The implementation of a financial assessment tool is now imminent for reverse mortgage applications.
After Wells Fargo recently exited the business, citing borrower tax defaults as a major reason, the issue has been front and center for industry execs.
There is talk about a uniform 50% debt to income ratio being applied to all new reverse mortgage applications. Debt to income ratios would be assessed after the benefit of the reverse mortgage proceeds were taken into account. Your monthly scenario could look somthing like the following.
Before the reverse mortgage:
$1000 mortgage payment (including taxes and insurance)
With all of the changes in the reverse mortgage industry lately, it can be stunning when researching lenders and products. It is important to know that even with the decisions of Wells Fargo and Bank of America to exit the reverse mortgage business, there remains a core group of lenders that use 100% of their resources to deliver reverse mortgages to borrowers over age 62, nationwide.
These lenders are an elite group of banks that specialize in reverse mortgage lending and have vast experience with these loans. While other banks are pulling out, these lenders keep growing and expanding and making reverse mortgages more affordable than ever.
As predicted by some, the lowest, fixed rate, reverse mortgage is quickly becoming the “go to” product for the industry. Boasting the highest pay out to the borrower and the lowest fixed rate available, the product has the added benefit of a note rate lower than the new HECM expected interest rate. By lowering the expected rate on the new HECM, HUD provided an unexpected benefit to the borrower along with the unfortunate higher MIP tacked-on to the ongoing fees in the program.
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.
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.
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Welcome!
You have found a Reverse Mortgage Specialist with knowledge, experience and integrity. Michael Manfredi is a fully licensed, bonded and HUD approved Reverse Mortgage Lender. He represents several national Reverse Mortgage Banks and has over ten years experience in Reverse Mortgage lending.Michael Manfredi
(602) 456-0009
NMLS License 150754Cities We Have Serviced
Apache Junction, Arizona
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