Tag Archives: Reverse mortgage

Title Services

8 Mar

An innovative industry leader, Tradition Title Agency provides unrivaled service with continued expansion of our full range of services and solutions in New York, New Jersey and Pennsylvania. Our experienced and knowledgeable staff, along with our carefully developed network of key partnerships, can find creative solutions for any complex residential or commercial need for a clear title.

 

We are especially well known for:

Reverse Mortgages

A specialty of Tradition Title Agency, we help lending professionals streamline the often-complicated process of assisting seniors to stay in their beloved homes with a Reverse Mortgage. We create productive working partnerships to educate and assure consumers, leading to less fear and confusion for seniors and their families, and more trouble-free, successful closings for you.

Commercial Mortgages

We save our business-to-business clients time, aggravation and money by anticipating and solving challenges before they become a deal breaker for you or your client. With our 40-plus years of experience, no issue has ever proven irresolvable to the expert team at Tradition Title Agency.

Residential Mortgages

Tradition Title Agency works with all types of lending professionals to help people realize the American Dream of home ownership, insuring that no one has to endure the nightmare of unexpected expenses, claims or losses now or after the closing.

Please call the Tradition Title Agency office for more information at 631-328-4410 or submit our contact us form.

We can help!

Reverse Mortgage Index at Record High

28 Sep

The National Reverse Mortgage Lenders Association (NRMLA) / RiskSpan Reverse Mortgage Market Index (RMMI), which quarterly analyzes trends in the home equity, home values and mortgage debt of homeowners age 62 and older, hit its record-high of 195.29 in the second quarter of this year.

This growth effectively surpasses the prior record of 192.03 the RMMI set in the fourth quarter in 2006. On a quarter-over-quarter basis, the index rose 3% in the second quarter, driven by a $117.1 billion increase in senior home equity, according to the RMMI. (Click chart to maximize image)Screen Shot 2015-09-22 at 3.21.01 PM

The increase in senior home equity, relative to the first quarter, was driven by an estimated $122.8 billion growth in the aggregate value of senior hosing, which the NRMLA/RiskSpan RMMI noted was offset by a $5.7 billion increase in senior-held mortgage debt.

“The strong gains in housing wealth among America’s seniors are an encouraging indicator for the millions of boomers who weathered the recession on the cusp of their retirement years,” said NRMLA President and CEO Peter Bell in a written statement. “The home equity they’ve worked so hard to build up can serve as a valuable financial management tool for years to come.”

The second quarter was the 13th consecutive quarter in which the RMMI has risen.

Additionally, the current estimate of $4.08 trillion for the aggregate value of senior home equity represents a 38% recovery from the post-Recession trough in the second quarter of 2011, when senior equity levels fell to an estimated $3 trillion, according to the NRMLA/RiskSpan analysis.

from RMD online September 22, 2015

Who Are We?

25 Aug

Title Services

An innovative industry leader, Tradition Title Agency provides unrivaled service with continued expansion of our full range of services and solutions in New York, New Jersey and Pennsylvania. Our experienced and knowledgeable staff, along with our carefully developed network of key partnerships, can find creative solutions for any complex residential or commercial need for a clear title.

 

We are especially well known for:

Reverse Mortgages

A specialty of Tradition Title Agency, we help lending professionals streamline the often-complicated process of assisting seniors to stay in their beloved homes with a Reverse Mortgage. We create productive working partnerships to educate and assure consumers, leading to less fear and confusion for seniors and their families, and more trouble-free, successful closings for you.

Commercial Mortgages

We save our business-to-business clients time, aggravation and money by anticipating and solving challenges before they become a deal breaker for you or your client. With our 40-plus years of experience, no issue has ever proven irresolvable to the expert team atTradition Title Agency.

Residential Mortgages

Tradition Title Agency works with all types of lending professionals to help people realize the American Dream of home ownership, insuring that no one has to endure the nightmare of unexpected expenses, claims or losses now or after the closing.

Please call the Tradition Title Agency office for more information at 631-328-4410 or submit our contact us form.

We can help!

Keeping Up With The HECMs

3 Mar

This past weekend saw the most recent of many changes to the HECM Reverse Mortgage program, when HUD set a new date for the implementation of Financial Assessment.  Here is a summary:

* Financial Assessment – All reverse mortgages with FHA case numbers assigned on or after April 27, 2015, will be subject to Financial Assessment.  Lenders must now check credit history and funds available to determine a borrower’s willingness and ability to keep up with property charges (real estate taxes and homeowners insurance).

