Tag Archives: Social Security

2015 NRMLA Regional Conference, Day Two, Afternoon

13 Apr

Tradition Title Agency representatives Karen Keating and Alison Keating met many of our partners at this year’s National Reverse Mortgage Lenders Association Regional Conference in New York.  Here is a recap of the conference topics, a day at a time.

The first topic covered Thursday afternoon was “Trends and Issues in Counseling”.  The panel reiterated that HECM counselors do not make pass/fail decisions on Financial Assessment.  Their mission is to explain, field questions, and determine whether their client fully understands the HECM product.

Counselors are not permitted to steer clients to any particular product or lender, but they may encourage them to shop around and to negotiate fees.  There were conference attendee comments that stated occasions when counselors had given erroneous information to borrowers, and the panel urged everyone to call the counseling agency in question if they believe that is the case.

Counseling agency panelists had comments of their own on the topic of lender steering, and reminded the audience that steering to any particular counselor is not permitted.  They asked attendees to report to HUD any marketing information received by a counseling agency, because in the same way, counseling agencies are not permitted to solicit clients.

 

The second afternoon session addressed HECM Loss Mitigation.  Payment of property taxes is tracked by the servicer directly, while insurance coverage and policies are tracked using outside vendor services.  Technical delinquency is defined as a failure to pay taxes and/or insurance when due.  Servicer actions include paying taxes and “lender-placed” insurance.

Reminder letters are sent before taxes are due, and if they are not paid in a timely manner the servicer will pay taxes on the borrowers behalf, notifying them by letter that they have done so.  Letters are sent before homeowners insurance premiums are due and upon being late for 21 days, lender-placed insurance becomes effective.  If property charges are paid by the servicer, a letter is sent to the borrower requiring them to contact the servicer, and a repayment plan is put in place.

A borrower is determined to be in default if they are Unable to pay, Unwilling to pay, and Unresponsive to servicer prompts.

A “due and payable” process may be set in motion if all loss mitigation options have been exhausted.  The timeline for the demand letters leading up to the foreclosure process and sale is regulated by each state.  A borrower can at any point reinstate their loan by paying taxes and insurance up to date.  A borrower is not personally liable for a reverse mortgage, so no deficiency judgment is filed after a foreclosure sale.

Very specific rules govern non-borrowing spouses who do not fall under the rules set forth on August 4, 2014.  There is a Principle Limit test and a Factor test which are outlined in Mortgagee Letter ML 2015-03.  A call to the servicer is recommended in all cases where there is a question or problem.

 

Thursday’s final session was “Understanding the Mechanics of Social Security and Its Impact On Your Clients Retirement Plan.”

A variety of options and scenarios were provided, highlighted by some useful information and ideas.  A 62-year-old loses $200,000 – $300,000 in lifetime Social Security benefits by NOT holding off until age 66 to claim benefits.  Maximum benefits are gained by claiming between ages 68 and 70, while maximum spousal benefits can be claimed at around age 66.

Full retirement age for people born between 1943 and 1954 is 66, while for those born 1960 and later full retirement will not come until age 67.  For those years in between, there is a scale of months based on years of age.  Social Security looks at the best 35 years of earnings.

Couples can use strategies such as “File and Suspend” and/or “Restricted Application” to maximize the combination of personal and spousal benefits.

Speaker Russell Settle of Social Security Choices provided his website http://www.SocialSecurityChoices.com to explore the various strategies.

 

 

The Reverse Mortgage Nest Egg

24 Jan

According to CBS News MoneyWatch, Americans aged 62 and older had accumulated $3.19 trillion in home equity by the end of the third quarter of 2011, according to data recently released by the National Reverse Mortgage Lenders Association (NRMLA). During the same quarter, home equity increased by $46 billion, reflecting stabilization and improvement in home prices. The $3.19 trillion is the net result of a $4.2 trillion increase in aggregate senior housing values and a mortgage debt of $1.02 trillion.

Reverse mortgages are one way to use your home equity in retirement. You can borrow against the equity in your home without having to make monthly payments as required when you have a traditional mortgage or home equity loan. Under a reverse mortgage, funds are advanced to you, and interest accrues on this balance. The outstanding balance isn’t repaid until you leave the home, sell it or pass away. You can take loan proceeds as a lump sum at loan origination, establish a line of credit or request fixed monthly payments for as long as you continue to live in your home.

According to the NRMLA, 99 percent of the reverse mortgages offered in America are home equity conversion mortgages (HECM) that are insured by the U.S. Department of Housing and Urban Development (HUD). To date, more than 725,000 senior households have utilized an HECM.  

Possible uses of a reverse mortgage include: 

— To pay for high medical or long-term care bills
— To pay for needed repairs on your home
— To provide a monthly payment to supplement your retirement income
— To buy a new home

Here’s one example of how a reverse mortgage might work, according to an online calculator offered by the NRMLA. A 70-year-old couple with a paid-for home worth $300,000 could get a monthly payment of $986 for as long as they live in the home or a single sum payment of $172,564.  The monthly income shown by this example would certainly help supplement Social Security and other retirement income.