Web site provides list of reputable lenders

DEAR BOB: My parents are avid readers of your articles and have become quite the experts on reverse mortgages for senior citizens. But they live in a small town that has one bank, owned and run by an “old geezer” who has been there for 100 years. At least he seems that old. I know he charges high interest rates but he is so charming that most of the “locals” don’t bother to go to the nearest city about 50 miles away to compare loan terms. Where is the best place for my parents to get a reverse mortgage? Are reverse mortgages available at small-town banks? –Marsha W.

DEAR MARSHA: Yes, reverse mortgages are available everywhere, even in small towns. However, there are minimum property standards.

Purchase Bob Bruss reports online.

Perhaps you remember the angry West Virginia homeowner whose reverse-mortgage application was rejected because her only drinking water source is a cistern (for some reason she didn’t want to drill a well). Frankly, I don’t blame the reverse-mortgage lender for rejecting that loan.

Your parents will discover most banks do not originate reverse mortgages for senior citizens. But a major exception is Wells Fargo Bank.

The easiest place to find reputable reverse-mortgage lenders for your parents in their area is at www.reversemortgage.org. They should consider the FHA (HECM), Fannie Mae and Financial Freedom Plan reverse mortgages.

More details are in my special report, “The Whole Truth About Reverse Mortgages for Senior Citizen Homeowners,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant delivery at www.BobBruss.com.

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Cash In On Home Equity To Cover Emergencies 

Elderly homeowners have plenty of equity in their homes once their mortgage is paid off, but for those who live on a fixed income, paying for anything outside of normal expenses can pose challenges.

Reverse mortgages can offer senior citizens a way to solve the house-rich, cash-poor dilemma without risk to their heirs.

Reverse mortgages allow homeowners to turn the value of their home into cash, and they don’t have to pay back until they die, sell the home or permanently move from the house, according to AARP.com.

Browyn Belling, the AARP Foundation’s reverse mortgage specialist, said the loans are a relatively new way to tap into home equity for those who are 62 and older.

In a conventional “forward” mortgage, homebuyers borrow a lump sum and make monthly payments, reducing the principle and interest over time. But with a reverse mortgage, there are no monthly payments.

“You don’t have to pay anything back for as long as you stay in your home; 85 percent of our survey respondents want to stay in their homes. Reverse mortgages let them tap that equity,” Belling said.

She conceded that the borrower’s debt grows larger with a reverse mortgage, because there’s no repayment and the interest is added to the principle.

But it’s often worth the higher price tag for borrowers who have few other options, especially since most reverse mortgages have a non-recourse clause that keeps the borrower or estate from owing more than the home’s worth when the loan is repaid, according to the Federal Trade Commission Web site.

Bob Walters, chief economist of Quicken Loans, said there’s no income or asset requirement for a reverse mortgage application. He said lenders look at the homeowners’ age and appraisal value.

“It’s a wonderful product for people struggling with bills. It gives people a lifeline,” Walters said.

There are four options for distributing the cash with a reverse mortgage, according to AARP.com: a lump sum; a monthly cash advance; a line of credit that lets the borrower decide how much and when to access the cash; or a combination of those methods.

There are three types of reverse mortgages — single-purpose, federally insured reverse mortgages called Home Equity Conversion Mortgages (HECMs) and proprietary or private loans, according to the FTC Web site. Applicants must be 62 or older and own their homes.

Belling said HECMs make up 90 to 95 percent of the reverse mortgage marketplace and require counseling before applying. She added that because they are backed by the full faith and credit of the federal government, if anything happened to the lender, the government would step in.

She said HECMs have been in effect since 1989 and generally provide the most money at the lowest cost.

HECMs follow rules of the U.S. Department of Housing and Urban Development so the loan’s costs and interest rate will be the same regardless of the lender. But closing costs, origination fees and servicing fees vary because they’re set by the lenders, according to FTC’s Web site.

Belling said proprietary loans are for higher priced homes, are a small sliver of the reverse mortgage market and are not backed by the federal government.

Belling said the typical borrower is a widowed single woman in her mid-70s who has a modest income. But now the AARP is seeing more couples choosing reverse mortgages.

“It’s gaining more recognition as a viable financial instrument,” Belling said. “Many people who thought they could manage are looking to their house as a more liquid asset than they used to.”