* New Principal Limit Factors – August 4th of last year saw a change in the figures used to calculate the amount of money a HECM borrower may receive.  Most borrowers will see an increase in funds available.

*Maximum First Year Draw – Borrowers are limited to 60% of available funds during the first year of their reverse mortgage, with the exception of “Mandatory Obligations” ie: funds which satisfy liens that must be paid at closing, including closing costs, upfront FHA mortgage insurance premiums, mortgages and home equity loans being paid off by the HECM.

* Reduced Up-Front Mortgage Insurance – Closing costs are significantly lower for those borrowers who access less than 60% of available funds at closing – higher for those whose Mandatory Obligations brings the initial draw over 60%.

*Protections for Non-Borrowing Spouses – the new Principal Limit Factors include non-borrowing spouses younger than the qualifying age of 62.   There are certain protections for these spouses should they survive the borrower.

 

For details on these changes, contact Tradition’s President, Karen Keating.  She holds the prestigious Certified Reverse Mortgage Professional designation and can answer any questions or direct you to the pertinent Mortgagee Letter.

CFPB Consumer Complaints

25 Feb

A recent report from the Consumer Finance Protection Bureau that takes a look at consumer complaints in the reverse mortgage arena over a three-year period has identified seven main complaints about the process.

Consumers complain that they cannot refinance

Consumers complain that they are unable to change the terms of their loans

Surviving spouses lose their home upon death of the borrowing spouse

Consumers complain about problems with loan servicing

Consumers complain that loan servicers make repaying the loan difficult.

Consumers complain that they are facing foreclosure due to nonpayment of property taxes or homeowners insurance

Consumers complain that loan servicers fail to keep accurate records.

Consumers complain that they face obstacles when attempting to prevent foreclosure

Most of the complaints boil down to consumer confusion over the terms of a loan. The most common complaint is that borrowers are unable to refinance. Related, many consumers dislike that they cannot change the terms of the loan. The most frequent complaint concerning requested loan changes “involves consumers wishing to add additional borrowers to the loan in order to extend the term of the loan,” the report states. “Reverse mortgages prohibit loan assumptions since actuarial tables are used when a reverse mortgage is issued to determine how much to lend to the borrower.”

Perhaps the most serious complaint comes from surviving, non-borrowing spouses. When the borrower spouse dies, surviving spouses suddenly face foreclosure, despite the fact that “some consumers report that their loan originator falsely assured them they would be able to add the other spouse to the loan at a later date,” the report states. Similarly, others complained that the loans are often difficult to repay and that lenders often throw obstacles in the way when consumers take steps to avoid foreclosure.

It should not be construed, however, that complaints run rampant in the reverse mortgage world.

From December 2011 through December 2014, the CFPB received 1,200 complaints regarding reverse mortgages. In 2012, the CFPB stated in its Report to Congress that there are an average 70,000 reverse mortgage loans written every year. Reverse mortgages make up about 1 percent of all mortgages, and complaints about reverse mortgages make up about 1 percent of all mortgage complaints.

Usually, borrowers themselves are happy with the loan process and complaints typically come from adult children who were not part of the lending process to begin with ‒‒ and were excluded specifically by borrowers wanting to keep their children out of the process.

One bright spot for non-borrowing spouses, however, is the changes the Department of Housing and Urban Development has implemented to give non-borrowing spouses greater leeway to defer loan payments after the borrowing spouse’s death. Mortgagees can start complying with new non-borrowing spouse requirements for case numbers assigned as of Jan. 12, and full compliance is mandatory as of March 9.

New Reverse Mortgage Qualifications Do Not Allow For “Deadbeats” – The Mortgage Professor Comments

28 Jan

One of the attractive features of the HECM reverse mortgage has been that there
are no income or credit requirements. All homeowners 62 and older who live in
their homes without a mortgage have been eligible, and those with mortgages
may also be eligible if the balance is not too large.

