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Posts Tagged ‘HUD’

HECM Reverse Mortgage Changes 10/2 – Seniors may benefit by acting soon

Written by Clay on . Posted in FHA, HECM, Refinance, reverse mortgage, Social Security, Uncategorized

Big Changes for HECM Reverse Mortgages October 2nd: Higher UpFront Cost – Lower Limits – Lower Insurance Premiums

Seniors on the fence considering a HECM reverse mortgage line of credit with a zero or low upfront draw may want to act quickly to get their reverse mortgage started before big changes go into effect October 2, 2017.

Three changes will impact the HECM Reverse Mortgage Program for FHA case numbers assigned beginning October 2nd. Upfront Mortgage Insurance Premium paid to FHA will now be 2.0% across-the-board. Previously borrowers accessing less than 60% of the principal limit only had a 0.5% upfront mortgage insurance premium and those with mandatory obligations over the 60% were charged 2.5% for the upfront mortgage insurance. Annual Mortgage Insurance Premium accrued on an outstanding balance is reduced from 1.25% to 0.50% which will be a benefit to those borrowers that carry a balance on the reverse mortgage but negatively impact the growth factor used when borrowers obtained a line of credit reverse mortgage. Principal Limit Factors were adjusted to be more conservative reducing the amount of funds available to an average borrower by about 5%. I will be spending some time looking at the impact by age group and share that a bit later. The net impact seems intended to discourage the use of a line of credit reverse mortgage. When taken out early on the growth in the credit line if left unused was dramatic and can be an important part of a overall financial plan providing flexibility and security with access to funds well into the future. Increasing the upfront cost; decreasing the growth rate by reducing the mortgage insurance premium; and lowering the principal limit factors all reduce the benefits of a line of credit reverse mortgage. Seniors on the fence may want to consider acting sooner rather than later. An application and counseling must be completed prior to securing an FHA case number so if this makes sense it would be best to act quickly and get a case number well before September 29, 2017. To learn more about tips and strategies when applying for a reverse mortgage, I’m available to answer all of your questions.  Let’s talk about your goals and perhaps ways that you can take advantage before these changes take place, please give me a call or send me an email: clay@104.238.124.149. I’d be happy to help!   Learn more about mortgage at mortgagebrokernearme.co.uk Clay Selland, Signet Mortgage Corporation clay signature blackcontact-block-1

Great News for Seniors Considering a Reverse Mortgage 

Written by Clay on . Posted in FHA, HECM, Loan Limits, reverse mortgage

Reverse Mortgage Loan Limits to Increase in 2017 The Federal Housing Administration (FHA) announced Reverse Mortgage Loan Limits will increase in 2017. This is significant news, since lending limits have remained stagnant for several years. The maximum claim amount will now rise to $636,150, up from $625,500, for Home Equity Conversion Mortgages (homeequitylineof.credit). This amount is 150 percent of the national conforming limit of $424,100. On the other hand, credit unions in houston is offering a full suite of financial services, with a track record of satisfied members dating back to 1934. Also increasing in some areas are loan limits for forward mortgages. In high-cost areas, the FHA national loan limit ceiling will increase to $636,150 from $625,500, and FHA will increase its floor to $275,665 from $271,050. The Maximum Claim Amount is then offset by the reserve set aside for future interest and mortgage insurance amounts accrued to arrive at a Principal Limit which would be the maximum amount a homeowner can borrow. The reserve amount is based on Age and interest rates and loan amount. When you want to trade on crypto markets, check out this Crypto Code Review and learn more. The loan limit changes and the maximum claim amount change for reverse mortgages to take effect after January 1, 2017 and stay in effect through December 31, 2017. This change was made as of the result of rising home prices, with 2,948 counties across the nation benefiting from these changes. Lots of good news for Reverse Mortgage recently. This increase is a positive for a program that provides seniors more choices and flexibility as they consider a reverse mortgage that can help senior homeowners in many ways.  The most important would be to be able to live in their homes as long as they want or provide strategic options for taking social security and withdrawing investment funds. You can always invest in bonds or marijuana penny stocks. To learn more about tips and strategies when applying for a reverse mortgage, I’m available to answer all of your questions.  Let’s talk about your goals and perhaps ways that you can take advantage of these loan limit increases, please give me a call or send me an email: clay@104.238.124.149. I’d be happy to help!   Clay Selland, Signet Mortgage Corporation     clay signature blackcontact-block-1    
Post Election Interest Rates Increase

Trump Thump: Mortgage Rates Jump 0.500% Post Election

Written by Clay on . Posted in FHA, Freddie Mac, Homebuyers, Presidential Election, Rate Updates, reverse mortgage

“Trump Thump” – Mortgage Rates Jump 0.500% or More Post Election

The election is now over and the dust has settled. As painful as it might be to accept, a trend described by others as the “Trump Thump” means we may now have to get used to 30-year fixed conforming loan rates at or above 4.0%.    

