some money.

Call today for details (888) 648-4843.

Reverse Mortgage Calculator Info

2008-04-17T19:15:00-06:00

A Reverse Mortgage Calculator is a great way to find out how much money you would receive if you took out a reverse mortgage. The reverse mortgage calculator must be updated weekly as interest rates change and follow all of the rules set in place bu HUD. Not all reverse mortgage calculators are accurate.

We make sure that our reverse mortgage calculator is updated frequently and that all of the estimates are accurate. Our calculator only calculates the monthly adjustable HECM since it is the most popular product. We are in the process of adding a fixed rate reverse mortgage calculator.

If you are curious about how much money you could qualify in a reverse mortgage feel free to check out ourreverse mortgage calculator. All you need to input is your date of birth, value of your property, amount of existing mortgages and zip code. It will do the rest and calculate how much you qualify for, its that simple!

Reverse Mortgage: CMT vs HECM

2008-04-17T18:46:04-06:00

Recently the Reverse Mortgage (HECM) market has added a new index to the available options. You now have a choice of the index you will get on your loan.

Lets start by analyzing what the index is. The index determines what the monthly interest rate will be for the life of the loan. Each month the index changes, it is a published financial indicator that is used in the markets. The current choices for HECMs are the 1 Year CMT - the Constant Maturity Treasury Index or the new 1 Month LIBOR - the London Inter Bank Offered Rate.

These rates are published on a regular basis and if they go up, your rate goes up. If they go down, your rate goes down. This is the "horse you are hitching your wagon to." Your interest rate will do whatever these rates do. Unfortunately there is no way to know how an index is going to perform in the future. We can however look at the historical values of these rates.

FHA Principal Limit Lock

2008-04-10T17:39:00-06:00

HUD Recently released a Mortgagee Letter that effectively eliminated the Principal Limit Lock for HECM Fixed Rate Loans. The notice stated that the final note rate had to match the rate used to calculate the principal limit.

This means the amount of money available in a reverse mortgage could change from the time the application is made and the time the loan closed. This ONLY effects Fixed Rate HECM loans which are already offering less cash than the traditional HECMs.

I don't understand why lenders aren't hedging this paper and offering a true "Lock In" upfront like forward mortgages. Why rely on a principal limit lock would they could be offering a rate lock up front. I think this is a good example that the reverse mortgage industry still has some maturing to do. There was a time in Forward mortgages when rates could not be locked in advance of closing.

Non Recourse Loan

2008-04-06T13:55:00-06:00

Non Recourse means that you or your estate can never lose more than the home. If your home goes into foreclosure on a recourse loan, and there is still a balance owed after the home is sold at auction, the lender can seek reimbursement from your other assets. They can file judgments and against other property and seize assets to regain their losses.

On a non recourse loan, the lender can only take the home, nothing else. This means that all other assets in our estate are safe in the event you walk away from the home. If you owe $500,000 and your home is only worth $200,000 when you pass away, the bank cannot seek the remaining $300,000 from your estate. All of your estates assets are untouchable because HECMS are NON RECOURSE!

All government insured reverse mortgages are non recourse, but other reverse mortgages may not be. Make sure you understand the terms and conditions of the reverse mortgage you are seeking. If you are getting a government insured HECM reverse mortgage the guidelines are all the same. If you are getting a non government insured reverse mortgage the terms can vary widely from lender to lender.

Acceleration Clause

2008-04-06T13:43:00-06:00

The acceleration clause is the part of a mortgage that allows a lender to call the remaining principal balance due, and ultimately take the property through foreclosure if the acceleration demand is not met.

On a forward mortgage the acceleration clause is triggered if the monthly payments are not made on time. Everyone knows if you don't make your payments you loose your house. What most people don't understand is that reverse mortgages have an acceleration clause as well, but it is triggered under different circumstances.

The main reasons are reverse mortgages is accelerated (meaning the entire remaining balance becomes due immediately) include: the borrowers pass away or the borrowers no longer occupy the home.

When either of these events occur, the reverse mortgage becomes due. If you or your heirs wish to keep the house they must satisfy the acceleration and pay off the mortgage. If you don't, you can just walk away with no consequence other than the bank taking the house because a reverse mortgage is a non-recourse loan. "Non recourse" is discussed in another article.

203b Limit, Max Claim

2008-04-06T10:18:00-06:00

All HECM Reverse Mortgages are subject to the 203b loan limit (FHA Loan Limits) this is sometimes referred to as the "max claim" amount. When your reverse mortgage benefits are being calculated the lender must use the LESSER of your home's appraised value and the FHA Loan Limit.

For example if you live in a low cost county, the current loan limit is $200,500. If your home was worth 205,000 or 305,000 your benefit would be the same because the calculations would be based on the loan limit since it is LESS than the appraised value. If you value was only 190,000 then your calculations would be based on value.