But all that will change effective March 2, 2015 when a series of drastic new FHA rules come into play.
The precipitating factor underlying the new rules is the marked rise that has
occurred in recent years in property tax defaults by HECM borrowers. While
such borrowers are violating their obligations under the reverse mortgage
contract, and are thereby subject to foreclosure and eviction, FHA has been
understandably reluctant to allow elderly homeowners to be thrown into the
street. Because of the potential political and public relations fallout,
those critical provisions of the HECM contract are essentially unenforceable.
Instead, FHA has elected to impose income and credit requirements on future
applicants. The purpose is to assure that henceforth borrowers will have both the
capacity and the willingness to pay their property taxes and homeowners
insurance. While this won’t affect existing loans that are now in default, it
should sharply reduce the default rate on new loans. The downside is that future
borrowers will have to pay the higher costs of originating and servicing HECMs,
and wait longer for deals to be completed.
The new underwriting requirements that lenders will apply to all applicants are
very detailed, and in some respects tougher than those used with standard
mortgages. I went through the new rules with an underwriter, who pointed out a
series of provisions that went beyond anything in the rules pertaining to standard
mortgages. This is strange, considering that applicants for reverse mortgages pay
only taxes and insurance whereas applicants for standard mortgages also pay
principal and interest, which is usually much larger.
On the other hand, the applicant for a standard mortgage who fails to meet the
underwriting criteria is rejected whereas the applicant for a reverse mortgage
who fails the test has another option, called a FullyFunded Life Expectancy SetAside.
The SetAside is an amount drawn under the HECM that is reserved for
payment of property taxes and insurance by the lender. The amount, calculated
using a formula provided by FHA, is viewed as sufficient to assure the required
payments can be met though the entire life span of the borrower.
I calculated the required SetAside for a borrower of 75 with life expectancy of
144 months, taxes and insurance charges of $5000 a year, and interest rate plus
mortgage insurance premium of 5%. It was $54,000, not a trivial sum. If this
borrower had equity in his home of only $100,000, the SetAside
would use virtually all of it, and no additional funds could be drawn. If his equity was less,
the required SetAside would not be possible and he would be rejected.
There is another possible option, however, termed a PartiallyFunded Life
Expectancy SetAside. This is available to applicants who meet the credit
requirements and are therefore viewed as willing to meet their obligations, but
don’t have enough income. This SetAside, which can be much smaller, is used
to draw funds from the HECM twice a year, which are sent to the borrower who
makes the payments.
In addition to their complexity, the new rules have two remediable weaknesses.
One is that the new underwriting requirements must be applied to every
applicant. But applicants with plenty of equity in their homes might find that the
fullyfunded SetAside imposes no burden on them at all, in which case the
underwriting costs could be avoided. There is no reason why lenders and
borrowers should not have that option.
The second weakness is mandating that the lender make the required payments
under the fullyfunded SetAside.  Why not give borrowers the option of making
the required payments with their own funds, with the inducement that an
equivalent amount will be transferred from the SetAside account to the
borrower’s credit line? The purpose is to encourage borrowers to become
responsible. This would involve no risk to FHA, since the lender will make the
payments if the borrower doesn’t.
Copyright © 2015 The Mortgage Professor

6 Jan
The Motley Fool  

Reverse Mortgages: What Every Retiree Needs to Know

http://www.fool.com/retirement/general/2015/01/04/reverse-mortgages-what-every-retiree-needs-to-know.aspx

Dan Caplinger
January 4, 2015


Source: Department of Housing and Urban Development.

Millions of retirees face the financial challenge of making ends meet, and for many of them, the equity they have in their homes is their largest untapped asset. Yet many retirees don’t want to make the dramatic decision to sell their family home in order to free up the home equity they’ve built up over the years, preferring instead to stay where they are and consider alternative ways to gain access to much-needed cash. In that vein, reverse mortgages promise to give retirees an easy way to pull out their home equity, but there are several technicalities that you should understand before considering a reverse mortgage. Let’s take a closer look at what reverse mortgages are and whether they’re right for you.

What a reverse mortgage is

One of the biggest confusions about reverse mortgages is the terminology involved. In its most traditional form, a reverse mortgage involves making an arrangement with a lender whereby the lender makes monthly payments to you. But reverse mortgages have several different payment arrangements. One allows you to take payments for as long as you’re alive and remain in the home. Others let you take payments for a fixed number of years, in a lump sum, or at the future time of your choosing through a line of credit. Which option you choose will affect how much you’re able to borrow, but in general, the percentage of your home equity that you’re allowed to tap will be higher for older retirees and lower for those at or near the minimum required age of 62.


Source: Images Money.

The Federal Housing Administration runs a government-insured reverse mortgage program that uses private lenders to extend reverse mortgage loans. The primary benefit of FHA reverse mortgages is that as long as the reverse-mortgage borrower remains in the home as a principal residence, the loan won’t come due. Only after the borrower dies, sells the home, or moves elsewhere does the reverse mortgage immediately become due. Moreover, if the loan amount outstanding exceeds the value of the home, then the government is on the hook to cover the difference, protecting the lender and making sure that the lender won’t come after you for any shortfall.

