Tag: Home equity

FHA Weighs Rule Reversal, Boon for Condo Sales?

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story
Daily Real Estate News | Tuesday, May 22, 2012

The Federal Housing Administration is reportedly considering revising rules that many in the real estate industry have called overly strict and that have left many condo units ineligible for FHA’s low-downpayment mortgages.

For example, one sticking point under the FHA’s rules has been that “individual condo units cannot be sold to buyers using FHA-insured mortgages unless the property as a whole has been approved for financing,” The Wall Street Journal reports. However, condo association boards are increasingly opting not to obtain recertification of their buildings for FHA loans due to its tightened regulations against condo units.

FHA’s regulations “have had an enormous impact on individuals,” says Moe Veissi, president of the National Association of REALTORS®. More condo unit residents are finding they are unable to sell their unit because the condo board hasn’t obtained approval from FHA, Veissi told The Wall Street Journal. This then can have a roll-over affect that negatively impacts the price of condo units in the buildings then.

Half of all condo buyers tend to use FHA mortgages, and it’s an important source of lending for first-time and minority home buyers, Christopher L. Gardner, managing member of FHA Pros, a consulting firm that helps condo boards obtain FHA approvals, told The Wall Street Journal.

FHA officials say they are willing to reconsider some of their rules that have raised such an outcry among condo owners, lenders, and real estate professionals. For example, one rule the FHA is reportedly reconsidering is its stance on non-owner occupancy. As of now, FHA requires that no more than 50 percent of the units in a condo building be non-owner occupies. “This rule alone has made large numbers of condominiums in hard-hit markets ineligible for FHA financing, where investors have purchased units for cash to turn into rentals,” The Wall Street Journal reports.

FHA also is reportedly revisiting its condo rules on how many owners in a building can be delinquent on their fees. As of now, FHA refuses to approve a project if more than 15 percent of the condo units are 30 days or more late on their condo association fees, The Wall Street Journal reports.

Source: “Condo Sales May Become Easier if FHA Revises Rules Governing Mortgages,” The Wall Street Journal (May 18, 2012)

Financial Planners to Reverse Mortgage Lenders: Educate Us

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story

by Elizabeth Ecker Published in News, Reverse Mortgage

A panel of financial planning professionals shared insight with attendees of the National Reverse Mortgage Lenders Association conference in Irvine, California last week. By and large their message to reverse mortgage professionals was: education is paramount.

While some financial planners do understand the viability of reverse mortgage products and they ways in which they can work for clients, and even with the help of recent positive financial planning press on the products, there is still work to be done on the education front, they say.

“I was getting a lot of phone calls about reverse mortgages,” said Pat McClain, senior partner and founding principal of Hanson McClain Advisors of his early experience with reverse mortgages. “I initially had a negative attitude toward reverse mortgages. But I realized they weren’t the reverse mortgages of old; they actually help people if used correctly.”

McClain, who became one of the founders of Liberty Reverse, now advises clients on financial planning. While his mind was changed, there are still others who need help understanding how the products can work.

“In terms of clients’ perceptions, there is still a lot of work to be done,” says Jerry Clements, certified financial planner with Ameriprise. “For most there is a negative connotation when I talk to clients.”

But, Clements says, there are ways reverse mortgage professionals can work with financial planners to bring them up to speed. Some are working with reverse mortgage advisors already, others are not.

“A lot of us still have preconceived ideas. …hopefully over time with education [the reverse mortgage] could be something they integrate more as a tool to prevent portfolio failure,” he says.

While real estate professionals focus on location, location, location, McClain says, for financial planners, it’s education that counts.

“For us in the financial planning community, it’s education, education, education,” he says. “You may assume we understand how it works, but some do not have a clue. It’s a process. It may take years to develop the relationship, but if you do and there’s that trust, you will be top of mind. Our clients are asking about it and the more educated we are the more we can help our mutual clients.”

Looking ahead, McClain says, the reverse mortgage could be incorporated into financial planning calculators.

“Figure out as an industry how to bake calculators into financial planning software, so it shows up as a line item. It will make a difference in three to five years, whether they recognize it now, or not.”

Wall Street Journal: Without a Reverse Mortgage, Most Americans Won’t Make it Through Retirement

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Reverse Mortgage

Saturday’s Wall Street Journal article by Tom Lauricella minces no words: “Your financial adviser doesn’t want you to read this column.”

What would cause this venerable financial publication to introduce a piece in such robust terms?

Because, based upon research done by the highly esteemed Center for Retirement Research at Boston College:

Without making any changes to their savings and investment strategies, 74% of households would fall short of their income needs at age 62, and 47% would fall short at age 67, when individuals (born in 1960 and later) become eligible for full Social Security benefits.

By anyone’s standards, these are scary numbers.

This sobering data, fortunately, is not the whole story. The article goes on to state that when certain “levers” are pulled, seniors’ odds improve significantly.

By adding two factors – the aforementioned “levers” – to a retirement portfolio, research demonstrates that odds swing greatly in seniors’ favor.

So what are these two levers?  First is working longer. This cuts down the number of years spent in retirement, and adds savings to the retirement kitty. Demographic studies consistently show people are working significantly longer even compared to just a few years ago, and this trend looks poised to continue.

And the second lever? For many Americans entering retirement, or for those already retired, a Reverse Mortgage makes possible living out their retirement years with dignity and in financial security.