Below is a list of Florida Counties that are above the base limit of $200,160. Any county in Florida not listed below is limited at $200,160.

ALACHUA  $204,440
BAKER  $294,500
BAY  $300,960
BREVARD  $221,350
BROWARD  $362,790
CHARLOTTE $224,209
CLAY  $294,500
COLLIER  $362,790
DUVAL  $294,500
FLAGLER  $218,500
GILCHRIST $204,440
HERNANDO $222,300
HILLSBOROUGH $222,300
INDIAN RIVER $213,750
LAKE  $268,850
LEE  $270,750
MANATEE  $336,100
MARTIN  $276,640
MIAMI-DADE $362,790
MONROE  $362,790
NASSAU  $294,500
OKALOOSA $237,405
ORANGE  $268,850
OSCEOLA  $268,850
PALM BEACH $362,790
PASCO  $222,300
PINELLAS $222,300
POLK  $205,200
SARASOTA $336,100
SEMINOLE $268,850
ST. JOHNS $294,500
ST. LUCIE $276,640
SUMTER  $211,375
VOLUSIA  $230,177
WALTON  $362,790

HECM Tenure Payments

2008-04-06T10:10:00-06:00

The Tenure Payment option of a HECM and some other Reverse Mortgages allows you to receive a monthly benefit payment for as long as you live and continue to reside in the home. These payments are a perfect way to receive a set amount off cash every month to supplement your income.

On a HECM the monthly payments are guaranteed by the Federal Government. If your lenders goes bankrupt or fails to send your payments, the Federal Government will step in and make sure you receive all the money you are due. This is one of the key benefits of the HECM loan. If you take tenure payments on any other reverse mortgage product you are depending solely on that lender. If the lender is unable to unwilling to make you payments, you do not have the protection of the Federal Government. For this reason, if you are seeking a reverse mortgage that is not government insured, I would suggest taking all of your cash up front.

You will receive more money through the tenure payment option, and pay less interest. The interest only accrues on the funds as you receive them. The calculations mandated by HUD for HECM reverse mortgages takes this into account and gives you access to more money.

As an example we had a client recently who was 62 and was eligible for either 106,000 cash up front or $590.72 per month for life. If they lived to be 90, they would receive a total of 198,481.00. You can see the extra cash created over time. The alternate situation to consider is investing the 106,000 - what would the value be in 28 years? This depends on the returns available in the market, these are the choices you must analyze and consider when deciding on a reverse mortgage. With the HECM tenure option the return and the payments is GUARANTEED by the government, you don't run the risk of losing the money through poor or under performing investments.

Reverse Mortgage Terms

2008-04-05T22:23:00-06:00

Reverse Mortgage Terms

Reverse Mortgage Scams

2008-04-05T22:20:00-06:00

As reverse mortgages become more popular, they are beginning to draw the attention of scam artists. Here are some important tips to keep in mind:

1) Never pay for information or education about reverse mortgages. There are scam artist offering to teach seniors "how to get a reverse mortgage" and charging thousands of dollars! You can receive all of the information you need through any HUD approved lender. You can request educational information free from us.

2) Only work with a HUD Approved lender. You can verify if a lender is approved through HUD website here. If you work with a lender that is not HUD approved, you will either receive a reverse mortgage that does not carry the guarantee and insurance of the federal government, or they will end up referring you to a HUD approved lender and charging a fee as high as $2,000 for acting as your "Adviser". The fee is included in the origination fee and financed in the loan so you may not even notice it, but they are charging this much just for "advising you."

3) Never sign ownership of your property over to anyone. You should not have to sign a deed to the lender, loan officer, title company or anyone else involved in the transaction. There are instances where you may opt to remove or add a family member to your deed, but you should never sign a deed to any other party. Beware of any document presented to y ou at the closing that includes the terms "Convey" or "Deed". There are reverse mortgage scams where an unscrupulous loan officer or lender will tell you it is normal practice to "Deed the home over to them", if this happens you should report them to the Dept of HUD and discontinue any dealings.

4) Never sign over your proceeds check. There have been scams where a loan officer has convinced a borrower to "sign over" the closing check telling them it was "Standard Procedure" in order to receive the tenure payments. The loan officer made a few payments to the borrower (while scamming others) and then disappeared with the money. In a legitimate reverse mortgage transaction involving monthly benefit payments, the money will not be disbursed at the closing, the lender will hold it back in order to provide it monthly according to the terms of the reverse mortgage. Never sign a check made out to you over to anyone else!

To learn more about reverse mortgage loans, request my free report or continue browsing this website.

Education First Reverse Article Server

2008-04-05T15:29:00-06:00

Welcome to the new Education First Reverse Mortgage article server. In order to increase the amount of education information available we have added this article server. The Reverse Mortgage Article Server can be accessed at www.efreverse.com/articles/.

We are adding more articles the database on a daily basis, so check back offten for the latest information.

Thank you for visiting www.efreverse.com