Borrowers can feel confident that I am abiding by the regulations of the New York State Banking Department, the New Jersey Department of Banking and Insurance, and the mortgage origination regulations of the Federal Government which are implemented by federal regulators and HUD. Additionally, I work with a company (Advisors Mortgage Group) that values its reputation and requires of its loan officers high ethics, dedication, and skill. Advisors Mortgage Group is an A+ Better Business Rated company which is the highest rating a company can have. They celebrated their 12th annivesary last year and as a banker of forward and Reverse Mortgages, they are a company to be reckoned with. I’m proud to be a part of this company.

Back to continuing ed: Many of us loan officers agree that some of things in our education (Ever study federal regulations? Lawyer talk isn’t easy to read.) are not necessary for us to know but are for banks or lenders or brokers to know, not the typical Mortgage Originator. Go figure: it’s WHO makes up the education and the tests that we wonder about! For instance, on the tests I took, NOT ONE SINGLE SOLITARY question about Reverse Mortgages – not one! So here we are in a business that is being constantly advertised on television and in every form of media, and not one question? Pretty amazing. And what does it cost to renew a Mortgage Originator license? It all depends on the state. Ever since the implementation of required licensing, you must pay for a license AND renew each year to the tune of sometimes $500! Prior to this, if you were under the auspices of a broker or banker, you were under their license. So, for instance, if you are licensed in 5 states, such as New York, you will be paying over $250 with New York, $500 let’s say for Massachusetts and so on. It can be tough. No one disagrees that loan officers are among the hardest working members of the work force. We pride ourselves on customer service, serving our borrowers, and doing a good job.

Be that as it may, you can be confident that I as your Mortgage Originator for New York and New Jersey, has fulfilled the necessary credentials and qualifications required by each state I am licensed in as well as the Federal Government’s criteria as required by the SAFE ACT (Secure and Fair Enforcement of 2008).

I haven’t written much since August due to how busy I have been writing loans and helping senior homeowners change their lives. From Octber till now I have also been re-doing my office with new wallpaper, ripping up the rug to reveal a beautiful oak floor, and settling in. These things take time!

Now I am involved in planning my 40th wedding anniversary with a wonderfully funny man I met in Bethesda, Maryland in August of 1971. It should be fun having a party with our friends and relatives.

You may have questions about Reverse Mortgages and about the programs, such as the HECM SAVER program which saves borrowers on the up front Mortgage Insurance premium (though you still pay Mortgage Insurance premiums ongoing for the life of the loan and receive fewer proceeds than the Standad HECM product). The mortgage insurance premium is not actually paid out of pocket but included in the loan and financed.

Please feel free to call me at 888-843-9797 or my cell phone, 631-804-9044.

GOD BLESS you and HAPPY NEW YEAR! Let us pray America turns around in the financial arena and that those who love this great land will continue to prosper in the coming year.

Kathie Adler – Senior Reverse Mortgage Specialist
Advisors Mortgage Group, LLC
Kathie Adler NMLS # 65780 – Licensed New York and New Jersey
Advisors Mortgage Group, LLC — an A+ Better Business Bureau rated company and a Multi-State Mortgage Banker with Headquarters located in Central New Jersey with offices throughout the US. Headquarters are located at 5114 Route 33, Wall, NJ 07727. New York Mortgage Broker License: 206697. Licensed by the N.J. Department of Banking and Insurance. Licensed Lender and Secondary Mortgage Lender no. 631155. All loans arranged through third party providers (FHA License #1548300002).

Advisors Mortgage Website

Kathie Adler Mortgage Website

In the mortgage world and with obtaining other credit, there is what is known as Debt to Income Ratio. Your DTI, Debt to Income Ratio, is a financial picture of your income vs your expenses. The definition of DTI according to HUD is a comparison or ratio of gross income compared to housing and non-housing expenses.

We’re seniors and in doing a reverse mortgage we get very excited that our house is now going to pay us. However some of us (because of emotions, basically) don’t always look at the whole financial picture which encompasses expenses vs income.

To protect potential Reverse Mortgage borrowers the FHA is going to implement what they call a “financial assessment” for seniors who are doing a Reverse Mortgage. According to an article in Reverse Mortgage Daily the FHA informed them this should be effective in about 45 to 60 days.

According to the article, Vicki Bott, Deputy Assistant Secretary for single family housing with the FHA (Federal Housing Adminisration), said, “We are focusing our efforts on the ability [of borrowers] to repay recurring costs”. Ms. Bott says the new rule is a “financial assessment” rather than a credit requirement.

“We don’t want to make [the rule] overburdening, but robust enough that lenders can evaluate seniors. It’s striking a balance between those two: efficient but effective,” she said. Bott says the rule is well on its way to being written, and the FHA hopes to have it released in the near future upon which a comment period will follow.

“The goal will be to ensure that any senior with a reverse mortgage does have the ability to pay the property charges so they will not be put in a position to default,” she said. “The focus will be on debt and income.”

The guidance is designed to establish a clear framework that protects both the homeowner and the lender who participate in HUD’s reverse mortgage program, according to the department.” (http://reversemortgagedaily.com/2011/03/02/fha-to-implement-financial-assessment-for-hecm-borrowers/

So if you are looking for a reverse mortgage, you can expect that HUD will do their best to be sure that borrowers are able to pay their taxes and insurance and maintain the lifestyle they are used to. Please call me with any questions you may have; I am always here to help.  And remember, you took care of your home, now let your home take care of you!

We Tailor Loans to Meet Your Needs
Toll Free: 1-888-843-9797 – KATHIE ADLER
SENIOR REVERSE MORTGAGE SPECIALIST
resident of Long Island for over fifty years!
Kathie lives on Long Island and serves the Long Island,
New York, and New Jersey area providing
free consultations to senior homeowners.
Kathie is licensed in New York and New Jersey, NMLS #65780
WWW.ReverseMortgageLI.com – Kathie Adler Business Card

ADVISORS MORTGAGE GROUP
5114 Route 33, Wall, New Jersey 07727
PH: 1-732-292-3133 – Fax: 732-960-2330

Advisors Mortgage Group, LLC — an A+ Better Business Bureau rated company and a Multi-State Mortgage Banker with Headquarters located in Central New Jersey with offices throughout the US. Headquarters are located at 5114 Route 33, Wall, NJ 07727. New York Mortgage Broker License: 206697. Licensed by the N.J. Department of Banking and Insurance. Licensed Lender and Secondary Mortgage Lender no. 631155. All loans arranged through third party providers (FHA License #1548300002).

Company Website: http://www.AdvisorsMortgagecom

What’s it like to write mortgage loans and take mortgage applications? If you love working with people, it isn’t hard. But it is interesting! Over the past nine years I have written all kinds of loans: equity loans, no-doc loans, refinances, purchases, and Reverse Mortgages. Reverse Mortgages are definitely my specialty, but I can write any type of mortgage. What is a day like when you are writing a loan? A day in the life of a mortgage originator is fun, but it can be fraught with frustration and irritating surprises. You also lose sleep because no matter how you slice it, things go wrong. Murphy’s law takes over, and you see three am all too often. As the saying goes, there is just never enough time in a day.

You’ve got to be sure that this is what you really want to do and that you see the rewards and NOT just the money. With my specialty in Reverse Mortgages, my time is taken up with speaking with seniors and finding out what they really want to do with the equity in their home. It all starts with that first contact, that first phone call. Many senior citizens find me on the web from my website, http://www.ReverseMortgageLI.com which I created. The information is helpful and can help anyone even if they don’t choose to work with me.

Information overload is not a phrase we need to worry about in the Reverse world because everyone is grabbing for information from any place they can. The more information you find the better. Naturally, if the information is bogus such as many of the erroneous comments made by some newscasters and some articles, it can cause problems. However, there are some great blogs with great information where you can garner details about the important Reverse Mortgage program.

As I talk with the person seeking info on Reverse Mortgages, I am looking to provoke some thoughts and ideas. So I ask some questions:
What is your goal in considering a Reverse Mortgage?
Does your current financial situation warrant considering a Reverse Mortgage?
Have you considered other alternatives?
How does your family feel about a Reverse Mortgage?
Would a Reverse Mortgage change your life for the better?

After speaking with a senior homeowner I refer them to a Reverse Mortgage counselor for HUD approved Reverse Mortgage counseling (Borrowers can choose which counselor they wish to speak with and can do in-person counseling or phone counseling). A Reverse Mortgage counselor is an unbiased individual who can help offer some alternatives to a Reverse Mortgage as well as review the program with them. Some charge fees, others do not.

Once the counseling is completed the client receives their Reverse Mortgage Certificate known as a HECM Counseling Certificate showing they have completed counseling and are ready to proceed. Here is where it gets interesting. All Reverse Mortgage specialists are required to print out the documents for the application. Years ago we had about 40-60 pages. We now have 270 page which includes: reverse docs, state docs, handouts, booklets, and the actual loan which is called the Security Instrument. It contains the Note, the Mortgage, and the Loan Agreement. I can tell you from experience, it’s a daunting task when you walk into someone’s home with something that looks like a book!

Now we sign the documents. Some loan officers race through these, and that’s where seniors can get confused later on. It is imperative to explain the documents so your client understands them completely, especially the Amortization Schedule which shows how the loan amortizes over time and which lists interest, balance owned, fees, and remaining equity.

Once the documents are completely signed the FHA Case Number can be ordered and the appraisal, title, and credit report can also be ordered. Here is where the fun begins. No loan goes perfectly smooth. Title companies make mistakes, attorneys make mistakes, loan officers make mistakes. But usually I’m catching other people’s errors and it becomes a bit tenuous. You see, I used to use a processor and now I process my own loans so I know every single aspect about my loan from start to finish. I like it better this way. I read all my appraisals, title reports, credit reports, and I take care of all the conditions the lender requires to close — and it can be a LONG list!!