The costs of a reverse mortgage

The benefits of reverse mortgages come at a price, though. Initially, you’ll pay between 0.5% and 2.5% of your loan amount as a mortgage insurance premium, and every year, you’ll pay another 1.25% of the outstanding mortgage balance to cover insurance costs. In addition, lenders are eligible to charge origination fees of as much as $6,000, with charges of up to $2,500 for the first $125,000 of value, 2% of the next $75,000, and 1% of the value above $200,000 subject to the overall maximum. Finally, monthly servicing fees can add $30 to $35 to the cost of a reverse mortgage.

To make things easier for retirees, the FHA often allows you to incorporate these costs into the total amount of the loan. That means you don’t have to pay them out of pocket, but they also reduce the amount that’s available to you to borrow or receive in monthly payments.

The surprise “gotcha” with reverse mortgages

Source: Flickr user Mark Moz.

One confusing aspect of reverse mortgages that trips up unsuspecting families is the requirement that the borrower live in the home. When married couples are both listed as borrowers on a reverse mortgage, their joint life expectancies can result in reduced payments. To boost their payment amounts, some homeowners choose to list just one family member on the reverse mortgage.

That strategy can backfire if the borrower has a medical condition that requires long-term care outside the home. In some cases, the borrower’s spouse will find that the reverse mortgage comes due immediately because the borrower no longer can treat the family home as a primary residence, and the spouse will therefore have to move out if the loan can’t be repaid.

The solution is simply to list both spouses on the reverse mortgage and accept the lower benefits that come with it. The peace of mind of knowing that the loan can’t come due as long as either one of the named spouses lives in the home can outweigh any financial reduction in payments.

Learn more

You can find more information about reverse mortgages from the websites of the government agencies that oversee them. The Department of Housing and Urban Development has information on reverse mortgages here, and you can see the answers to many frequently asked questions about reverse mortgage on this web page.

Reverse mortgages can be complicated, but they also offer a unique way to tap your home equity in a way that’s consistent with the typical retiree’s lifestyle. As long as you’re aware of the potential pitfalls, a reverse mortgage can be a great solution for your liquidity needs while letting you stay in your home as long as you like.

Reverse Mortgages to Require Financial Assessment Starting March 2, 2015

14 Nov

The Department of Housing and Urban Development has issued a financial assessment for reverse mortgage borrowers that will take effect for all case numbers issued on or after March 2, 2015.  The financial assessment is detailed by HUD through Mortgagee Letter 2014-22 published Monday.

“The mortgagee must evaluate the mortgagor’s willingness and capacity to timely meet his or her financial obligations and to comply with the mortgage requirements,” HUD writes in defining the purpose of the financial assessment. “In conducting this financial assessment, mortgagees must take into consideration that some mortgagors seek a HECM due to financial difficulties, which may be reflected in the mortgagor’s credit report and/or property charge payment history. The mortgagee must also consider to what extent the proceeds of the HECM could provide a solution to any such financial difficulties.”

NRMLA issued a statement in support of the financial assessment following its release.

“At NRMLA, we are always concerned about protecting those aging Americans who cannot afford to meet the responsibilities of reverse mortgage loans,” said NRMLA President and CEO Peter Bell. “Financial Assessment will help determine if the product is right for the potential borrower. By implementing this process, HUD is responsibly making the HECM a safer product.”

Reverse Mortgages For Co-ops Unlikely

2 Sep

from the New York Times Sunday Aug 31, 2014

A long-awaited regulatory change that would open up the federal government’s reverse mortgage program to co-ops is unlikely to happen, presenting a problem for older New Yorkers.

“There is a huge class of older owners who have enormous equity in their apartments who would like to use some of that” for medical bills, building maintenance and other expenses, said Arthur I. Weinstein, a Manhattan lawyer and a vice president of the Council of New York Cooperatives and Condominiums, which represents about 2,300 co-ops and condos.

Most reverse mortgages are issued through the Home Equity Conversion Mortgage program, which is insured by the Federal Housing Administration, a part of the Department of Housing and Urban Development. Under this program, homeowners 62 and older can withdraw some of the equity in their homes as monthly cash payments, a line of credit or a lump sum disbursement. The amount borrowed, plus interest, insurance and fees, is due only when the owner moves out of the home or dies.