With the FHA-insured Reverse Mortgage, homeowners never give up title, cannot get underwater, never make a payment as long as they remain in the home, and never have to move.

Read the whole article at: http://alturl.com/jiu2o

CNBC Reports on Financial Planners’ Rising Interest in FHA Reverse Mortgage

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Reverse Mortgage

“Financial planners often don’t even understand [reverse mortgages] because the lessons they have learned (from other financial products) don’t apply,” said Barbara R. Stucki, vice president of home equity Initiatives at the National Council on Aging.

But advisers are now jamming them into their tool boxes. Financial planners who once shunned them as too costly and confusing are starting to see their value – especially as other cash sources dry up for retiring baby boomers.

“A reverse mortgage can be a perfectly good way to use your home equity,” said Stephanie Moulton, an Ohio State University public policy assistant professor and reverse mortgage expert who has worked a reverse mortgage counselor for American Association of Retired Persons.

“The danger is that boomers might draw down their equity and spend it on the wrong thing, like expensive vacations, and find themselves with none left at age 75 when they need it even more. But if you use reverse mortgages as part of a financial strategy, they can be a sophisticated product that fills a real need.”

How They Work

Reverse mortgages are offered to people who are at least 62 years of age. There are two main types set up under the FHA’s Home Equity Conversion Mortgage, HECM, and referred to by insiders as ‘heck ‘em.’ (The Federal Trade Commission has a reverse mortgage primer on its site.)

The “standard,” or traditional, reverse mortgage, gives you a stream of income for a number of years, usually as long as you live in your home. As with Social Security, though, there is no “means-testing” or upper income limit. The program can pay thousands of dollars per month on principle of up to $625,000. It is government-guaranteed and not taxable income, and it is not likely to affect Social Security or Medicare benefits. The older you are, the higher the payout.

Read the article at: http://alturl.com/qo9p2

FHA Reverse Mortgage: Rumors Of Its Death Have Been Greatly Exaggerated

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story

Well, well, well – one thing certainly can be said of those of us living in the Washington, DC area: we read our news.

Yesterday, MetLife unexpectedly announced it was exiting the Reverse Mortgage field, catching even its own employees off guard. Met had already sold its bank and closed its home mortgage division months earlier.

Within 10 minutes of the announcement my phone began to ring. And ring…and RING. Colleagues, clients, and co-workers wanted to know if Met’s exit meant my employer, Middleburg Bank, was going to be negatively impacted.

So what does this mean for you, for your clients, and for those of us privileged enough to live here in the greater Baltimore-Washington corridor?

NOTHING. It means nothing.

And WHY? Because the FHA HECM only works when there is equity in the home sufficient to extinguish “forward” loans on the property. Put a home in Tucson or Tulsa, Denver, or Dubuque and chances are the HECM just isn’t going to work.

Put that same home in Bethesda or Brandywine, Arlington or Alexandria, Middleburg or Marshall, and it’s a different story altogether.

The Blessed Are…Well, Blessed: Using Home Equity to Supplement Retirement Income

There are no two ways about it: we here in the shadow of D.C.are blessed in many ways. History books are filled with reasons why those with options have more options still, and those with few options have still fewer.

As one nationwide lender after another exits the HECM market, the product becomes a regional offering. And it makes sense: why would a national lender maintain a workforce of hundreds – or thousands – if the product only works in a handful of regions across the country. We have always had good options – and now we still have good options.

I am grateful to live in a region in which our senior clients, adult children caring for parents, and our family and friends still have available to them the FHA HECM as a planning tool to see them safely through retirement.

Give me a call with any questions or concerns you may have. I am always delighted to hear from you. And, as always, I am privileged to work with you to find solutions to the financial needs of the seniors in your life.

Laurie

Laurie MacNaughton [NMLS# 506562]
Reverse Mortgage Consultant
Middleburg Mortgage
20937 Ashburn Road, Ste 115
Ashburn, Virginia 20147
703-477-1183 Direct
703-995-4870 Fax
LMacNaughton@MiddleburgBank.com
www.MiddleburgMortgage.com/LaurieM

New Mindset, New Objectives

by ReverseLady, posted in FHA HECM, Reverse Mortgage

Why Borrowers Take Reverse Mortgages

Apr 01, 2012 04:21 pm | Elizabeth Ecker | Reprinted From Reverse Mortgage Daily

Reverse mortgage borrowers are taking out reverse mortgages at a younger age according to a recent report by the MetLife Mature Market Institute and the National Council on Aging. Additionally, borrowers are using reverse mortgages for different purposes today versus several years ago.

Younger borrowers are using the loans to pay off debt more than in the recent past, the study shows.

The full report can be found at:

http://www.metlife.com/mmi/research/changing-attitudes-changing-motives.html#key%20findings

More Seniors Use Reverse Mortgages to Raise Cash

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Reverse Mortgage

Finding themselves financially strapped, more seniors at an earlier age are trying to get reverse mortgages on their homes in order to survive, according to a new report.

The study says the percentage of people aged 62 to 64 applying for reverse mortgages has increased 15 percent since 1999.

The reason for the dramatic upswing among “younger” seniors is simple, the report concludes: They need the money.

READ THE REPORT AT:

More Seniors Use Reverse Mortgages to Raise Cash