I am sometimes up against appraisal mistakes, and the worst experience I had was when a client of mine had her appraisal done, and it was appraised TERRIBLY LOW even in this market! It came in $50,000 lower than the true value! If I didn’t get an ulcer over this one, I knew it would be a miracle. The borrower called the appraiser an “idiot” because he insisted on coming at eight o’clock in the morning as he claimed he was working with a “new” company. “I need to impress them”, he said. He commented to my borrower that he “hated front to back splits”, which offended my borrower and got things off to a rocky start.

At the outset and prior to the appraisal I tried to tell the management company (we cannot talk to appraisers anymore so we are forced to use a go-between called a management company) that this was a special area in a special part of town. Did they listen? This poor borrower got so upset with that “lousy appraisal” that she ended up with shingles! Her husband was so upset he was going to throw in the towel. And I had already worked so hard already re-doing documents, going to the house, taking the wife OFF the application documents which had to be re-done and all re-typed because their attorney suggested this to give the borrower more money. Worse than that, to see my clients aggravated and stressed when my goal was to help them made me wonder why the process isn’t easier.

We decided to appeal the appraisal. I worked on the appeal paperwork off and on for about 15 hours making calls, typing, and researching. I went to the borrower’s house and took photos of everything I thought would help change the appraised valuation. I had to download the photos which took time, resize them all in Photoshop, and I outlined everything in the appeal that the appraiser missed. I wrote a letter (which I redid several times!) and filled out the appeal form with COMPS (comparable sales in the area) which I found (after talking for hours with a consultant who is also an appraiser). After all the work that was done, I was sure it would all work out. Did the appraisal change? It didn’t. The appraisal was not changed despite what I did, in fact, they lowered it!

But all was not lost. Time had passed, so we got a new appraisal with new comps. Now the borrower’s house was beautiful, but it also needed a bit of touching up. So I decided to get a painter who was very cheap but good and he began painting the entire bath and door. Things went wrong, and he disappeared for a couple of weeks, and guess who got the blame? Yours truly! Lesson learned. We got him back on track, things in his life had gotten tough, but he and I worked on painting the house. From 10 am to 8 pm on weekends we painted doors, trim, sanded, etc,. and I actually did a pretty good job. The borrower felt guilty to see me working, but I informed her, “If the next appraiser likes the house, no, LOVES the house, then we did our job”. I was thrilled with how the paint job turned out and the great job the painter did so I took more pictures. We brought in a large area rug from a friend of mine for the den and everything looked perfect.

This time the new appraiser walked in the house, commented it was a “large” home, and said to the borrower, “Tell me about your house.” He actually sat down on the couch with my borrower and talked with her! Needless to say, the borrower was thrilled! Finally, she felt someone cared. And miracle of all miracles, the new appraisal came in for $50,000 more! We only needed $625,500 for the deal to work, but it came in $10,000 higher than that! Our prayers had been answered.

So now we had a CORRECT appraisal, and we’re ready to go. All of a sudden rates drop, a very good thing. Now I have to re-type the documents all over and put the wife back on the loan because there is enough money in the loan for the wife to be put back on the application. Prior to this, only the husband was on the application because he was older, and since the Reverse Mortgage is based on age it changes the cash out figure tremendously. We hoped after all the aggravation we’d been through that things would go smoothly.

Did I tell you there were two satisfied mortgage loans from years ago that were showing on title even though they were paid off? The title company omitted these and took responsibility in case these old mortgages showed up again after closing. The bank didn’t have to worry about them anymore. We get what is called Clear to Close which means we can set a closing date. Yeah! Finally this loan is going to be done. The borrower will be happy; I will be happy. Everyone will be happy. All of a sudden the closer at the lender sends me an email that the “omit” from the title company on those old mortgages is not good enough. “Why did they give me a clear to close?”, I thought. Now we are off and running with sheer aggravation between me, the title company, the bank, the borrower, and a day in the life of an originator becomes sheer hell. I am caught in the middle.

Then, to top it off I get a call from the title company who was annoyed at the lender, and I am now told, “There are taxes due.” I knew he was wrong! I had already checked with the clerk’s office who handles taxes, and there were no taxes due till months later. If he is right the documents have to be changed— again. I called the title company and told the title company I’d check it out. I get back home, I call the clerk in the county who handles taxes and she confirms the taxes ARE paid. This issue gets resolved.

The borrower is all ready to close and arrives at the closing table forty minutes away. Back to the lender. I am working with the closer for the lender from my office. We finally had fixed the mess on the outstanding mortgage liens so I thought all the roadblocks were out of our way. The borrower can begin signing the documents with the closing attorney (who will be receiving an email with the new documents), and I am ready to get out the door and drive to the closing location once I get the corrected documents in my email. They arrive in my email. But the documents are wrong!

(DON’T LET THIS SCARE YOU, these things are VERY rare and this is an isolated case!)

Here comes the NIGHTMARE CLOSING. I finally get the docs corrected by the closing dept which takes about an hour, but something is still incorrect. I examine the documents again, my eyes are killing me from eyestrain, and I find the error. Once I get the corrected documents I get in my car and drive 85 miles per hour to the closing, racing as fast as I can to get there . It’s a wonder I got there in one piece. I have not eaten anything; I’m starved. A call comes through my cell. “Can you get something for my husband to eat, he’s diabetic and didn’t bring his meds and needs to eat right away.” “Not a problem”, I answer. I figure I will get something quick to eat also. But I get lost finding the diner, then can’t find the front door because the diner looks like a huge box! I walk all around the diner, finally find the door, then order some food for my client.

At the closing I discover the attorney has printed the wrong documents as he didn’t see the new set come into his email. What a comedy of errors. I replace the wrong documents with the correct ones I brought with me and the signing continues. The borrower, unbeknowns to me, told the closing attorney, “If this doesn’t close today, I’m out of here for good.” The night ends pretty late, but things have gone better than expected.

One day after that closing fiasco I get a call from the title company. “I need to increase the title premium”. “What?!!”, I say. “The title premium is based on the appraised value. It’s correct. Besides, we already closed. I can’t go charging borrowers after a closing! That’s crazy!” We argue back and forth, he is adamant he’s right, and he finally makes a call and discovers I am right, he is wrong. This has now caused serious tension between me and the title company.

Over and out? Nope. As Gomer Pyle used to say, “Surprise, Surprise!” Next day I get an email from the funding department at the lender saying the HUD is missing!! The HUD is the final closing statement showing all the closing costs that all attorneys type and bring to a closing. Somehow the attorney was told by the bank’s closing department that he did not need to re-type his own HUD but could use theirs. That was a huge misunderstanding for which the bank later apologized. Wires got crossed and it was simply an error in communication.

The attorney calls me and says he’s working on his HUD, but there are some things he needs. “Should I come there?”, I ask. “Would you?” Now I am off and running again twenty minutes away, not far, but more time out of my day. It seems his secretary was out that day, of all days, and the HUD has some things on it that don’t make any sense. I arrive to find a sweet girl typing the HUD and then telling me, “I’ve never done one before.” This is when I got really scared.

We call the bank, they walk us through the HUD and any problems we encountered. After a couple of hours we finally get it done. The lender says the HUD is now perfect. We are HOME free!

Suffice to say, the loan funded, the borrower got what they wanted which was to zero out their mortgage payments; they will never again pay a mortgage payment on their home. Naturally, it took a couple of weeks to recover from the severe stress I experienced. My body felt like it had been through the war. I walked around feeling weak, but at least it was over, and everyone was again at peace. I felt terrible for my borrowers, but they understood that sometimes Murphy’s law parks itself at your doorstep,and you just have to get through it.

I hear so many people talk about wanting to do mortgage loans. Have you got what it takes? Maybe you do. It can be very stressful. You are not always appreciated. It’s a LOT of work. You have to be on top of your game. You need to get enough sleep. You will work long hours, reading documents will be tough on your eyes, and you may find yourself painting houses, doing things you didn’t think physically possible, driving far, re-printing documents over and over again, wasting ink and paper, shredding unused documents, staying up late, and wondering at those low times if it’s worth it.

Now, I am not special and I’m no exception. Every mortgage originator works hard. That is, if they’re serious about what they do. There are days that I’ve traveled to Staten Island in the morning, and by nighttime I am in East Hampton. I have gone from one end of Long Island to the other. I type lots of paperwork, make lots of phone calls, and I know I’ve got to do what it takes. And do I love it? You bet! So don’t feel sorry for me! I chose to work in the mortgage business, and no matter what the challenges or the aggravation, the joys far outweigh them all.

I have many satisfied, happy clients. And many do appreciate me. I’ve been given dolls, paintings, a display dog that’s almost as big as I (kidding!), and I’ve got memories of every borrower who has become my special friend. I hope things stay just as they are! And I wish good luck to anyone who takes on the task of getting licensed and being the best mortgage originator you can be!

I shared this information in the hopes that just one would-be loan officer will choose to care enough to give their very best.

The FHA Reverse Mortgage has just gotten a facelift, and it’s about time. What seniors have disliked most about Reverse Mortgages are the high closing costs. I have heard this for years, and I always agreed much to the chagrin of a former fellow loan officer who once told me, “Don’t agree with them!” “Why not?”, I answered. “It’s the truth, isn’t it?!” I never blamed borrowers for hating the high closing costs because putting myself in THEIR shoes as a borrower I would have hated them too. I wasn’t a salesman trying to make a fast buck, I was a caring loan officer with a senior borrower sitting in front of me who had needs, and I was there to help.

Reverse Mortgages can be costly, but being an FHA loan with the required up front mortgage insurance premium, they are not much more expensive than the typical FHA mortgage. And you don’t pay the up front mortgage insurance out of pocket.  It gets financed as part of the loan. But even though you don’t lay it out and it gets rolled into the costs of doing an FHA loan, it means financing more money and stacking up more interest.

