Tag Archives: reverse mortgages

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.

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Good To Know: What Happens to a Reverse Mortgage When the Borrowers Die?

17 Jul

As more seniors turn to reverse mortgages, their adult children might well be puzzled or
concerned about what will happen to that debt when one or both of their parents eventually
dies. At that time, questions about how to pay off the loan will need to be resolved – and relatively quickly.
Nearly all reverse mortgages today are home equity conversion mortgages, or HECMs, which are insured by the Federal Housing Administration. HECMs are subject to certain rules that might not apply to non-HECMs.
The first thing adult children should know about HECMs is that these reverse mortgages
technically become due and payable when the borrower dies.
The word “technically” is important because it’s understood that a borrower’s heirs can’t possibly refinance or sell the home on the day of death to satisfy the debt, said Beth Paterson, a certified reverse mortgage professional at Reverse Mortgages SIDAC, a division of Greenleaf Financial in St. Paul, Minnesota.

Instead, what usually happens in practice is that the loan servicer sends out a letter that Paterson said might seem insensitive, but is intended to inform the heirs of the rules and ascertain their intentions for the loan and property.
“The servicing companies have had issues with people not notifying them and trying to stay in the home, so that’s why it needs to be harsh,” Paterson said. “My conversation to the consumer is that communication is vital.”

Servicers use a number of resources to find out that a borrower has died. These include the Social Security death index, proprietary databases and annual occupancy letters that typically are sent to reverse mortgage borrowers. “If they don’t get the letter of occupancy back or property taxes or insurance aren’t paid, they start doing the next steps: contacting an alternate contact, searching other records or sending someone out to inspect the property and see if someone is living in the house,” Paterson said.

The borrower’s heirs aren’t required to sell the home to pay off the reverse mortgage, said Cara Pierce, a housing and reverse mortgage counselor at ClearPoint Credit Counseling Solutions in Fresno, California. But if heirs want to keep the home, they’ll have to pay off the loan.
“If they want to get a loan in their own name and pay off the reverse mortgage, they can,” Pierce said. “But if they can’t and there are no other assets, like life insurance, other property or a 401(k),
that they could use to pay off the loan, they will have to sell the property.”
When heirs sell, they typically can choose their own real estate broker. The heirs manage the sale and keep any capital gain after the loan and closing costs have been paid. The borrower’s personal belongings and furnishings can be removed. Fixtures, as defined by state law, can’t.
A tenant living in the property might have certain rights and protections under state law.
Spousal rights If the borrower was married, the surviving spouse might be able to remain in the home even if he or she wasn’t a co-borrower, according to Sarah Mancini, an attorney at the National Consumer Law Center, a nonprofit advocacy organization in Washington, D.C.
That’s important, Mancini said, because some borrowers remove a younger spouse from their
home’s title to secure a larger reverse mortgage, leaving that younger spouse vulnerable to
eviction and foreclosure after the older spouse’s death.
The rules that affect surviving non-borrower spouses are complicated, and surviving spouses and heirs may need to consult an attorney to interpret their rights and options if the spouse wants to continue occupying the property.
“There are serious legal issues,” Mancini said, “and possible grounds for a legal challenge if the lender forecloses while there is still a surviving spouse.”
Upside-down HECMs The loan servicer usually will order an appraisal to determine how much the home is worth,
Paterson said. If the loan balance is higher than market value, the heirs can pay off a HECM at 95 percent of that value.
Another option for heirs is to sign a deed-in-lieu of foreclosure, giving the house to the lender, to resolve the situation more quickly.
HECMs are nonrecourse loans, so once the property is sold or given to the lender, the debt is considered satisfied and cannot be pursued further against the heirs or the borrower’s estate.
If the heirs don’t act, the lender can foreclose.
How long heirs have to act Time frames vary. According to the Department of Housing and Urban Development, or HUD, heirs can get an extension in some cases if a reasonable effort is being made to refinance or sell the home, and the lender and HUD agree to allow more time.
The bottom line, Paterson said, is that “if the servicer is not hearing from the family, they will start foreclosure proceedings.”

from The Houston Chronicle chron.com

2 Jun

Welcome to Tradition Title Agency

No title agency works with more diligence and attention to detail than Tradition Title Agency. With decades of experience creating and using innovative solutions, our team of professionals has perfected title searches, transfers and deeds, for reverse mortgages, residential mortgages, and commercial mortgages in New York, New Jersey and Pennsylvania. We have never had a title issue that we could not find a viable and satisfactory outcome for.

Tradition Title saves your company time and money by streamlining and fast tracking your title clearings. We ensure the safety of your clients’ interests and eliminate liability issues with no hidden fees in an average turn around time of just three to five business days.

We help you build your business by partnering with you to help educate your clients to make the best choices. Mortgage lenders, brokers, loan officers, and attorneys rely on Tradition Title again and again because your satisfied customer is our goal, too.

The entire Tradition Title team is ready to assist you with reverse mortgages, title searches, title insurance, land titles, lien searches, residential title clearing, commercial title searches and more.

Please contact our office to find out what we can do for you at 631-328-4410, email us at info@traditionta.com, or submit our Contact Us Form.

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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

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.”