For fiscal year 2005, the average property value of reverse mortgage borrowers was $254,000, the borrower’s average age was 73.8. In addition, 46 percent of borrowers were single women, 16 percent were single men and 38 percent were couples, according to data from HUD.

Belling said the older the homeowner is and greater the value of the house, the more the person can borrow.

As the loans become more commonplace, so are the TV ads about reverse mortgages. Front-end education about the terms, fees and options can be vital in deciding if it’s the best option and is required for HECMs.

“The biggest danger is not understanding how the loan works,” Belling said.

For example, she pointed out that it’s a bad idea to take out a reverse mortgage if the homeowner only plans to stay in the house for one or two years.

“The total costs of the loan are spread out over time and the costs are much lower. Charges become lower if you spread them out over time,” Belling said.

FTC’s Web site recommends that consumers ask a counselor or lender to explain to them the Total Annual Loan Cost that lays out the loan’s average annual cost over time, including all itemized costs.

Walters said an obstacle with which homeowners may be struggling is that they want the home’s equity for their heirs or they don’t want to touch it for emotional reasons.

Walters said one of the best features of reverse mortgages is there’s no risk to the borrower’s heirs. If there is still equity in the home, heirs have up to a year to repay the debt by selling the home.

Belling said the heirs’ responsibility for repaying the debt is usually done by selling the home. She said that sometimes heirs want to keep the home; and they can apply for a conventional mortgage to pay off the reverse mortgage.

A big myth with reverse mortgages is that the bank gets the house. Belling said the borrowers are still the owners, and they need to live in the house the majority of the year.

She stressed that borrowers need to keep up with paying their property taxes and insurance throughout the life of the loan, because failure to do that can result in a default.

“You need to do a lot of due diligence of what the costs are to decide whether to apply. Then there aren’t any surprises about fees or charges,” Belling said.

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More senior citizens cashing in home equity with special mortgages

October 29, 2006 – The number of federally insured reverse mortgages made in the U.S. in the government’s 2006 fiscal year has increased by 77 percent. Rising home values, larger sales forces, and increased consumer acceptance of these loans designed for senior citizens has fueled the growth, according to the National Reverse Mortgage Lenders Association.

During the most recent federal fiscal year, ending September 30, the Federal Housing Administration (an arm of the U.S. Department of Housing and Urban Development), insured 76,351 Home Equity Conversion Mortgages (HECMs), commonly called reverse mortgages, compared to 43,131 the prior year.

“More seniors are recognizing that traditional retirements tools, such as IRAs, pensions, and 401(k)s are not providing sufficient income to help fund everyday living expenses and healthcare,” said Peter Bell, President of NRMLA.

“Thru proper education, more retirees are recognizing that the home they have lived in for so many years can now take care of them by using a reverse mortgage to access the equity accumulated over 20, 30, 40 years, to help them living more comfortably.”

The Santa Ana, Calif., metropolitan area displaced Los Angeles as the top reverse mortgage market in the country with 5,825 loans funded (compared to 3,067 in 2005).

Others in the top ten reverse mortgages markets and the changes were:

● Los Angeles (5,758, compared to 3,915 in 2005);
● Sacramento, Calif. (3,625, compared to 2,161 in 2005);
● Coral Gables, Fla. (3,577, compared to 1,387 in 2005);
● San Francisco, Calif. (3,353, compared to 2,040 in 2005);
● New York City (2,492, compared to 1,454 in 2005);
● Fresno, Calif. (2,461, compared to 942 in 2005);
● Phoenix (2,438 compared to 720 in 2005);
● Boston (2,263 compared to 1,148 in 2005); and
● Denver (1,947 compared to 1,515 in 2005).

NRMLA attributes the explosive growth to several factors, including high home appreciation rates in many parts of the country, which allow seniors to access greater amounts of equity; more lenders offering the product (NRMLA now represents about 500 firms nationwide compared to 370 last year at this time); and greater acceptance of reverse mortgages as a wealth management tool.

The government’s top housing official, Brian Montgomery, who serves as FHA Commissioner and Assistant Secretary of Housing at HUD, commented at NRMLA’s Annual Meeting in September, that he anticipates reverse mortgages will one day be as commonplace as 401(k)s and other retirement planning tools.