Borrowers did not like the Mortgage Insurance fee (2% of the appraised value.) So, for example, if a home appraised for $600,000 that tabulated to a mortgage insurance premium up front of $12,000 at closing, an amount that would be financed as part of the loan but high nonethless. It was extremely distasteful to borrowers as well as loan officers.

Hud, however, has listened. HUD announced a new program called the HECM Saver which took effect October 4th. The proceeds to the borrower are reduced from the standard HECM, but the good part is that the required FHA up front mortgage insurance premium is now less (0.01%) and is now spaced out over time (1.25% of the outstanding loan balance per year.) For borrowers who are satisfied with smaller proceeds, the HECM Saver is a great alternative due to significantly lower closing costs. (HECM Savers are for Fixed and Adjustables.) The HECM Saver opens the door to seniors who have thus far closed the door on this life changing program. For senior borrowers that may be looking for maximum borrowing power, the HECM Standard would be the better option. Compare programs to see what’s best for you.

With the new HECM Saver program borrowers will receive less money, however, the up front mortgage insurance premium is only .1%. This tabulates to only $60.00 on a $600,000! Of course the yearly mortgage insurance has increased, so with the new program the continuing yearly mortgage insurance premium is calculated by multiplying 1.25% times the entire mortgage balance. But it’s spaced out over time and the best part is that the floor rate has been reduced so proceeds are that much more!

For years the cost to secure a Reverse Mortgage was anywhere between $15,000 to $22,000 depending on appraised value. With HECM Saver this has been drastically reduced. The HECM Saver is available as a fixed or adjustable program. If you are looking for higher proceeds you can still choose the HECM Standard fixed or adjustable. Be sure to ask for a comparison of products so you can see the amortization chart for the HECM Saver as well as a Good Faith Estimate so you can compare it to the HECM Standard. Then you can decide which program best suits your needs, the HECM Saver or the HECM Standard?

I try to help borrowers solve questions. What are they looking to do with their money? How much money do they need and when? I always tells borrowers don’t take more than you need. In the final analysis it’s up to homeowners to choose a program for their needs, but mortgage originators like myself can certainly explain the programs so senior homeowners can clearly see what’s best for them.

What I like most about Dolly is her perspicacity. Just when you think you have something down pat, Dolly comes up with a unique slant, a quick wit, a challenging idea, and she’s usually right. Like the time she told me, “These dumb regulators, they’ve gotta come up with something for the fifties  crowd. They need to open Reverse Mortgages up to younger people. It’s hard to keep a house, and they need the help. What’s wrong with them? And those insurance fees! They’ve got to get the costs down.”

Dolly echoed my sentiments exactly. So what made Dolly think about a Reverse Mortgage? Dolly had hit upon some some hard times for a little while, so she considered a Reverse Mortgage. From her own lips, she told me it not only worked, but it changed her life.  About a year after she closed on her Reverse Mortgage Dolly took me into her newly remodeled kitchen and gave me the “cook’s tour”.  It was beautiful.

I had the privilege of getting to know Dolly well and consider her an unforgettable friend. When we first met, Dolly, who is in her 80′s, was dressed to the nines. High heels, stockings, short skirts, and blond hair. I must admit, I was floored. All I could think was, “Wow, this gives me hope!”

“You can still wear those heels? I can’t!”, I said to her.

“Are you kidding? I can’t wear anything else! I’ve worn these for so many years I’ve gotten used to them.”

One cold winter night I surprised Dolly and called to say I was in the area. I didn’t want to inconvenience her, so I thought I’d just say hello and drive on home.   Dolly told me, “What are you waiting for? Come on over!” Dolly met me at the door, high heels, silk stockings, and still wearing a skirt at nine o’clock in the evening! Did I tell you she also worked full time till she was near eighty?  She has since retired, but had enjoyed her full time job immensely and was a great asset to the company.  Now, this lively woman is someone ladies can admire.  No, this is a woman ANYONE can admire! Her personality is lively, she’s smart, witty, intelligent, fun to be around, keeps active, and she still keeps herself looking like a class act.

Being a former acrobat and walking everywhere she went when she lived in Europe sure helped keep Dolly in shape.

<i>”These young people today, they drive a car to go five minutes away! When I lived in Europe, I walked everywhere, everyone did. The girls had no cellulite, no fat on their legs– not like today.”</i>

You can learn a lot from a lady like Dolly. You can learn fortitude, determination, a great work ethic, a sense of humor, and how to stay in shape well into your 80′s. But ONLY if you leave your car keys at home!

—————————————————————————————

Kathie Adler – Senior Reverse Mortgage Specialist With Advisors Mortgage Group, LLC- Originating Mortgages in New York and New Jersey -  NMLS  Identifier #65780, New Jersey Dept. of Banking and Insurance #0902775.   Advisors Mortgage Group  LLC is an A+  Better Business Bureau rated company and a Multi-State Mortgage Banker with Headquarters located in Central New Jersey with offices throughout the US.    Headquarters are located at 5114 Route 33, Wall, NJ 07727.  New York Mortgage Broker License: 206697.  Licensed by the N.J. Department of Banking and Insurance.  Licensed Lender and Secondary Mortgage Lender no. 631155.  All NY loans arranged through third party providers (FHA License #1548300002).

Then, came the meltdown. The mortgage meltdown, the sub-prime meltdown. We are told it was caused by us loan officers. We were greedy! And many were. But is that entirely true? Check out Dave Zwierecki’s blog: “The mortgage meltdown as many are calling it basically boils down to, in a nutshell, lenders making money too easily available to too many consumers. Lending guidelines and lending criteria became way too loose and relaxed for the better part of the past decade, housing values continued to rise extremely quickly because of the easy money and the low interest rates, and too many consumers bought way more home than they could truly comfortably afford because lenders would approve them for too much. Combine all of the above factors up together at the same time and doom was bound and determined to find its way into the real estate economy. This is how we ended up in this mortgage meltdown.” http://themortgageu.wordpress.com/about/

Look for “cause and effect” of the mortgage meltdown on his blog. I’m sure if you do a search online, you’ll find more about the meltdown, but this blog contained a simple answer that most of us can understand.

After the mortgage meltdown our government decided they need MORE regulation. And regulations we’ve got! The problem is this, however: Many good and honest appraisers are being driven out of the business. Many good and honest HUD counselors who do Reverse Mortgage counseling have been driven out of the business. The list gets shorter and shorter and shorter every day of industry professionals who knew their stuff and are gone. Many who just can’t contain the stringent rulings have all but given up to choose a totally different career, one where they can support their families.

Why is this happening? For sure, the real estate market is down. Mortgages have slowed down. And regulations are UP. It seems the glow that was on this industry has become so fettered by documents, paperwork, and laws that it becomes rather difficult instead of joyful. Sure, we love our senior borrowers. We love what we do! But our industry, due to the mortgage meltdown and fear of some sort of reverse mortgage sub-prime crisis, is now in overkill mode. One HUD counselor told me she was “shaking” in her boots about taking the new HUD counselor test so she can remain on the HUD counseling “roster”. What would make an experienced HUD counselor fearful of taking a test?

Many borrowers have no idea about these things. You don’t see it on the evening news. We are here to serve you, we care about YOU. And we believe if borrowers had any idea that appraisers are being paid half what they are worth, they would be shocked. All appraisals now go through a management company, we have ZERO contact with our appraisers. Management companies now make a pretty penny though they don’t even do the appraisal, go to the home, write up the appraisal or anything!! If you ask any lender, any loan officer, any broker, if they agree with all the regulations and changes, 95% would say “absolutely not”. Now, lenders can get fined more easily for mistakes, though they be unintentional, and loan officers can get STUCK for fees that they, as human beings, never intended to make on a Good Faith Estimate. We are not gods, we are human. Even HUD people, the people who make all these rules, make errors, yet they are forgiven.

Example: Suppose you make an error. You forgot to include “endorsements”, part of title fees. Let’s say you forget a fee of $100, for example. You get stuck with it; the loan officer has to pay it, even IF it is a legitimate closing cost to the borrower. It could cost you hundreds if not thousands if you slip up. Why? Because loan officers are permitted to create only one Good Faith Estimate. That’s it. There is no recourse, no mercy, no “cure” as they call it in the mortgage industry. Yet, our OWN government can make mistakes, and they just write another bill.

Here is information I placed on a blog recently that says it all:

“The situation is sad if not dangerous to this industry. With the AMC’s, no appraiser has assurance that he will be called upon. All this, despite the appraisers’ years of work establishing relationships with brokers, bankers, lenders. Sad.

I talked with an appraiser who said the management company threw him a whopping $200 for all his hard work. He has not drawn a paycheck since January!

I got a letter from an appraiser that says it all. Naturally, the name is withheld:

“Hi Kathie, It’s a sad day. I can no longer speak to people I have worked with for years. You were the last bank client I had that wasn’t an appraisal management company. I have lost all of my HONEST mortgage brokers. Years of work. Now its gone. So sad. They will use the cheapest appraiser available regardless of the quality of their work, their appearance, or personality. They will not be there representing you or your company or your borrower. I wish you the best of luck. Keep in touch. Thanks.”

All the years it took to build up their appraisal business — gone in one day. Essentially, many will be put out of business by “big brother”. Same thing happened with the HUD counselors. I talked to counselors who could not pass the test; too hard. Others are terrified of taking the test. Just looking at the new HECM Roster for HUD approved counselors, gosh, it’s a LOT smaller. So many are gone.

And the loan officers, well, I have heard of Reverse loan officers just jumping ship and quitting the business. They can’t take it anymore. I hope we can let our voices be heard, and that one day things will revert to the pleasant business I loved. Over six years trying to help seniors do Reverse Mortgages, and I don’t see how much of this is to their benefit.”

I keep repeating myself because I believe his blog is worthy of reading, but be sure to check out http://www.DennisHaber.com – he’s honest and straightforward. And so am I.

