Posts by: Michael Manfredi
Recent changes in the HUD insured reverse mortgage program has left some of us scratching our heads, again. The program, once described by many as “Too good to be true,” is having a hard time living up to that comment in light of the new fee changes set to go into affect in October of this year.
Mortgagee Letter 2010-34
Some borrowers can now expect to receive more money from their reverse mortgages. The Department of Housing and Urban Development (HUD) announced Mortgagee Letter 2010-34 that makes some substantial changes to the reverse mortgage (HECM) program, including lower expected interest rates. While the mortgagee letter was widely anticipated as a formal announcement of further reductions in reverse mortgages loan amounts (PLF), an unexpected addition to the rule resulted in lower expected interest rates. For some younger borrowers, the lower rates will yield higher loan amounts and therefore, more loan proceeds to pay off existing mortgages which could result in more applicants qualifying for the HECM. While the dust settles, existing reverse mortgage applicants should stand by to see what outcome the effects of this new mortgagee letter will have on current applications in process.
Loan officers have long enjoyed the potential to make a substantial income in the mortgage industry. The job usually does not require a college degree, just a burning desire to succeed. We loan officers have been long criticized for the way we are paid and we are accused of abusing customers by selling loans for the benefit of compensation rather than what’s in the best interest of the borrower.
Reverse Mortgage counseling has taken another turn in the wrong direction in my opinion. The counselors now wield more influence over the borrower’s ability to get a reverse mortgage, whether or not they are qualified to do so. During the process of reverse mortgage counseling, counselors are required to give a pass/fail exam to the borrower who may or may not receive the certificate and may or may not pass go to get the reverse mortgage. If the borrower does not demonstrate basic knowledge then the certificate is not issued. Here is my problem with that.
Reverse Mortgage Concepts, an Arizona reverse mortgage broker is quoting fixed rate, FHA reverse mortgages with 100% lender paid MIP. Borrowers can elect to have a 5.49% interest rate without having to pay the up front mortgage insurance premium required by HUD, instead, the lender will pay for 100% of the MIP. In addition, another choice of a lower rate, 4.99%, comes without lender paid MIP.