“HUD has gone to great lengths to educate community leaders and senior advocates about the potential benefits of reverse mortgages, which has helped make more people comfortable with recommending the product to their elderly clients,” Bell noted. “I think Commissioner Montgomery deserves as much credit as anyone for helping to make reverse mortgages a more mainstream financial planning tool.”

A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home, without having to sell the home, give up title, or take on new monthly mortgage payments.

Loan proceeds can be used for any purpose, and taken out as a lump sum, fixed monthly payments, line of credit (except in Texas), or a combination. The loan amount depends on the borrower’s age, current interest rates, and the value and location of the home.

A reverse mortgage does not have to be repaid until the borrower moves out of the home permanently, and the repayment amount cannot exceed the value of the home. After the loan is repaid, any remaining equity is distributed to the borrower or the borrower’s estate.

A senior’s home does not have to be owned free and clear to qualify for a reverse mortgage. NRMLA distributes a free information booklet on reverse mortgages, called Just the FAQs: Answers to Common Questions About Reverse Mortgages. Consumers can order it by telephone (1-866-264-4466, toll-free) or at NRMLA’s Web site, http://www.reversemortgage.org.

The Web site has extensive information on reverse mortgages, a state-by-state list of lenders, and a reverse mortgage calculator. To be listed on the NRMLA website, a lender must agree to abide by the Association’s Code of Conduct and operate in accordance with its Best Practices.

NRMLA is a nonprofit trade association, based in Washington, DC, whose members make and service reverse mortgages throughout the U.S. and Canada. Members sign a Code of Conduct pledging to abide by guidelines that assure fair, ethical, and respectful practices in offering and making reverse mortgages to seniors.

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Omni Home Prioritizes Industry Service Levels — A Critical Component to Any Loan Officers Resources Ensuring Financial Protection

SAN CLEMENTE, CA — (MARKET WIRE) — 10/25/06 — Omni Home, a reverse mortgage origination firm which specializes in providing sound financial advice and products to America’s senior population, is building continued industry interest among successful loan officers looking to increase value in customer relationships. Omni Home created such a positive working environment within its offices that a new service culture automatically thrives in every loan the company closes. “It starts with the first point of contact where our loan officers leave that indelible impression on the borrower that we will close this loan for them. I am fairly certain some of our competitors can’t make the same assurance,” says Brett Varner, Manager at Omni Home.

Reverse mortgage products have evolved significantly since their inception, creating better options, protection and security as well as greater complexity for seniors. This is compounded by seniors’ limited knowledge of available products, the loan process, or how and where to utilize available money. Funds could only come in one of two ways: lump sum or monthly payments. Still, many seniors are unaware that reverse mortgage proceeds can cover future health care costs, eliminate debt or reduce financial burdens awaiting their children. Moreover, the loan process took as much as three months to close; not a warming feeling for seniors anxiously awaiting funds they desperately need.

Omni Home takes the security of financial advice to our senior population and converts it into powerful knowledge first given through seminar classes and mailers, then, finally accentuated by the crop of professional loan consultants. Mostly, the industry manufactured a senior’s decision to settle on a reverse mortgage based solely on dire financial straits. Moreover, without the right team, seniors can find the loan process confusing and drawn out. Omni Home is changing the course of that philosophy. With increasing flexibility and options, it is imperative that loan consultants are consistently armed with industry updates to be an educated resource for their clients.

What Omni Home looks for in staff and loan officer candidates parallels how a coach might judge good athletes showing great potential in becoming the best. Dave Bancroft, President of Omni Home, was quoted recently at a sales drive pronouncing, “The portion of home financing we operate in calls for integrity, honesty, you name it, we’re adamant about staying the course on ‘customer first’ ideology. You, as the consultant, should want to play on a successful team. Omni Home needs to hire the best of the best, we’ll make you better.” Loan officers in the reverse mortgage segment of home finance wanting sound service levels should look no further than Omni Home.

For information on becoming a member of Omni Home, contact Brett Varner at 877-333-3930 or visit www.omnihome.net

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These days, the Baby Boomers are approaching retirement. Most of their parents, too, are still living. This unprecedented population of elders has given rise to new financial tools. One among them seems all the rage: the reverse mortgage.

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Product lets borrowers tap more home equity

Reverse Mortgage of America, a subsidiary of Seattle Mortgage and the third-largest producer and servicer of reverse mortgages in the country, plans to roll out the first new reverse product in nearly a decade when its privately funded jumbo program — The Lifestyle Plan — hits the market in the next few weeks.