Many of my clients are business people. They don’t need to be shielded from our displeasure with this insane process, a process that is there for their benefit. Ask anyone in the mortgage business how they like the new Good Faith Estimate or even a borrower. You get mostly negatives, though we agree disclosure to consumers is good. While we can grasp that the winds of change were necessary and blowing our way, we didn’t need a tornado.

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First, a little bit of history: Reverse Mortgages are certainly not new. For over forty years Reverse Mortgages have helped senior homeowners remain in their homes and enjoy an easier lifestyle. Yes, that’s right, over forty years! That’s a long time. Reverse Mortgages have been around since the 1960′s, though they were not FHA insured loans. In 1961 Nellie Young closed on her Reverse Mortgage, the first in the nation, with Deering Savings and Loan of Maine as her lender.

Twenty years later Congress passed FHA Reverse Mortgage Legislation called the Housing and Community Development Act of 1987 (December 22, 1987), a great Christmas present to seniors, and the Reverse Mortgage took off. The first FHA insured Reverse Mortgage closed October 19,1989 with James B. Nutter and Company, the lender, and Marjorie Mason of Fairway,
 Kansas was the lucky recipient.

These days the most important thing to remember is to learn about Reverse Mortgages for yourself. There is no substitute for knowledge. You can’t blame someone else if you haven’t taken the time to learn firsthand what Reverse Mortgages are all about. If you are an internet user, use the information super highway to find out more. Order some CD’s; most are free. Attend a seminar. Talk to an experienced Reverse Mortgage Specialist, someone you feel comfortable with who knows their field. Find someone with expertise and experience who will walk you through the education process, the application, and who will stay with you all the way through. But it doesn’t end there. A good Reverse Mortgage Specialist will stay in touch with you even after you close!

Check out the company they work for. Are they listed in good standing with the Better Business Bureau? (I am proud to say my company, Advisors Mortgage Group, has an A+ Better Business Bureau rating!!) What can your Reverse Mortgage Specialist offer that attracts you to work with them? How long has your Reverse Mortgage Specialist been doing Reverse Mortgages? Do they have testimonials from satisfied borrowers or phone numbers you can call to see what these borrowers think of Reverse Mortgages?

Personality has a lot to do with it when you are choosing someone to work with. You can tell when you meet someone over the phone or in person whether there is a real connection between you. There has to be a genuine sincerity and honesty coming from a professional who is sharing their product with you for you to want to work with them. Here are some suggestions for choosing the right person and company:

1. Expertise and professionalism
2. Experience and know how
3. Sincerity and compassion
4. Good listening skills – Are they genuinely interested in what you have to say? Are they on YOUR wave length?
5. Are they able to explain the program to you in a simple manner so that you also understand it? Do they encourage you to get opinions from your family and trusted advisors?
6. Are they willing to make a free, personal in-home visit to review the information with you?
7. When they arrive, do you feel rushed or comfortable?
8. Do they present their license and company license, and do they offer referrals of satisfied customers?
9. Is their company respectable and experienced?
10. Are their loan officers all licensed and tested?

Very often we meet the nicest people, but what programs do they offer to you? Do they try and sway you to accept a program that does not fit your present needs? Are you aware there are fixed as well as adjustable rate mortgages? These are important things to take into consideration. Loan officers are precluded from “steering” borrowers into a loan that does not fit their needs. It is against FHA regulations, HUD, and the banking departments of every state in the union. So be careful; be your own counselor. Even though you will be receiving HUD required Reverse Mortgage Counseling, be sure to do your own homework. Your Reverse Mortgage Specialist will help you ascertain whether it is a good idea to do a Reverse Mortgage by looking with you at your budget and seeing how a Reverse fits in.

Remember that all loan officers must be licensed and tested. They need to know certain things such as the law, current regulations, and how to do a loan. But you can’t legislate ethics. That has to come naturally. Find someone with good character, someone you can respect, who knows enough about Reverse Mortgages so you can learn from an expert! Ask for referrals and recommendations. Then, take advantage of this wonderful financial tool.

Wishing you all the best life has to offer!!

There was a time in the not so distant past that I called “the good old days”, when a simpler, less complicated mortgage world existed, and where Good Faith Estimates showing the estimated costs of a mortgage was a simple document. They were easy to explain and typically one page.

At closing a HUD1 settlement form was issued to the borrower which showed final closing costs. Prior to closings, loan officers went over these final costs with their borrower. One day prior to closing exact fees were disclosed from the HUD1 and borrowers knew exact costs rather than find out at the closing table.

Obviously our Federal Government wasn’t happy with the process in light of the mortgage crisis, understandably so, and so the entire industry from top to bottom has been revamped. To prevent fraud and protect borrowers, many changes in the industry have taken place. This is good! Borrowers should never be overwhelmed by high closing costs, costs they never expected. However, did you ever hear of an onslaught of information and rules that weary the mind? Well, this is it! Pity the loan officer who has to disseminate all the constant changes, new rules, new laws, mortgagee letters, new time constraints, new mortgage education, testing, licensing — it makes your head spin. But this is the New World Order of Mortgaging! And it’s all supposed to benefit the end user, the consumer– YOU. And isn’t that what ALL Loan officers want?

Rules that were passed in 2008 took effect July 30, 2009 and onward and have been slowly implemented. While no one doubts the mortgage industry needed more oversight, it’s been difficult to navigate in a wave of regulations coming one on top of another. Transparency and disclosure is the reason for the change, but in light of all the new HUD Mortgagee letters and laws and acts, it has now become overkill for loan officers. And it has been difficult for borrowers whose closings are delayed due to time constraints and special disclosure requirements before you can close.

As of January 1, 2010 a brand NEW Good Faith Estimate has been implemented. Loan officers are NOW permitted to produce only ONE Good Faith Estimate, and that is at time of application. Any changes to the GOOD FAITH are labelled a “QCC-Qualified Changed Circumstance” such as appraised value changes (whether higher or lower) and the new Good Faith must come from the lender themselves to the borrower within THREE days of discovering the QCC. The Good Faith is NOT permitted to be changed by a loan officer. It must come from the lender.

Definition of an Application: We’ve not only got a NEW Good Faith Estimate, but we now have a new DEFINITION of what constitutes an application! Once a loan officer gets name, address, social, income, and other criteria, this is considered an “application”. Loan officers MUST have borrowers complete and sign the actual application and disclosures within three days. Times, they sure are a’ changin’!

RESPA: Real Estate Settlement Procedures Act:Regulation X, which implements RESPA, known as Real Estate Settlement Procedures Act with new changes called the “final rule”, imposes new forms and new tolerance requirements.

HUD published the “final rule” November of 2008 in order to simplify the industry and the consumer’s ability to shop for settlement services. 2008 was a BUSY year for the mortgage industry while the feds were busy fixing the mortgage meltdown.

Additionally, borrowers were always able to shop for certain services such as title insurance, flood insurance, etc. This has not changed. But now they will be provided with a list of title charges so they can compare a title quote from their OWN sources to the loan officer’s quote.

Real Estate Settlement Procedures Act of 1974 was implemented at the time to provide consumers with improved disclosures of settlement costs. It was to encourage consumers to shop for settlement services. Also, RESPA eliminated referral fees and kickbacks. All these things were and ARE good.

SAFE ACT: What is it? Let us look at one of the acts that was passed in 2008, an act I feel was a long time in coming. The SAFE ACT, part of HERA (Housing and Economic Recovery Act of 2008), sets a new standard for mortgage originators as it requires licensing, testing, and helps to protect consumers from fraud by establishing a tracking system whereby consumers will be able to check if a loan officer is duly licensed. Strict standards for licensing of mortgage bankers, brokers, and mortgage loan originators (now called MLO’s) was established. Good loan officers do not grumble about being licensed OR tested. We work for the good of our clients. However, here is the big surprise. While we loan officers KILL ourselves studying and passing a national test as required by the SAFE ACT, those who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, are exempt from licensing AND testing! Some of us consider this not only unfair but unconstitutional. However, since we loan originators with bankers or brokers are educated and tested, we do have an edge and can claim the knowledge a consumer is looking for.

Back to the SAFE ACT, MLOs must pass a rigorous national test, participate in and complete a pre-licensure education course of 20 hours for the National Component, and take annual continuing education courses. The SAFE Act requires submission of fingerprints to the Nationwide Mortgage Licensing System (NMLS as it is called — OH, THOSE ACRONYMS!) for submission to the FBI for a criminal background check. Originators must also be trained, tested, and licensed by each state where they originate. State licensed mortgage loan originators (MLO’s) are to provide authorization for the NMLS to obtain a credit report.

Again, loan officers who work for a banking institution are totally exempt from all of this, testing and education (which costs a total of about $400 PLUS, not counting the cost of each state license and some are $300!). However, these loan officers get the privilege of being registered within the NMLS and receive a unique identification number. Wow, do they rate.

Now onto MDIA, TILA, and RESPA rules. Many of the rules pertain to the timing of disclosures to borrowers and transparency which isn’t all bad. However, it has of necessity increased the waiting periods for borrowers to close on their loans and get their money as well as increased the paperwork they have to sign.

When rules and regulations that were supposed to help consumers turns into closing delays then we complain! Now, preventing deception and unfair lending practices is something most loan officers are in favor of, with the exception of the dishonest ones. However, in ridding the industry of some bad apples (bad loan officers), HUD and our government has thrown the baby out with the bath water!

This has literally been, for the past couple of years, a federal crackdown on the mortgage industry, a HUGE overhaul, a FLOOD of information raining down on all loan officers and affecting Reverse Mortgages as well as Forward Mortgages. It’s going to take some getting used to. But we’ll weather the storm.

Let’s talk about MDIA. What is MDIA, another one of those acronyms. (As a side note, I sometimes laugh when I think of all the acronyms we are supposed to remember: HMDA, (we call is HUMDA), HOEPA, TILA, RESPA, HVCC, QVCC, and I joke and say we forgot one: DUMDA!!

