Reverse Mortgage Arizona

June 29, 2009
Non-Borrowing Spouse, Trailing Spouse

A gap in age between spouses would make a greater net benefit amount available during this type of transaction if the older spouse applies for the loan and the younger does not. If the older spouse, now the only borrower to the transaction, is someday not able to live in the home, the younger spouse would need to look for options to retain the home by replacing the existing reverse mortgage or selling the home. Proper care should be taken to provide the couple with education, training and options for handling this type of reverse mortgage transaction.

Mr. Surprise, Arizona is beginning a new reverse mortgage application today with Mortgage Concepts, LLC , 7310 N 16th Street, Suite 315, Phoenix, AZ 85020. He is age 72 and has decided to apply for the loan without his spouse to increase the net benefit dollar amount. This is called a “trailing spouse” or a “non-borrowing spouse.” There are several issues that surround this type of transaction.

First, all of the same reverse mortgage rules apply for this borrower. Next there are additional terms and conditions for the trailing spouse. The lender will require the non-borrowing spouse to sign off the title to the home. This would leave the non borrowing spouse with no home ownership rights during the term of the loan. In most cases, this is acceptable because the spouse may not need any ownership rights during the term of the loan. Most experienced lenders can offer solutions to the borrower for proper handling of this transaction and guide the non borrowing spouse to some options to protect ownership interests if the borrowing spouse is no longer able to reside in the home.

In addition, the non borrowing spouse will need to have reverse mortgage counseling with the borrowing spouse and will need to sign additional disclosures during the transaction.

Michael Manfredi is a reverse mortgage originator and the CEO of Mortgage Concepts, LLC, Phoenix, AZ

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Reverse Mortgage Arizona
June 12, 2009

Mr. Dewey Arizona has applied for a reverse mortgage with Mortgage Concepts, LLC of Phoenix, AZ. He is age 77, his approximate home value is $145,000 and his current mortgage balance is $95,000. Current interest rates and programs available at Mortgage Concepts, LLC dictate the net amount available to this borrower at $95,000, enough to pay off his current mortgage, including all associated fees and costs.

This home is a HUD eligible manufactured home on a large parcel of land. The valuation is suffering from the current local real estate market turbulence. If this borrower chooses to do so, he may refinance this reverse mortgage in the future, when values return to the local market yielding a sufficient net benefit to the transaction.

Michael Manfredi is a reverse mortgage originator and the CEO of Mortgage Concepts, LLC in Phoenix, AZ.

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For immediate release:

MORTGAGE CONCEPTS, LLC EXECUTES GROWTH, EXPANSION AND RELOCATION PLANS IN CENTRAL PHOENIX.

Michael A. Manfredi, founder of Scottsdale, AZ mortgage broker, Mortgage Concepts, LLC, is finding new ways to meet current demand and exploit growth opportunities by partnering with Jesse Gee, CEO of New Beginnings Debt Settlement. The deal closed on May 1, 2009.

“Reverse mortgages are a smart choice for some borrowers and compliment our ability to help more homeowners resolve their current financial difficulties,” comments Jesse Gee, CEO of New Beginnings Debt Settlement, a Scottsdale, AZ based debt settlement company.

Mortgage Concepts, LLC will move to a new, first class office facility located in central Phoenix and commence operations at the new facility on June 1, 2009. Mortgage Concepts, LLC which currently employs five full time loan officers, focuses on reverse mortgages offering a wide range of FHA and conventional loan products for borrowers in the Arizona market.

“The new facility will house 10 new loan officers and maintain an in-house call center focused on finding the best solutions for borrowers” Manfredi says. Future plans to expand into more markets are slated for fourth quarter 2009.

Mortgage Concepts, LLC is an Arizona limited liability company and licensed mortgage broker in the state of Arizona.