 

Prior to the election, pundits had clearly agreed on the idea that the markets “built in” the prospect of a Clinton victory, and – in the unlikely event that Trump won – this surprise victory would mean an improvement in the bond market because of the uncertainty Trump would bring to the table. Well, so much for that idea. 

 

Economic experts maintain that Trump’s economic policies will boost spending and business, as well as bring inflation (all of which leads to lower bond prices and higher mortgage rates). Interesting to me how quickly everything turned in the direction. Was there not enough time spent analyzing the impact of a Trump victory? Did this catch the markets unprepared?  

 
Trump Election, Mortgage Interest Rates

Post Election Results on Mortgage Rates

According to a recent article by Money writer, Taylor Tepper, markets indicate there’s a 75% chance that the Fed raises short-term rates modestly when policy makers meet in mid-December. Here’s a more in-depth analysis on what President-elect Trump means for interest rates in Tepper’s article:  President Trump Interest Rates Federal Reserve. CNBC’s Diana Olick weighs in on the mortgage rate crisis: watch video. 10-year treasury yields have also spiked in the days since Trump’s election, and something to keep in mind with that is: Don’t panic. This sudden rise isn’t likely to continue, at least, not because of the Trump presidency. “Rates tend to move very sharply in short periods of time and very little in prolonged periods of time,” said Greg McBride, chief financial analyst for Bankrate. “It’s not something that I think continues.” So, my advice to those who are anxious about mortgage rates, know that this is a cycle… and as far as rates are concerned, nothing is on the horizon that would suggest waiting for an improvement in rates. Either way, expect volatility and a continuing upward trend in rates.  

HUD Squashes Reverse Mortgage Option

Written by Clay on . Posted in reverse mortgage

PrintA variation in the HECM reverse mortgage was squashed by HUD last week. Introduced by a small number of reverse mortgage lenders in October as a combination of an initial fixed rate draw and fixed rate on a future draw on a line of credit.  While that sounds attractive – it was outside of the design of the reverse mortgage program.   A future draw at a fixed interest rate could be very nice for a borrower but if borrowing costs were to have risen dramatically and the lender not honor that commitment the responsibility would fall to the FHA insurance fund. Many HECM borrowers feel more comfortable with fixed-rate options however fixed rate HECM require the entire available distribution to be taken at closing which can result in paying interest on more funds than are needed at that time. Recent changes to the HECM program are more conservative and are designed to match the clients needs with the amount borrowed. While these loans do have a variable interest rate, interest is only charged on the outstanding balance much like a line of credit. Quite often the HECM line of credit is left unused but is always available as the need arises whether it’s to handle an emergency, supplement monthly income or one-time expenses. Signet Mortgage Corporation is a member of the National Reverse Mortgage Lenders Association and is licensed in five Western states.  We believe the HECM reverse mortgage is best used as a supplement retirement plan to help provide a more secure and flexible retirement. Call us today and let’s talk. No obligation of course but we can help you understand how a reverse mortgage can meet your needs.    

FHA Loan Limits going down for California … No change to Reverse Mortgage Limits

Written by Clay on . Posted in events, FHA, HUD, Loan Modification, reverse mortgage

HUD announced last wupdateeek the new Federal Housing Administration single-family loan limits effective Jan. 1st 2014. The standard loan limit for areas with relatively low housing costs will stay at its current level, $271,050. However, the limit for California and other high cost areas will be reduced by more than $100,000, from $729,000 to $625,500. Loan limits for FHA-insured reverse mortgages will remain the same at a maximum amount of $625,500, with actual loan limits based on the value of the property, current interest rates and the borrower’s age. The limits were lowered under the Housing and Economic Recovery Act of 2008 (HERA) as an emergency measure to keep mortgage credit available during the housing crisis, according to HUD. Not much of an impact with the FHA loan limits being lowered – the increase in up front and monthly mortgage insurance implemented earlier in the year has made FHA loans less attractive than conventional alternatives anyhow. Welcome news that there were no changes to the HECM reverse mortgage limits.  With the recent changes to the HECM program in October – the amounts available to borrowers are conservative but still viable for California homes values.

