After June 30, 2023, the 1-month and 1-year LIBOR indices will no longer be published. Therefore, existing borrowers with LIBOR-based loans must be notified, prior to their next rate adjustment, that the variable portion of their interest rate will be tied to an alternate index. What can you tell me about the LIBOR Transition? The […]
Bring on 2023! We have a varied subscriber base at Understanding Reverse, but this message is specifically for the reverse mortgage professionals who work hard each day to change the lives of older homeowners. You help seniors live a more comfortable retirement and maximize their cash flow as they age in place. Your service is […]
Top-10 Reverse Mortgage Consumer Protections The federally insured reverse mortgage product known as a Home Equity Conversion Mortgage or HECM has been around for more than 30 years. During that time, the U.S. Department of Housing and Urban Development (HUD) and other governmental agencies have added layers of protection for older Americans. Let us begin […]
When making big decisions, procrastination is only natural. We fight this battle every morning when we determine which activities are important, and which are easy. Unfortunately, making estate planning decisions based on tax law, Social Security strategies, Medicare guidelines, market conditions, and interest rate projections, is not easy. One thing we know for sure – […]
As part of HUD’s 2015 rollout of Financial Assessment, every lender must now examine every applicant’s credit history and property charge history as well as their residual income. This is done to determine whether the reverse mortgage is a sustainable solution for the borrower. Please note that the lender is not looking at a FICO […]
When a spouse is not a borrower in a HECM transaction, he or she is referred to as a non-borrowing spouse (NBS). This is often due to the spouse not meeting the age requirement of 62. Understanding Reverse-2021 A non-borrowing spouse (NBS) is the spouse of a reverse mortgage borrower that will not be a […]
The answer is maybe, but probably not for the reason you think. Rate caps restrict the movements of interest rates, and the conventional wisdom is that more restrictive caps are better for the borrower, right? Not necessarily. Of course, we do not know what the future holds, but the easier question to answer is have […]
Many still claim reverse mortgages do not require income, and prior to 2015 they would have been correct. That changed when HUD began requiring every lender to examine the financial capacity of the borrower and the sustainability of each HECM loan. Residual income analysis can be summarized using the following 3-step process: 1. Calculate effective […]
One of the great advantages of the adjustable rate Home Equity Conversion Mortgage (HECM) is the ability to draw funds from the line of credit (LOC) when needed. For this reason, the HECM ARM is often preferred over the fixed rate option which does not allow for an open line of credit. Furthermore, those funds […]
Rates are extremely low right now, and I’m not just talking about traditional fixed rate mortgages. When reverse mortgage rates drop, it’s highly beneficial to new reverse mortgage prospects as well as for existing borrowers with federally insured reverse mortgages called a Home Equity Conversion Mortgages (HECMs). As a result, I’ve been asked by many […]
It’s best to plan for retirement cash flow needs, and now is an ideal time for many homeowners to look at their options. In fact, those that believe that a reverse mortgage is a last resort may find that their options could be limited if they wait. Keep in mind, the reverse mortgage industry must […]
I recently had the opportunity to present at our national conference alongside industry trainer, Jim McMinn. During this presentation, one talking point stood out as a misconception that needed addressed – what is necessary to satisfy a HECM loan when it matures? The conventional wisdom is that a HECM payoff will be the lesser of […]
The short answer is yes. ANY homeowner or estate can lose a home for various reasons. While the media sensationalizes this as “news,” they haven’t taken the time to understand reverse. But as ridiculous as this sounds to the novice, there are ACCEPTABLE foreclosures from the borrowers’ (and the heirs’) point of view. Consider Susan, […]
On Friday, December 14th, we saw The U.S. Department of Housing and Urban Development (HUD) raise the 2019 limits for FHA’s reverse mortgage product – the Home Equity Conversion Mortgage (HECM). This means that homes valued above $726,525 are capped at that figure when calculating principal limits. This is an increase of nearly $47,000 from […]
Reverse Mortgage Professionals find themselves constantly touting, defending, and pitching the numerous advantages of the federally insured Home Equity Conversion Mortgage (HECM). The primary reason they put in so much effort is not to make a sale. It is because the public is still confused and largely unaware of the lifestyle and financial planning advantages […]