MDIA stands for Mortgage Disclosure and Information Act which took effect July 30, 2009. Here is a quote from an ezine I found explained it all very well: “Within HERA, Congress included amendments to TILA which are known as the Mortgage Disclosure Improvement Act of 2008 (MDIA). On October 3, 2008 Congress further amended the Mortgage Disclosure Improvement Act as part of the enactment of the Emergency Economic Stabilization Act of 2008 (Stabilization Act). With the enactment of HERA and the Stabilization Act, the Federal Reserve Board is now amending Regulation Z (Truth in Lending Act) with all provisions of the MDIA and making these changes effective as of July 30, 2009.”
http://ezinearticles.com/?The-Mortgage-Disclosure-Improvement-Act-(MDIA)&id=2679397

Now here’s the tricky part. Under MDIA, disclosures are required for “any extension of credit secured by the dwelling of the consumer.” The time frame is as follows: three business days from when a borrower signs an application they must receive a Good Faith Estimate and a Truth in Lending disclosure. This one surprised me because I NEVER give a borrower an application without also giving a Good Faith Estimate as well as the TIL, Truth in Lending disclosure. Perhaps in the Forward world more regulation in this regard was needed. Who can tell.

To quote this ezine again by David Alan Miller, a 19 year mortgage veteran, there is a time constraint on when a new loan can close. “The earliest a transaction can possibly close is seven days after the initial disclosures have been issued by the lender (delivered in person, mailed, emailed, etc.). This is assuming no re-disclosure is required.”

Here is more info on the MDIA ruling:

“1. MDIA implements a 3-7-3 rule that creates new timing and waiting requirements with regard to the issuing of Truth-in-Lending disclosures and when closing can occur. The 3-7-3 rule requires the lender to:

a. Upon the taking or receipt of a loan application, provide an initial Truth In Lending(TIL) to the borrower(s) within 3 business days of the application (no change to current requirement).

b. Impose a waiting period BEFORE allowing a mortgage loan to close. The waiting period requires a lender to wait until the 7th business day following the delivery or mailing of the initial TIL to the borrower(s) before a creditor may close any loan. The 7 day period may be waived only if there is a bonafide and/or extreme and/or urgent reason to do so. This would be handled in the same manner as a waiver of rescission, which is virtually impossible to achieve. Therefore, there will be virtually no waivers of the 7 day waiting period.

c. Impose an additional 3 day waiting period before a loan may close in any instance in which the Truth In Lending(TIL) is outside of regulatory tolerances (e.g., for regular or fixed rate loans more than .125% and for irregular loans more than .25%). The 3 day period begins with the mailing of the TIL. A corrected TIL is required whenever a TIL is outside of regulatory tolerances.

d. The TIL may be mailed via regular mail or overnight or by e-sign or e-mail. However the lender sends the TIL, they must still comply with the 3 day waiting period. MDIA does not assume a quicker waiting period might occur and does not allow the lender to proceed until after the 3 day waiting period has ended.

2. Lenders can under no circumstances collect any upfront fees prior to the consumer’s receipt of an accurate TIL unless the fee is to cover the cost of the consumer’s credit report.”
http://www.hud.gov/news/speeches/2008-11-12.cfm

Folks, having had Epstein Barr Virus years ago, I’ve got to pace myself; so I will continue this blog tomorrow– and I won’t start writing it at 3 o’clock in the morning! My neck is aching, and I’m getting droopy. But at least we’ve taken a chunk of information and gotten through just some of the new changes that will affect your loan, most for the better. Stay tuned — more to come in the wacky world of mortgaging!

Oh, before I forget, here are some great blogs:
http://www.DennisHaber.com

For months we waited with baited breath for word from Congress to be announced– when it was feared the current increased loan limit might return back to $417,000, the previous loan limit. Friends, we were not disappointed. Congress announced that on October 29th they passed an extension of the current Reverse Mortgage loan limit through December 31, 2010. Every Reverse Mortgage Specialist is rejoicing that senior homeowners can continue to take advantage of this limit.

Many seniors owe substantial balances on their homes and where the equity in their home is adequate to do a Reverse Mortgage, the higher lending limit will prove to be a Godsend to them.

Additionally, high value homes require the higher lending limit for the program to work for them, and seniors have been taking advantage of the HECM loan limit of $625,500 for refinances and purchasing a home with a Reverse. The program would have lost its appeal were it returned to the previous limit of $417,000. Congress, thanks. We appreciate it.

President Obama will sign the Congressional Resolution, signing it into law through December 31, 2010. It would be tough to see that limit get reduced end of next year, but we’ll cross that bridge when we come to it!

Source:“The House and Senate moved quickly to pass an extension of the $729,750 GSE (Government Subsidized Entity) loan limit through the end of 2010, hoping to avoid any potential disruption in the mortgage market. Both chambers cleared the loan limit extension late Thursday as part of a continuing funding resolution. President Obama is expected to sign the continuing resolution (CR) shortly.. . . The CR also extends the nationwide $625,500 loan limit for FHA-insured reverse mortgages through December 2010. “Given the lack of a private secondary mortgage market, FHA, Fannie Mae and Freddie Mac are pretty much the only game in town,” said Robert Story, chairman of the Mortgage Bankers Association. “Extending the current loan limits, along with other initiatives will help restore stability to the housing and mortgage markets. . . ”

National Mortgage News-October 30, 2009

Beginning October 1st there will be a 10% reduction in the Principal Limit (the money you can borrow) on a HECM (Home Equity Conversion Mortgage) better known as a Reverse Mortgage. This only hurts seniors, the very people the governments claims they want to help.

I get concerned with the changes that HUD makes with very little warning– like this one. Days before September 24th we got wind of this change. Such little notice for us to warn our borrowers is getting too typical. Shades of the Fannie Mae directive the end of March which commanded Reverse Mortgage lenders to increase their margins (the money the lender makes over the interest rate.)

Stay tuned, there WILL be more–just when you think your borrower is all settled and understands the process, and just when you think you can make things easier for them, seniors will get more surprises dumped on them.

I recommend you keep uppermost in your mind an excellent blog from well known expert, author, and attorney, Dennis Haber. His blog address is: www.DennisHaber.com

His blog about the 10% reductions ends brilliantly:

“When an industry is incapable of policing itself, when regulators set inappropriate guidelines, lawmakers will gladly fill the void.

When a particular cohort is treated badly there is the concept of intended consequences. To those lawmakers on the state and federal level who refuse to get it right, who have forgotten what “We the people” means, who try, for example, to convince seniors that they are working in their best interests when they are not, the power of the vote will serve as a good reminder?”

Stay tuned! There is sure to be more from HUD– hey, maybe getting in touch with your government about how you feel about all these changes and losses might help!

And now, the industry has seen even Reverse Mortgage lenders (two recently) announce they will no longer be accepting applications. It isn’t a slow down of Reverse Mortgages perse, but an industry that is in flux, growing, learning, and making changes by leaps and bounds. But have no fear. The Reverse Mortgage isn’t going anywhere. It’s here to stay. Senior homeowners can take confidence that the program will be here, though admittedly not perfect. To my mind it’s far too complicated and FAR too much paperwork for borrowers to sign– my pet peeve. But we’ve still got a program that will continue to change lives for years to come.

Greater control is a must in this industry, so now it is required that loan officers MUST be licensed by their respective states. There will be national mandatory testing for all loan officers and testing for each state you are licensed in. Hopefully that will weed out those who have little desire to be true Reverse Mortgage Specialists with a heart for senior homeowners, those who just care about the “bucks” will go by the wayside.

So what am I up to lately? Last year I followed my former mortgage broker and boss (the one who brought me into the mortgage business in 2001) over to a mortgage brokerage firm that had more options and was in business for over ten years. After nearly one year, the mortgage brokerage decided to joined a mortgage banker called Advisors Mortgage Group headquartered in Manasquan, New Jersey. I would now have more options! The ability to be approved to do mortgages in more states and with a mortgage banker who had hundreds of loan officers was a plus. But the brokerage did not remain with Advisors Mortgage Group so I had a choice to make. Do I stay with Advisors who offered me Reverse Mortgage lenders to work with or join another company? Decisions, decisions decisions! But I made the right choice. I stayed. And I couldn’t be happier.

I still work from my home in Holbrook, Long Island just as I’ve done for years, and I continue to visit senior homeowners in their homes. The only change is a top notch company that goes strictly by the book.

I pray you’ll wish me well as I continue this mortgage journey. I am approved to do mortgages in New York and New Jersey, and Advisors Mortgage Group is licensed in sixteen states. So with change, I recall a statement of my husband’s: “The more things change, the more they stay the same.” And that’s the truth.

You can find some interesting information about Reverse Mortgages here on my website which I created – sort of proud of it! ReverseMortgageLI.com-an informational and educational website for seniors.

Michael A. Quinn stated, “Fannie Mae’s decision to discontinue to purchase CMT-indexed HECM’s is intended to help standardize and simplify HECM product offerings, build liquidity for the product, and encourage a market shift toward securitization”.

The CMT will be replaced by the LIBOR product (London Interbank Offered Rate), an index which has been used for Reverse Mortgages for a few years. A rise in the CMT index has been occuring which means lower proceeds for senior borrowers.

Because the LIBOR index gives Fannie Mae the chance to sell the product, the marketable LIBOR was a good opportunity to get rid of the CMT for Reverse Mortgage loans. The change becomes effective on August 31, 2009.

Fixed rate indexes have become attractive to borrowers since the fixed rate of late seems to offer a good amount of cash out for borrowers. Note that with Fixed rates, however, all proceeds must be taken at closing. Obtaining a fixed rate reverse mortgage is not always the best choice for borrowers since the interest on the full balance begins on day one. Because all the proceeds must be taken at closing, interest is accruing on a larger sum of money. Consult an advisor or an attorney to discuss your options before proceeding with a fixed product, and consider the LIBOR adjustable rate if you are looking for more options such as a monthly check or line of credit.