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Click the link below to hear the podcast:
Homeowners Should Examine Reverse Mortgages
This podcast is interesting to me because I hear the same thing all of the time, from much less credible sources, when a reporter examines the subject,specifically, “Reverse Mortgages are expensive.” Expensive? As compared to what? Yes the total fees are higher than a traditional 30 year mortgage but that is because of the FHA guaranty on these, no qualifying type loans. An FHA representative is quick to point out their watchdog role in the process and it appears that they are acting to lower lender’s fees for these loans but doesn’t point out that the FHA always gets the lion’s share of those fees in an upfront 2% premium and an ongoing .5% per year. The FHA could be doing much, much more to lower fees on reverse mortgages, including, spreading out the up-front lump sum premium they add to the closing costs over the life of the loan.

The podcast gets the interest rate scenario wrong…Rates on reverse mortgages are typically lower than traditional loans. I have been in the reverse mortgage business for seven years and have sold loans averaging under 4.25% during the entire period. The current rates on most adjustable reverse mortgages as of the date of this post are approx. 3-4% and fixed for life as low as 5.56%. A 30 year fixed, traditional mortgage is at an historically low 5% today.

There is also no mention of the credit line growth rate feature that allows borrowers to keep the cash in an insured account and earn a tax free growth rate equal to .5% higher than the adjustable loan rate, for the life of the loan. They are not charged interested on the amount left in the credit line (unused balance) but rather can watch it grow over the years, tax free with no market risk, whatsoever. This is a credit line, that is totally liquid and can be drawn down and replenished at will.

Just one more thing, I have done hundreds of reverse mortgages and have no unsatisfied clients. I do not sell investments but find my customers borrow the money for a variety of reasons, not just dooms day scenarios. Some of them finance insurance products that yield a greater, tax free sum of money to heirs than had they left the money in the home. Others do charitable deeds and get to see the fruits of their labor while they are alive. Mostly, they are worry free, without mortgage payment and have a tidy some of liquid assets and the freedom to tell everyone they do not need their help and can be totally independent, at home, for quite some time or the rest of their lives.

Michael Manfredi is a reverse mortgage originator and the CEO of Mortgage Concepts, LLC in Phoenix, Arizona.

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This has happened to us before but it seems it is much more severe this time and it’s like there’s nowhere to hide. I’m referring to the current mark-up in reverse mortgage margins as evidenced by lender rate sheets this week. Sure the ten year treasury yield backed up into the low 3’s again but it’s no excuse for ever higher margins atop of the already adjusted margins of recent weeks. My last post was about needing higher rates and now I’m going to complain about exactly that, hardly fair but I guess you could say you heard it here first. And why are the margins going up so fast? Simple, just as I suggested, Fannie is trying desperately to find more investors to bring a cash infusion to this niche product. In these economic times, seniors need the help of reverse mortgages and it’s good that the government is seeing to it that the product stays on the shelf for a while longer but look at the method by which we will suffer the process of obtaining these loans. Live pricing recently paved the way for competition and, of course, deception. It’s no secret the mortgage industry, like wall street, is drenched with greedy operators but I’d like to think our little slice of it (reverse mortgages) is run by a group of caring professionals that want to be paid to make seniors lives better and not to upset or confuse them. I’m afraid there’s just no way around it, this time. We’ve all made promises to our senior borrowers, painstakingly educated them and gained their trust by going the extra mile and now we are forced to disappoint them and bring them to the closing table with a higher rate and less money available. I’ve made the calls, some of them acted like they understood but I found myself apologizing anyway. I think it will all work out, eventually and help to stabilize the market in the long run. But I fear for the borrower with the high margin loan. What happens to them when the indices return to their normal benchmark levels? Lawsuits? Who knows, but as a lender, the first question that comes to mind is, at what price will the first reverse mortgage have to be bought back? At what age will the borrower be? What will the home be worth? And finally, what will the loan balance have grown to? Pretty scary, huh? Did you ever stop to think that in normal times, LIBOR is usually around 4% so, adding a 1 or 2% margin is certainly no big deal, but now we’re forced to add 3-4% margin which will most definitely add up to a 7-8% loan rate for our current applicants in years to come. Yes, this all really has to happen, right now, there is no other way but perhaps you were wondering if another poor sap out there, like you, had to make some of those phone calls today, well, yes, now you know of one that did.

Michael Manfredi is a Reverse Mortgage Originator and the CEO of Mortgage Concepts, LLC in Scottdale, AZ.

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