“Our Reverse Mortgage Is Great. Gives Us Some Elbow Room.” And More Testimonies by Reverse Mortgage Borrowers

Posted on September 25, 2011 by Beth Paterson, CRMP

While some people will say they have heard bad things about reverse mortgages I haven’t been able to get the real definition of “bad” or the reasons behind these statements. However, actual reverse mortgage borrowers have lots of good things to say about their reverse mortgage. Let me share some of them here.

“The reverse mortgage has allowed me to be able to breathe again and alleviate $tress” S.R.

“My reverse mortgage gives me financial security due to my fixed income.”

“It was a good experience. The extra money each month is wonderful.” D.M.

“Since my cash assets have been spent down over twenty years of retirement, it became pertinent that my $750 mortgage payment needed to be ended. I got this far in life seventy eighty years, without a monthly pension. Now I have funds to supplement my Social Security Income.” D.W

“It’s great not to have to make mortgage payments.” M.L.

“I did the reverse mortgage to have extra money every month for expenses. It gives me a little more financial freedom.” J.F..

“After retiring I found that my income was too little for the active life I was used to, with trips to family and a modest vacation each year. But bills were piling up and I needed a real solution to stay in my home. I have my dignity and security back again.” E.B.

“The reverse mortgage allows me to have more means to meet future needs. Having it has taken some of the fear away that I had for the future” C.G.

“I did the reverse mortgage to pay medical bills, credit cards and other debts. It has made my life less stressful.” C.J.

“The reverse mortgage has allowed me to stay in my home with comfort to do things with my family.” J.T.

“With joy and delight I have felt hope and even vision anew in knowing that this home belongs to me. It comes with a challenge for me to realize that I am accountable in using these funds to achieve goals otherwise not possible.” B.L.M.

“Affords me the ability to retire and make ends meet.” S.G.

“The Reverse Mortgage helps out a great deal and solves many problems.” C.C.

“As a senior citizen, I had been having some concerns with my finances. Being on a limited income made much needed household repairs and property tax payments very difficult to meet. I was going to have to make a choice soon about whether to continue to live in my house, or move on to an apartment. The costs of continuing to live in my home were getting beyond my means, but I wasn’t ready to leave the home that I had raised my children in. I decided t use the equity in my house to make life easier and meet the financial obligations that I had.” S.M.

“We can now continue to travel to Florida every winter.” L.C.

“A reverse mortgage means I’ll have a place to live even in case of serious illness.” D.B.

“It helps me keep up with bills I cannot cover with my limited income. It also allowed me to remodel my home to improve it’s value and be more comfortable. I greatly appreciate it.” R.D.

“It is really great not to have to be concerned about where the money will come from for my long term care insurance policy payment and emergency repairs. It has relieved us of a great deal of stress and makes grocery shopping a lot easier too.” M.S.

“After six years of non-payment of property taxes, nearly four years of confession of judgement, and the home I had lived in for nearly 69 years within weeks of tax forfeiture, the Reverse Mortgage lender Beth Paterson, I worked with came to the rescue with a Reverse Mortgage. The property taxes are now current for the first time in a decade, and I have a line of credit of approximately $100,000.” R.W.J.

“The only way we could comfortably stay in our home of 42 years” S.H.

“Once we realized that we could only relieve the stress on us by contracting 24-hour nursing care for grandma, a reverse mortgage was the only way to do it.” L.T.

“I didn’t have money to keep up with my living expenses so I did a reverse mortgage. I paid some bills and my credit cards and have some additional funds for future needs.” J.D.

“The relief I feel from not having to make a mortgage payment each month is so great! Now that my credit card is paid off, I will only need occasional one-time draws from my Line of Credit. To continue living in my home and travel and pursue some hobbies.” E.B.

Keep these testimonies in mind and share them when you hear reverse mortgages are “bad.” As you can tell, actual borrowers think they are great!

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-ut

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Questions About Reverse Mortgages Continue Receiving Misinformation As Responses

Posted on September 11, 2011 by Beth Paterson, CRMP

Recently I saw a question on an on-line forum wondering if the questionnaire’s relative should be doing a reverse mortgage. They stated that the relative who is in their mid-60’s and in great health recently remarried a woman who likes expensive things. This relative evidently has a monthly fixed income of $8,000 and an expensive home and wants to do a reverse mortgage. With concern over the new wife “bleeding him dry” they “want to protect him.” They asked for others experience and opinions on reverse mortgages.