“After thinking about why the builder would decline an offer in this climate, Branson comes to the realization that there was too much fear of the unknown (ie. HECM for purchase). When you approach a builder with an approval letter to purchase a home using a program that requires no income and very little credit qualification, I can understand why they might be worried. One of the in house lenders even asked the borrower for a 1040 to qualify for a HECM… (from Reverse Mortgage Daily, March 23, 2009,

As of January 1, 2009 FHA began insuring Reverse Mortgages for purchases, not just refinances! The former Fannie Mae for purchase program ended December 31, 2008 and was replaced by the HECM for purchase program.

A HECM for purchase can help you achieve your dream home. The HECM for purchase program was designed to allow seniors (at least 62 years of age) to purchase a new residence and obtain a reverse mortgage all at the same time. You can downsize or buy the home you’ve been wanting or move closer to your children and grandchildren.

With the typical Reverse Mortgage, the HECM for Home Purchase has a maximum FHA lending limit of $625,500.

Eligible properties are: one to four unit properties. Construction must be completed. Coops, homes without a C.O. (Certificate of Occupancy), and Manufactured homes that were built prior to 1976 are excluded.

What is required as regards occupancy? The HECM for purchase home must be your primary residence. And the HECM purchaser has 60 days in which to occupy the home. No seller’s concessions are permitted.

Bridge loans and interim financing (secured or unsecured) are prohibited. There can be no other existing loan but the Reverse mortgage unless the loans are satisfied prior to the closing. All liens must be satisfied at closing and there must be clear title.

Credit card advances and equity loans cannot be used toward the purchase of the home or the closing costs.

Note: Manufactured homes that were built after June 15, 1976 must conform to the Manufactured Home Construction Safety Standards as evidenced by affixed certification labels (i.e., data plate and HUD certification label). The home must be on a permanent foundation as required in HUD’s Permanent Foundations for Manufactured Housing Guide.

HUD Approved Reverse Mortgage counseling is a required safeguard for Reverse Mortgages and the same is true with the HECM for Purchase. Your Reverse Mortgage Specialist will tell you how much you qualify to receive and a HUD approved counselor will answer all your questions. Happy house hunting!

If you’re looking for a monthly check (or direct deposit) of proceeds or a line of credit or a combination, you won’t have those options with the fixed rate. Of course you can’t be barred from getting a fixed rate with options, but the interest rate would be very high. And the amount per month will be less. It just doesn’t make sense to choose a fixed with those options.

Everything depends on the reasons why you are getting a Reverse Mortgage. If you’re thinking about setting up a line of credit to pay the taxes on your home, or if you want extra money each month, or you want a line of credit with monthly checks to you (modified tenure) the adjustable HECM is best.

The interest rate is still good, and the hit to your equity will not be as large as with a fixed rate which is now anywhere from 5.8% to 7%. Remember, with the fixed rate you draw all the monies at closing — no matter how high the amount. So if you qualify for $230,000 cash at closing, that’s what you’ll have to draw out. And the interest starts ticking on that amount plus the closing costs. If you home does not go up in value, and if you live a long time, the equity in your home could be gone.

This is why it’s important to compare programs with a Reverse Mortgage Specialist. It doesn’t take a brain scientist to figure out why someone would choose a fixed rate Reverse Mortgage (although most borrowers choose the FHA adjustable). It’s usually fear – fear of the adjustable rate mortgage (ARM). But sometimes a borrower will choose a fixed rate (taking all the proceeds at closing) for purposes such as investing or buying another home such as a vacation home. There are times when it makes sense to choose a fixed rate, but in five years of doing Reverse Mortgages I’ve had only two borrowers choose it. These borrowers refused the adjustable due to fear of adjustable rates. And it is true that the cap on it is 10% over the current rate.

However, do your homework. Talk to the right people. Look at the historical data to see how interest rates have changed over the years (maybe do a ten year history). Look at the the 1 year CMT and the 1 month LIBOR. Do a search on Google for “historical index” on each. Actually, www.Mortgage-x.com has a page dedicated to checking the history of an index.

Keep studying! It sure helps.

The HECM is the federally insured reverse mortgage product. It is insured by the Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development (HUD). HECMs account for about 90 percent of all reverse mortgages made today in the U.S.

Following are the number of HECM loans made in each federal fiscal year since the program began. HUD provides data by federal fiscal year (each federal fiscal year begins October 1 and runs through September 30 of the following year. FY 2006, for instance, began October 1, 2005, and ends September 30, 2006).

FY 2010 8,872 *
FY 2009 114,692
FY 2008 112,154
FY 2007 107,558
FY 2006 76,351
FY 2005 43,131
FY 2004 37,829
FY 2003 18,097
FY 2002 13,049
FY 2001 7,781
FY 2000 6,640
FY 1999 7,982
FY 1998 7,896
FY 1997 5,208
FY 1996 3,596
FY 1995 4,165
FY 1994 3,365
FY 1993 1,964
FY 1992 1,019
FY 1991 389
FY 1990 157 loans

Total = 581,884
Source of statistics: HUD
(http://www.Nrmla.org)
National Reverse Mortgage Lenders Ass’n.

As the name implies, a Reverse Mortgage works in reverse. Instead of equity growing as the loan is paid (like in a “forward” loan), because no mortgage payments are made this is considered a decreasing equity loan. But even so, it’s a great concept!

Reverse Mortgages are a great way to access equity in your home without giving up title or paying a new monthly mortgage payment. If your home is your primary residence you can obtain a Reverse Mortgage. Not everyone needs a Reverse Mortgage or even wants one. But they do serve a good purpose for many and can even rescue a senior homeowner from foreclosure. Even homeowners who are currently in bankruptcy can secure a Reverse Mortgage if there is enough equity remaining in their home. And those who have an existing mortgage, as long as there’s enough equity, may qualify for a Reverse Mortgage.

What Can a Reverse Mortgage Be Used For? Reverse Mortgages can be used for any purpose: travel, buying a new car, helping grandkids with college tuition, paying bills, getting rid of a current mortgage, taking care of medical expenses, just enjoying life a little more. Reverse Mortgages are guaranteed by the Federal Government and offer an adjustable or fixed rate. They can be structured for your own lifestyle and needs — as a monthly check to you (or directly deposited into your bank account), a lump sum at closing, a line of credit for future use, or a combination of all three. In fact, you can also set up a term loan for a certain amount of years which would increase your monthly proceeds. Your payments will end when the term is up, but you get to remain in your home; you are not forced to move just because the term ends.

When Did Reverse Mortgages Start? Reverse Mortgages have been changing the lives of senior homeowners for over forty years, but only since 1987 have they actually been federally guaranteed under the HECM program, meaning Home Equity Conversion Mortgage.

What’s the big mystery? Too often I’ve heard homeowners say, “I won’t own the house anymore after I do this, right?” And I wonder where that information came from. I always clarify that if your previous mortgage did not cause you to lose ownership of your home, why wuld a Reverse Mortgage be any different? Banks can’t take title to your home unless there is a foreclosure proceeding. Further, just like other mortgages, a Reverse Mortgage IS a mortgage– that means the lender (mortgagee) takes an interest in the property but NOT ownership.

For Reverse Mortgages to be understood we need to demystify the entire concept. For some strange reason there is a great mystery surrounding Reverse Mortgages. Actually the concept is fairly simple. Perhaps lenders and originators (loan officers) unwittingly encouraged this, and perhaps more education has been needed. Over the past few years Reverse Mortgage lenders have geared media campaigns toward senior homeowners, and this has been great. But more education is needed because false information still exists.

It is my considered opinion if you give enough people enough information, people make better decisions.

Seniors are no different than anyone else. They aren’t ignorant or naive, and they certainly want to learn more about one of the most important decisions they may make about their future. Educating oneself is imperative when it comes to big decisions, and a Reverse Mortgage warrants careful consideration

How Does a Reverse Mortgage Work? A Reverse Mortgage works like a typical mortgage, but it works in reverse. Rather than you paying a monthly mortgage payment to the bank, the bank pays you! Rather than qualifying with your credit score or your income, you qualify with your age and the value of your home. Unlike an equity loan if you choose the line of credit option and don’t draw all of the money out, it will grow. It’s a unique and amazing concept, one that causes me to marvel every time I close a Reverse Mortgage loan.

How does one qualify, and what are the parameters for getting a Reverse Mortgage? To get a Reverse Mortgage you must be at least 62 years of age. (The loan is based on the age of the youngest borrower.) Your home must be your primary residence where you reside most of the calendar year. Your home can be a 1-4 family dwelling, a condo, townhouse, or manufactured home, but not a co-op or mobile home. (Co-op Reverse Mortgages may be in the offing this year.)

How Much Money You Get: The amount of proceeds you receive is determined by age, value of home, and current interest rates. Fixed rates are usually proprietary to each lender. Adjustable rates are based on indexes (more correctly known as indices), and then the lender adds a margin (how much they will make.) There is the note rate which is also called the applied rate as it’s applied to your balance over time. But it’s not the Applied Rate or Note Rate that determines how much money you’ll get at closing.

Now, before I proceed, if you don’t like technical stuff don’t bother reading this part — but I believe every reader will be able to grasp this information. The rate that determines your available proceeds (called the Principal Limit / what you can borrow) is called the Expected Rate. Besides the Applied Rate and the Expected Rate we also learn there are also two indices, i.e., a variable benchmark interest rate that serves as an index for adjustable rate mortgages. The portion the bank gets (margin) is added to the index, and that is how you get your interest rate. This is called the fully indexed rate.