The new product initially will be available in Washington, Oregon and California. It will be marketed to the remainder of the country early next year.

Designed for owners of higher-value homes, The Lifestyle Plan product is similar to Financial Freedom’s Cash Account and allows for a higher percentage of available home equity to borrowers, exceeding the federal loan limit placed on reverse mortgages insured by the Federal Housing Administration.

Both the Reverse Mortgage of America (RMOA) offering and the Financial Freedom mortgage function similarly to the FHA Home Equity Conversion Mortgage (HECM) and Fannie Mae HomeKeeper reverse-mortgage programs, but are funded by a third-party lender.

The Lifestyle Plan could be more beneficial than the HECM for homeowners with substantial equity. For example, a HECM would provide a typical 73-year-old couple with an appraised home value of $700,000 with approximately $203,723 in available funds. Under The Lifestyle Plan this same couple could avoid closing costs and loan fees, netting $291,915 in available funds, a difference of $88,192, according to Reverse Mortgage of America.

“The Lifestyle Plan provides additional opportunities for seniors across the nation, particularly those in expensive housing markets, who are eagerly seeking alternate sources of income,” said John Nixon, executive vice president of Reverse Mortgage of America. “It is important that seniors understand and fully examine their financing options. As our population ages, reverse mortgages will supplement retirement and enhance the quality of life for many more senior homeowners.”

Financial Freedom first introduced a jumbo reverse mortgage in 1996 and had no competition until now. Jumbo amounts, now starting at $417,000, adjust annually and are greater than the “conforming” limits established by Fannie Mae and Freddie Mac.

The interest rate on the new RMOA program is the six-month LIBOR Index, plus 3.6 percentage points. That rate today would be 9.02 percent, compared with 5.07 percent three years ago. While the new RMOA program’s “margin” is slightly higher than the Financial Freedom mortgage (3.6 compared with 3.5) the RMOA mortgage offers a more flexible no-fee option.

Most seniors prefer predictable, reliable mortgages. Many have requested a fixed-rate reverse to the unpredictable moves of an adjustable, but underwriters have been unwilling to take on the risk of a long-term product.

Tom Scaberti, who left Financial Freedom last year to head up the soon-to-be-released reverse mortgage at Countrywide Home Loans, said it has been difficult for potential mortgage investors such as Lehman to commit to gauge how long seniors will remain in the home. That information, plus other research, would bring more mortgage variety and result in lower rates and fees for consumers.

“There are actuarial tables, like the ones insurance companies use, to predict how long a senior will live,” Scaberti said. “But we don’t have a lot of data yet on the move-out rate. How long will they stay once they get the reverse?”

FHA’s HECM is clearly the nation’s most popular reverse mortgage and carries a lower interest rate than the jumbo products, but borrowers are limited in the amount they are able to borrower by FHA’s loan ceilings and geographic regions. Urban areas typically have higher loan ceilings than rural areas. Borrowers have to pay HECM loan fees, typically 2 percent of the appraised value plus a 2 percent mortgage insurance premium, but these fees can be subtracted from the loan proceeds. Thus, borrowers do not have to pay “out of pocket” for most of these fees.

Reverse borrowers make no monthly payments on their mortgage during its term. The loan comes due when the borrower permanently moves out of his or her home. To qualify, consumers must be at least 62 years of age and own their own home. The home does not have to be paid off entirely, but the greater the equity, the greater the reverse loan amount.

However, seniors can “outlive” the value of their home without being forced to move. The homeowner cannot be displaced and forced to sell the home to pay off the mortgage, even if the principal balance grows to exceed the value of the property. If the value of the house exceeds what is owed at the time of the homeowner’s death, the rest goes to the estate.

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DEAR BOB: I have friends who own their home, which is on leased land. The senior-citizen reverse mortgage lender told them the residence is not eligible. Is this correct? –Anthony L.

DEAR ANTHONY: If the residence is a manufactured house or a mobile home on a leased lot, it clearly is ineligible for a reverse mortgage.

However, if it is on a leased lot with an option to purchase, then some lenders will approve a reverse mortgage in such a situation. Owning a residence on leased land is never an advantage and is frequently a detriment.