Single-family homes, multifamilies with up to four units, condominiums approved by HUD and manufactured homes that meet F.H.A. standards are eligible for these loans, known as HECMs. Co-ops are not.

Co-op advocates had expected that to change, however, largely because of a provision in the Housing and Economic Recovery Act of 2008 that permitted HECMs to be used for co-ops. HUD was charged with writing regulations to extend the program.

But Mary Ann Rothman, the executive director of the Council of New York Cooperatives and Condominiums, said her organization learned that HUD began drafting regulations a few years ago and then ultimately decided not to put them into effect, “which is terribly, terribly distressing to us.” Ms. Rothman says she frequently hears from co-op shareholders eager to tap into their equity; they tend to check in with her repeatedly to find out whether regulations are forthcoming. “Eventually, I don’t hear from them again,” she said, “and you just know they had to sell the apartment where they would have most loved to stay on.”

A HUD spokesman confirmed that the agency had studied expanding HECM to include co-ops, but decided against it because “F.H.A.’s single-family programs are based on loans being secured by real property and the co-op structure does not meet this basic requirement.”

Co-ops are owned by a corporation and run by a board; residents own shares, rather than property. And because most co-ops are in the New York area, HUD anticipated that loan volume would be small.

Ms. Rothman said that through her affiliation with the National Association of Housing Cooperatives, she has been urging members nationwide — including those in Chicago, Florida and California, where there are concentrations of co-ops — to contact HUD about their own support for reverse mortgages. “We do everything we can to stress the diversity of places where housing co-ops are located,” she said.

Mr. Weinstein noted that before the housing crash, reverse mortgages were available to co-ops through some portfolio lenders (outside the F.H.A. program).

These proprietary loans are largely unavailable, but Peter Bell, the president and chief executive of the National Reverse Mortgage Lenders Association, says he thinks the situation may change in a year or so. Lenders are now beginning to return to the reverse mortgage market, he said, “and my guess is the New York co-op market will be a very attractive opportunity.”

New Proprietary Reverse Mortgage

25 Aug

Urban Financial of America is rolling out a new, proprietary reverse mortgage that will be made available to borrowers beginning September 2.

The new, fixed-rate loan, called the “HomeSafe,” will be focused on borrowers with high-value homes, with a maximum loan amount slightly more than $2 million. It will roll out initially in five states: California, Florida, Hawaii , New Jersey and Texas, with more states anticipated in the coming months.

A private investor group has partnered with UFA on the product, which has long been in the making, says Urban Financial President and CEO Steve McClellan.

The reverse mortgage market has, for several years, offered just a single proprietary reverse mortgage: Generation Mortgage’s Generation Plus jumbo loan, which was reintroduced in 2010. The Generation product is offered to borrowers with homes valued between $500,000 and $6 million, well outside the bounds of the Federal Housing Administration’s Home Equity Conversion Mortgage lending limit.

Other lenders have talked about the potential for more proprietary products, but none has yet to offer one.

Urban sees the Home Safe as an opportunity to work with borrowers who own non-FHA approved condos as well as high-valued homes.

“We view this as a complementary product, not a replacement product,” McClellan says. “It doesn’t apply for everybody, but it will allow for more participants in the market.”

The pricing of the product, which will include a credit underwrite for borrowers, will be more competitive than what is currently offered, he adds.

“Our product is priced a lot more attractively than the market. It will be a lot more price-friendly to clients,” he says.

It will launch at an initial interest rate around 7% and will be made available through Urban’s wholesale and correspondent channels, with Urban doing the underwriting of the loans.

“If you are a younger senior and you have a $700,000 condo that is not FHA approved, you can’t get anything out of that home with the HECM,” he says, noting the 140,000 senior homeowners in California with homes valued at more than $1 million.

Urban is mum on details of the loan-to-value ratios that will be available under the Home Safe loan.

“That’s a big part of our secret sauce,” McClellan says.

Hinting as to the possible loan amounts, however, Urban says the loan amount will be driven by age and home value.

“The older you are, the more you can access,” McClellan says.

Under one sample scenario, a homeowner with a $1.5 million home with a $100,000 mortgage can qualify to borrow roughly $410,000 under the fixed rate HECM program including a $246,000 upfront draw. With the HomeSafe, the same borrower can access $575,000, all upfront.

On purchase reverse mortgages, the HomeSafe will allow for seller credits, which are not allowed under the HECM program, offering an additional advantage to those utilizing the product.

from ReverseMortgageDaily