There are two indices used for Reverse Mortgages: the LIBOR index and the CMT index. Libor means London Interbank Offered Rate and CMT means Constant Maturity Treasury index. The first index, LIBOR, is the rate that banks participating in the London money market offer each other for various short term deposits. LIBOR rates are published by the British Bankers Association at 11am daily and represent countries in each currency.

NOTE: The CMT index is published on the U.S. Federal Reserve Board’s website along with other rates like the swap rates, commercial paper, eurodollars, etc. The page you can access to find this information is:
http://www.federalreserve.gov/releases/h15/current/h15.htm

The page that links to this page is http://www.FederalReserve.gov, and you would look for “All Statistical Releases”, then click on “Interest Rates” and then click on “Weekly”. You’ll see a list of indices and rates, and columns. Look for the CMT, and you can check the index you are looking for.

CMT: What is it? The “CMT index is essentially a ‘theoretical’ set of securities that is based on recent auctions of actual securities. These actual securities include bills of one, three, and six months,bills of two, three, five, ten, and thirty year notes, as well as the ‘off-the-runs’ in the seven to twenty year maturity range. CMT rates are also referred to as Treasury Yield Curve Rates. The most widely used mortgage CMT index is the 1 Year Constant Maturity Index. In fact, about 50% of all arms are based on this one. It is also known as the 1 Year T-Bill or 1 Year Treasury Spot Index. ( http://www.ascendantfinancial.com)

The One to Watch: The Expected Rate is the rate to watch because that is the rate which determines your bottom line, what proceeds you’ll get at closing. Sure, both the Applied Rate and Expected Rate are important, but always remember the Expected Rate is what will determine how much money you can borrow. If you’ve got a savvy loan officer they’ll be smart enough to check rates before ordering your appraisal.

If You Don’t Pay Anymore Mortgage Payments, What Are You Responsible for? You continue paying taxes and homeowner’s insurance and maintain your home as always. You are responsible to keep your home in good condition as the bank has an interest in your home.

Study and Learn – Only you can determine if a Reverse Mortgage is right for you. Study Reverse Mortgage material, read articles, and ask questions. Set up a consultation with a Reverse Mortgage Specialist and review actual numbers and program options. Get a Good Faith Estimate (an estimate of your closing costs).

Ask the kids what they think about it. Talk to your attorney or one of your friends. But be sure you get accurate information based on facts which can only come from a Reverse Mortgage Professional who has the software that produces Reverse Mortgage comparisons.

It’s true, Reverse Mortgages are certainly not for everyone. But for many senior homeowners who just want to have more, a Reverse Mortgage may be the perfect solution.

Happy Reverse Mortgage hunting – and good luck! For further information, visit my website: http://www.ReverseMortgageLI.com

To all you photographers out there . . . capture beauty in your own garden. When I have time I'll share some of my favorite garden must-haves, awesome hostas! "You know what a camera is? A mirror with memory." Author Unknown

Written April 1, 2009

This blog page is long– it covers events past and present that led us up till today. Anyone seeking a Reverse Mortgage needs to know the facts about Fannie Mae and the recent change in margins from Reverse Mortgage Lenders. After all, we are on your side – and we never wanted this to happen.

A Reverse Mortgage affects your future and your finances and is a wonderful tool. But in light of recent events with Fannie Mae (which resulted in an increase in Reverse Mortgage margins (the profit lenders make over the index), this has affected many potential borrowers from getting the amount they were looking for.

Being in the dark is never the route to go, and so I share this information with you.

A few days ago Reverse Mortgage specialists nationwide woke up to an awful nightmare. And immediately we knew one thing: our senior borrowers would suffer loss. For those of us who consider this more than a job, we were understandably upset. To our borrowers it would mean less proceeds from their Reverse Mortgage, and we would be the ones bearing this disappointing news.

Every one of us in the industry was upset. No, we were angry! But did the news media cover the story? No. Go figure. Maybe if Fox News or NBC carried the story there would be more outrage from more Americans. So what really happened? There is a background to how we got here– so please bear with me. Here’s the scoop:

Fannie Mae, currently the sole investor in Reverse Mortgages, changed their pricing on March 27th which necessitated all Reverse Mortgage lenders changing their margins (i.e., the percentage a lender adds to an index such as the LIBOR index (London Interbank Offered Rate) or the CMT index (Constant Maturity Treasury) to achieve a “fully indexed rate” for borrowers.

Dennis Haber’s March 29th blog (Dennis is an attorney and one of the most well known experts on Reverse Mortgages in the U.S. today), had this to say:

“Reverse Mortgages: FANNIE MAE Declares War On Seniors - Silence or non action by one side when “inappropriate action” is taken by another side, if history teaches us anything, is further reason why the one being harmed needs to speak up. The reverse mortgage industry has maintained an attitude of indifference, which is just as bad as maintaining silence. The force causing the harm is Fannie Mae.”

Dennis is right. It is “war on seniors”. But senior borrowers and the industry must make their voices known. We must get to the people who will listen to us. Here’s an interesting online article that sums up recent events:

“The Reverse Mortgage Wire – Brokers Scramble as Reverse Mortgage Rates Rise – Posted April 01, 2009 3:59 PM PST

Reverse mortgage originators have been scrambling to close and re-disclose home equity conversion mortgages this week as new pricing from Fannie Mae led lenders to raise margins a minimum of 50 basis points. . .

The sudden change caught the industry off-guard. Rising interest rates mean fewer proceeds to borrowers in most cases. Brokers either lose money on committed deals or have to re-disclose new pricing to customers.

“It’s been brutal,” said David Bancroft, president of Mission Viejo, Calif.-based brokerage Omni Reverse.

Generation Mortgage Senior Vice President Sherry Apanay said pricing from Fannie is negative for any margin lower than CMT 325 and LIBOR 275. Generation and other lenders, such as Financial Freedom and MetLife Bank, have been adding margins as high as 375 basis points for CMT loans and 325 for LIBOR loans as they eliminate premium pricing to brokers for lower margin reverse mortgages. . .

Industry insiders say that Fannie Mae is attempting to make the HECM product, particularly Constant Maturity Treasury indexed loans, more enticing to investors. The government sponsored enterprise, under federal conservatorship, needs to begin slimming down its loan portfolio in 2010.

Spokespeople for Fannie Mae did not responded to requests for further comment. “

Did you catch that? “Fannie Mae did not respond to requests for further comment.” Why am I not surprised?!!

Lest you think I am being sarcastic, let me be clear. You are absolutely right! It’s not pretty when you have to go to your borrower with a shortfall (they need money to close as the amount they qualified for with their Reverse Mortgage wasn’t enough to pay off their mortgage debt) and tell them they need even MORE money at closing! Sure, they signed an application, but you can’t — at least it looks like this – keep your word. The program no longer even exists because the lender dropped the program — because Fannie Mae forced them to. How does it make you feel to do this to a borrower? LOUSY.

But here’s the worst part. The problems that began on March 27th with Fannie Mae are not new. Fannie Mae had problems back in the nineties. And actually these problems began with Franklin Delano Roosevelt’s “New Deal”, and I quote:

“Legislation, Presidential & Congressional Politics – recession
Expert: Michael Troy – 10/23/2008

The current recession can actually be traced back to the New Deal, when the Federal government created institutions to buy and resell diversified mortgages. This increased bank liquidity and diversified risk, allowing for more people to get home loans, but it also helped to inflate home values and to separate lenders from the risks of lending. Over the following decades, these policies allowed home values to increase steadily. The diversification of risk made lenders willing to offer lower down payments and take greater risks with home buyers.

In the 1990′s many government officials . . . encouraged Fannie Mae and Freddie Mac to loosen standards for home loans. . . By allowing these higher risk buyers to qualify for loans that could be resold through Fannie Mae and Freddie Mac. . . a strong push in the 1990′s. . . The lowering of borrower standards brought new homeowners into the market. That, combined with an increase in real estate investment after the 2001 market crash, helped to push home prices even higher. . . When the inevitable pull-back in housing prices came, investors found that those low risk securities were suddenly higher risk. Since no one knew how to value that risk, the prices fell through the floor, leading to many of the problems we see today.”

Risk. Lowering borrower standards. Home buyers who knew they could not afford to pay high mortgage payments each month should NEVER have been granted mortgages. But they were. No ability to pay– and this is where problems began. Mortgages known as “sub-prime” loans and “stated income” loans were granted (where unverified incomes were used to qualify borrowers for mortgages). This situation was addressed by John Dugan in 2007.

Regulator sees stated income subprime problem
Wed May 23, 2007 4:19pm EDT – By John Poirier

“WASHINGTON (Reuters) – Use of unverified income data in making mortgage loans to borrowers with poor credit histories should be the exception rather than the rule, a U.S. banking regulator said on Wednesday. . . Comptroller of the Currency, John Dugan, said the use of a borrower’s stated income, without verification, had helped increase mortgage delinquencies and foreclosures in combination with other lax underwriting standards. . . But he said stated income is a “different kind of animal” because it invites misrepresentation and potential fraud. Stated income helped people qualify for bigger loans and more expensive houses, and tempted brokers to push such practices to gain higher fees.”

Now, the sub-prime problem came to a head and “stated income” mortgages ended while “sub-prime” lenders were either shut down or went belly up in 2007. The era of unverified income when applying for a mortgage was over.

THOMAS KOSTIGEN’S ETHICS MONITOR - No surprise here – Shaky ethics of subprime lending lead to shaken investors – By Thomas Kostigen, MarketWatch – Last update: 12:03 a.m. EDT July 20, 2007 SANTA MONICA, Calif. (MarketWatch) -

http://www.marketwatch.com

“In March, New Century Financial Corp., the nation’s second-biggest subprime mortgage lender, announced that it didn’t have enough cash to pay its own creditors. Fremont General Corp., Accredited Home Lenders Holding Co., NovaStar Financial Inc., and Countrywide Financial Corp., the nation’s biggest mortgage company, have also tumbled over subprime woes this year. . .