Ruling will negatively impact the future of Reverse Mortgages

Written by Clay S. on . Posted in Current Events, HECM, reverse mortgage

… unintended consequences… bad news for seniors

The Department of Housing and Urban Development will be forced project anticipated future losses from its reverse mortgage program following a ruling Monday ignoring the contractual obligation resulted in some homeowners facing foreclosure following the death of a spouse. Dealing with the death of a spouse is stressful enough … if it also means losing your home because the reverse mortgage is now due, adds to the tragedy and makes sensational headlines.   However, in most cases the issue is a poor choice made when the homeowner obtained the reverse mortgage in the first place.  This ruling simply bails out those few who made an ill-advised decision to drop a spouse from title to get more money out of their reverse mortgage, and will negatively impact every senior that obtains reverse mortgage going forward.  A terrible ruling in my opinion. The federally insured program allows homeowners 62 or older to borrow against the value of their homes. If the borrower moves or passes away, the loan must be paid back either through the sale of the home or refinance into a traditional mortgage.  Should the proceeds from the sale be short of the current loan balance – FHA insurance that the borrower pays for – up front and monthly – steps in and makes up the difference.   Some homeowners, because their names were not on the reverse mortgage or deed, found themselves facing foreclosure after their spouses died, according to a Wall Street Journal report. The AARP filed a lawsuit two years ago against the Department of Housing and Urban Development law firm, alleging that HUD violated federal law when it required surviving spouses to pay off their mortgages in full or be foreclosed upon, the Journal reported. You should hire court reporters. We recommend NAEGELI which is the only litigation support firm to provide you with an outstanding portfolio of court reporting, video conferencing and trial support services specifically designed to give you the competitive advantage in your case. The Federal Housing Administration, which falls under HUD, issues reverse mortgages by using actuarial tables to determine the size of the payment a borrower will receive. Older borrowers receive larger payments. Here is where stupid decisions were made … advisors would allow prospective borrowers to put only the name of the older spouse on the application and take the younger spouse off title entirely.   Since the “younger” spouse is not on the loan or deed of trust – in the event of the older spouse passing away.. they are out.  It is a dumb strategy and should never be done.   There are situations where a borrower marries after he/she has obtained a reverse mortgage … and that is a difficult situation.  The new spouse is not on the mortgage and unless they are of a similar age there is no practical way to add them to the reverse mortgage.  This is a tough call and should be discussed thoroughly as part of their financial planning with a later in life marriage.  Ideas like the new spouse keeping their current home and renting it might be the best option.  It gives them a home to return to if something happens to their spouse. HUD made a motion in 2011 to dismiss the AARP’s lawsuit, claiming that allowing surviving spouses to stay in their homes and continue receiving payments would “eviscerate” the “actuarial balance of the program,” according to the Journal. But U.S. District Judge Ellen Huvelle sided with the seniors’ advocacy group. Imagine HUD having to anticipate the possibility of a much younger spouse either not included as a borrower on purpose … or the possibility that a borrower might marry someone younger later.  This creates uncertainty and is very expensive to project for the reserve fund – especially with no history to draw on.  Every new borrower is going to pay for this uncertainty going forward.  And all because of a stupid decision by a borrower that is not using the reverse mortgage as it is designed … this ruling will have significant negative consequences. The decision will mean even bigger losses for the FHA, which last week announced it would be taking a $1.7bn cash infusion from the Treasury to cover losses already sustained from the reverse mortgage program.

Existing reverse mortgage products will be combined under new HUD proposal..

Written by Clay S. on . Posted in HECM, reverse mortgage

Result will be a more conservative offering designed to ensure the long-term health of the reverse mortgage program.

Although details are yet to come, HUD is planning to combine the standard and saver HECM reverse mortgage programs into a new offering. The new product will have principal limit factors somewhere between the current saver and standard programs.  Also, the new product will have new mortgage insurance premiums that vary based on the amount drawn up front with 60% limit. Only borrowers with mandatory obligations will be allowed to exceed that threshold. What that means is those wishing to pay off a mortgage or purchase a home can draw more than a borrower simply wanting to take a large lump sum mortgage. Details are expected from HUD within the next two weeks and those changes should be implemented by October 1, 2013 http://reversemortgagedaily.com/2013/08/19/hud-to-combine-existing-reverse-mortgage-products