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California based Reverse Mortgage USA is a member of a select group specializing in Reverse Mortgages. Company sees over 100% increase in loan volume over previous fiscal year.

Santa Ana, CA — (SBWIRE) — 10/23/2006 — Orange County – California-based Reverse Mortgage USA Specializes in FHA insured Reverse Mortgages. It currently services the entire State of California as well as Hawaii. In addition to its increased closing rate , Reverse Mortgage USA ranks among the top five percent in the field of almost 1000 Reverse Mortgage lenders nationwide.

“ We are proud of our ranking — it proves our high regard for customer service — especially since it’s HUD, not the lender, that sets the rates and terms in a Reverse Mortgage. That means all lenders offer the exact same programs,” said Vince Welter, President of Reverse Mortgage USA, noting the differentiation between traditional mortgages that can be shopped according to rates and terms. “Our growth has been won through superior knowledge about the program, understanding the needs of seniors and delivering.”

The wave of baby-boomers entering their retirement years, and those working on behalf of their elderly parents who face escalating living and healthcare costs, has caused the popularity of the federally regulated reverse mortgage industry to rise.

Nationwide, 75% of all reverse mortgages are closed by 5% of lenders, an elite group specializing in this unique mortgage program. In the last two years, Reverse Mortgages have jumped 238%.

“While there are many good lenders in the country who offer Reverse Mortgages, there are only a handful that truly specialize in this program. This is a critical distinction. This program is so unique from other types of mortgages, even skilled loan officers find they must relearn the program each time they attempt to fulfill. Reverse Mortgage USA specializes in reverse mortgages. We know what we’re doing and recent stats depict our expertise,” said Welter.

Reverse Mortgages have been around for years, but it wasn’t until the early ’90s after the Federal Housing Administration started regulating and insuring the program, such began earning respectability.

The purpose of the Reverse Mortgage is to turn what was once inaccessible — the value of one’s home — into a liquid asset for use by seniors at a time when they need it most. “Seniors have worked hard for what they’ve earned; finally there’s recognition that these earnings can be accessed without the penalty of moving, or high payments. They can use what they have built to live comfortably. It is a way to realize the benefits of homeownership and equity building like no other!” said Welter, “We seek to educate the public at-large and seniors specifically about access to this valuable resource.”

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SEATTLE–(BUSINESS WIRE)–A new partnership between industry leader Reverse Mortgage of America, a division of Seattle Mortgage Company, and several of its document preparation partners will reduce origination costs for senior citizens seeking a reverse mortgage.

The agreement between Reverse Mortgage of America (RMOA) and its strategic partners reduces document preparation fees by $50 per mortgage, which in many cases represents a 50 percent fee reduction. The plan, available November 1^st, is a result of RMOA’s technological advancements combined with rapid growth in the reverse mortgage industry. The resulting economies of scale are reducing costs and paving the way for further reductions in the future. Lending partners and others utilizing RMOA’s software technology ReverseWare^® will be able to pass this benefit along to their borrowers.

This benefit is a result of creating seamless integration of mortgage document solutions within the RMOA ReverseWare^® lending platform, eliminating manual input. Joint efforts between Reverse Mortgage of America and their document preparation partners resulted in one hundred percent data pull through and the dynamic generation of initial disclosures/closing packages, thus eliminating costly data entry errors and the rekeying of data. This solution includes reverse mortgage documents for Fannie Mae HomeKeeper, FHA HECM (Home Equity Conversion Mortgage) and Reverse Mortgage of America’s new jumbo reverse loan product called The Independence Plan^SM.

This development will benefit the thousands of seniors seeking reverse mortgages. “This is another positive step toward reducing the costs associated with reverse mortgages,” said John Nixon, Executive Vice President of RMOA. “Strong growth in the market – up approximately 76 percent over the same period last year – promises continued economies of scale, product innovation and competition that will make reverse mortgages even more appealing and available.”

For additional information regarding reverse mortgages please call 1-800-233-4601 or log on to www.seattlemortgage.com.

Reverse Mortgage of America, a division of Seattle Mortgage Company, has been originating and servicing reverse mortgage loans for more than 10 years. Based in Bellevue, Wash., the organization is the third largest producer and servicer of reverse mortgages in the industry, selling under the brand names Seattle Mortgage and Reverse Mortgage of America. General information about the company can be found at www.seattlefinancialgroup.com or by calling 800-233-4601.

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