Bear Stearns, the highly regarded Wall Street trading firm, is now caught up in the fiasco. Two of its hedge funds with ties to the subprime mortgage market have gone belly up and it will mean losses to the firm as a whole. . .

Just how much financial carnage the hedge funds have stacked up at the firm is yet to be determined. But Bear Stearns could very well become the poster child for the subprime meltdown.”

So I ask you my readers, what word describes just what was going on for years prior to the mortgage meltdown of 2007? Just ONE word: GREED. Greedy banks, greedy brokers, greedy loan officers. On the part of the prospective homeowners it wasn’t greed. I call it wishful thinking, self deception, and desperation. ‘Get myself into a home of my own no matter what it takes and even IF I can’t afford it. I’ll figure out a way to make it work! I’ll just do a stated income loan because I could never qualify any other way.’

Back to Fannie Mae. After the surprise we got by Fannie Mae on March 27th Reverse Mortgage specialists and industry leaders knew that to close many Reverse Mortgages would result in a COST to their companies from the lenders. This is often prohibitive so some Reverse Mortgage loan officers were forced to change the program they offered their borrowers or suffer huge losses. I had such a situation; I checked my reverse mortgage software with one lender for a borrower in a shortfall whose application was written. It would have cost my company $8,000 to close the loan with that same program– while the origination fee to do the loan was only $6,000!

How do we explain this to borrowers? Compare it to a contractor who gives you an estimate to paint your house. The estimate seems reasonable. $3,000 for the outside including trim. You contract to have your house painted, but the next day Benjamin Moore raises the price of paint SO high that it results in a loss to the contractor. What is the contractor forced to do? Return to the homeowner telling him that he has to change his price because Benjamin Moore just pulled the rug out from under him!

Now, I am quite sure nearly all Reverse Mortgage specialists would be willing to suffer the loss of some of their profits to help their senior borrowers. After all, it’s not always about the money — it’s about serving a community of people who made America great. And it’s about our own credibility.

When you think things can’t get worse, something else happened. On March 30th the boom got lowered even farther. Because of Fannie Mae’s changes in pricing certain loan programs were no longer offered by lenders, one large lender in particular. Programs disappeared and were replaced by higher margin programs as the prior programs were no longer profitable to the lenders.

Who was to blame? Again, Fannie Mae. Our “wonderful” GSE (Government Subsidized Enterprise) known as Fannie Mae!!

What are Fannie Mae and Freddie Mac, and what do they do?” Here’s a synopsis:

“Fannie Mae and Freddie Mac are “government-sponsored enterprises” (GSEs). This means that they are privately owned, but receive support from the Federal Government and assume some public responsibilities.

The GSEs provide a secondary market in home mortgages, purchasing mortgages from the lenders who originate them. For lenders to stay in business, this is what they do – sell loans to Fannie Mae or investors. They hold some of these mortgages, and some are “securitized” — sold in the form of securities which the GSEs guarantee.

As many of you already know, Fannie Mae and Freddie Mac, are among the largest corporations in the world today. (They actually hold half the mortgages in the United States.) Sort of unveils the curtain as to why Fannie Mae is so important to the stability of our economy. If Fannie Mae gets into trouble, it’s a bad situation. http://www.mtgprofessor.com/A%20-%20Secondary%20Markets/what_do_fannie_and_freddie_do.htm

As you know, Fannie Mae was bailed out (taken over) by the Federal government on September 9th 2008. Let me quote the Times Online, September 8, 2008, but notice the emphasized words in BOLD (by me) :

“Fannie Mae and Freddie Mac bailed out by US Government – The US Government took control of Freddie Mac and Fannie Mae, the stricken companies that underpin the American mortgage market, yesterday and promised to inject up to $110 billion of taxpayers’ money to keep them afloat.

The cash infusion was one of a series of measures designed to restore order to the stricken financial system that included the immediate removal of the 0chief executives of the companies and the elimination of future dividends to shareholders.

Henry Paulson, the US Treasury Secretary and a key orchestrator of the rescue package, acknowledged that it was highly unusual for a government to intervene where publicly traded companies such as Freddie and Fannie were concerned. But he emphasised that the two struggling groups represented a special case because their survival was crucial to the health of the worst housing market since the Great Depression of the 1930s.”

In the same article, John McCain, the Republican nominee . . . told CBS that Fannie Mae and Freddie Mac had both become “sprawling, massive bureaucracies, rife with corruption and cronyism” in which the needs of ordinary mortgage-holders were ignored.”

Bureaucracy, corruption, cronysim. He’s got that right.

Here’s more about the warnings about Fannie Mae’s problems:

“The United States Senate May 25, 2006 Sen. John McCain [R-AZ]: “Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal. The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac. The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market.”

Unfortunately, Barney Frank, Chairman of the House Financial Services Committee and a defender of Fannie Mae as well as some House Republicans kept ignoring the problems of Fannie Mae! But an overhaul was proposed as early as 2003.

New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON - Published: Thursday, September 11, 2003

WASHINGTON, Sept. 10 — “The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac , the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.”

However, here is an interesting statement that has now been quoted by the news media and critics alike:

“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

As we see, the current crisis which has now affected even the Reverse Mortgage industry began years ago. Had Fannie Mae not been bailed out or had problems, it’s unlikely the Reverse Mortgage industry would have been blindsided as it was.

I don’t believe there’s a Reverse Mortgage specialist who isn’t upset with Fannie Mae about what has happened. It mars the name of the Reverse Mortgage industry. It hurts our reputation as specialists who offer this product to seniors, but most of all– it hurts our borrowers who look to us and our lenders to provide what we all consider a wonderful product. We offer lifestyle to our borrowers, not just money. And yet, our senior friends get blindsided by this shocking situation, and many just don’t understand it.

Is there anything that counteracts this horrendous situation? It’s bad enough we don’t trust our own government. Now some seniors don’t trust us either. But there are still benefits to getting a Reverse Mortgage and still honest people around who’ll give it to you straight.

Here’s the good news:

Reverse Mortgage rates are STILL very good.

a) A range of 3.5% or thereabouts (adjustable) is still quite good and rates in the mid 5′s to 7% (fixed) are also quite good.

b) FHA (the Federal Housing Authority) lending limits have increased to $625,500 up from $417,000 and prior to that it was $362,790 (and at least till the end of this year $625,500 will hold as a nationwide lending limit and hopefully will be extended beyond 2009 with some pressure from us in the industry on behalf of borrowers).

c) Origination Fees have been capped so the maximum origination fee lenders or brokers can make on the FHA Reverse Mortgage is $6,000. It used to be $7,255.80 on a lending limit of $362,790. Big change.

d) While it is true if your home is worth $625,500 or more (the current max lending limit of FHA) you will pay a 2% Mortgage Insurance Premium (or MIP), considering what you get it’s worth it. The premium, as with nearly every Reverse Mortgage closing cost (other than your appraisal) is financed inside the loan.

Paying mortgage insurance is absolutely essential. First of all, a Reverse Mortgage is a non-recourse loan; the home stands for the debt. And because you have mortgage insurance your debt will never exceed the value of your home when repaid. Plus, the lender can never attach your bank account, your winnings from the lottery, nor can they look to your heirs for repayment.

You carry mortgage insurance for a very good reason – to protect the lender which in turn protects YOU. Actually, you will NEVER be personally responsible for the debt. This is a loan where if you live in your home until your passing, you will never pay it back.

e) Where can you find a mortgage that GIVES you money and asks for no monthly mortgage payment rather than the typical mortgage where YOU are paying the bank? And where can you wipe out a current mortgage payment that costs perhaps one to two thousand dollars a month in just a single day?

The picture is not bleak, it is hopeful — and I trust this blog has helped clear away the cobwebs and unveil the mystery attached to Reverse Mortgages. Past and recent events have shaped where we are today. And I admit even those of us who work in this industry were left frustrated and somewhat confused.

When we are at the mercy of the federal government and Fannie Mae, nothing is guaranteed. Rates are not guaranteed. Programs can change. But one thing is for sure; we’ve got a program that is helping lots of people stay in their homes and enjoying their retirement. And I believe Reverse Mortgages will be around (God willing) for a long time to come. Despite the difficulties of recent weeks, Reverse Mortgages, in my opinion, are the best thing to come along from the Federal Government for seniors who own homes — and that’s a plus.

I hope this blog has helped. I apologize if it was lengthy, but I felt it needed to be said.  You can find more information on Reverse Mortgages here: http://www.ReverseMortgageLI.com – and hear my radio commercial here – http://www.ReverseMortgageHelpline.com

Kathie Adler – Senior Reverse Mortgage Specialist
Advisors Mortgage Group, LLC, 300 Garden City Plaz, Suite 170
Garden City, NY 11530

I had no idea how to do one or which blog company to use. I’m new to blogging, and frankly never wanted to take the time to do one — so little time lately! But it was really quite simple. I’ve done website design (used to at least), so it’s pretty similar, though not as complicated.

I hope you will enjoy these blogs (updated weekly as time permits) and do let me have your thoughts. Most will be about Reverse Mortgages, what I do best, but some blogs will be about senior issues, how to make money from home, and interesting topics you might enjoy. I’ll try to include some interviews with interesting people who can impact your life for the better.

Now that I think of it I needn’t have worried about having content for my blog. My husband always says I don’t write letters I write books! Prolific writer or whatever label fits, I’m always thinking of how to write about something.

Maybe you’re like me, maybe you do that too? If so, then you’ll understand if these blogs become lengthy! I’ll do my best to shorten them, but it’s a real character flaw — I have BIG trouble editing things! For whatever it’s worth, welcome to my blog — I hope you’ll stay

QUOTE FOR THE DAY: “Character is what we do when we think no one is looking.” (H. Jackson Brown, Jr, American best selling writer, author of Life’s Little Instruction Book.