Now before you go off and start stating this person shouldn’t be doing the reverse mortgage because reverse mortgages are bad and/or expensive or the person should be able to live off of $8,000 a month as replies to the questions stated, read my reply:

There is a lot of misinformation about reverse mortgages. Most articles in the media, politicians, so called “financial advisors” who write and/or comment about reverse mortgages and those mortgage professionals who don’t offer them, friends or neighbors with the statements that they are “bad” are based on their own opinions, not on the facts. They have not talked with those of us in the reverse mortgage industry to get the facts. So don’t base your opinion or decision on these sources.

You don’t go to a plumber if you are having health problems, right? You go to a doctor, and not just a generalist but a specialist in the area of need. Well the same should be true with a reverse mortgage – go to a reverse mortgage specialist to get the facts to make your decision.

See my blog post, “Seventeen Facts about Reverse Mortgages That You May Not Know.”

A reverse mortgage is a mortgage with special terms for seniors 62 and older. Some of the differences include income and credit scores are not considered to qualify and monthly mortgage payments are not required. Rather than a 15 or 30 year term, the loan is due and payable when the home is no longer the primary residence of the borrowers or on the 150th birthday of the youngest borrower. In addition, the reverse mortgage is non-recourse, which means if the loan balance is higher than what the home can be sold for there is no personal liability to the borrower or their heirs. If the home is sold for more than the loan balance, the borrower or their heirs receive the difference.

Often thought of or stated as expensive, the costs are actually comparable to a conventional mortgage except for the FHA Mortgage Insurance Premium. See a side-by-side comparison at “Comparing Reverse Mortgage Closing Costs To A Conventional Mortgage – You’ll Be Surprised They Are Not That Different.” And because the interest rates are historically lower than conventional mortgages, in the big picture the reverse mortgage can be less expensive.

Generally seniors don’t qualify for a conventional mortgage. And even if they do, one needs to consider that payments are required. What happens if “life happens” and one can no longer make the payment? They could be facing foreclosure. I often get calls from those who took out a conventional mortgage and can no longer make the payments and now want to do a reverse mortgage. Unfortunately, I often have to say that there are not enough funds from the reverse mortgage to pay off their current mortgage (a requirement of the reverse mortgage). They would have been better to do a reverse mortgage in the first place.

Now with that said, just like anything, a reverse mortgage is not right for everyone. While there are no limitations on how the funds can be used one should consider if they will have funds to cover taxes, insurance, maintaining the home as well as other needs in the future.

It sounds like in this situation there is more concern about the new wife’s spending habits. Are you or others concerned about the new wife eating away at an inheritance? Because reverse mortgage proceeds use the equity, there may be less inheritance for heirs – this can be considered a negative of the reverse mortgage.

I would suggest a conversation with your relative to understand their reasons for a reverse mortgage. Is the pension and income paying for the everyday lifestyle but they want extra to enjoy life such as traveling or modifying their home to be prepared for the future? Do they have a financial and estate plan in place? Do they have long term care insurance to cover needs of their future? Have they talked with an elder law attorney to set up a will or trust to determine that the inheritance will go to his heirs and not all go to his new wife?

After helping them get the facts and looking at options, keep in mind it is his decision in the end. You might check out, “Who Are We To Judge How Reverse Mortgage Funds Should Be Used?

Find a reverse mortgage originator who specializes in reverse mortgages (not conventional mortgages) who has experience and will provide you with the facts and details. Look for one who has the client’s best interest in mind, not just their own. Work with one who is local – not doing applications through the mail (for example I originate in Minnesota and meet with borrower’s and their relatives in person.). And see if your relative will allow you to be part of the meetings with the originator and the counseling. “What to Consider When Talking With Reverse Mortgage Lenders” will help you know questions to ask reverse mortgage originators and determine who you should have assist you with a reverse mortgage.

To get facts and details on reverse mortgages, explore my website, http://www.RMSIDAC.com and other articles on my blog, http://www.BethsReverseMortgageBlog.wordpress.com.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Comparing Reverse Mortgage Closing Costs To A Conventional Mortgage – You’ll Be Surprised They Are Not That Different

Posted on July 24, 2011 by Beth Paterson, CRMP

It seems like every article, report or someone you talk with states the reverse mortgage closing costs are high. Have you looked at closing costs on a conventional home mortgage?

As with a conventional home mortgage (called a “forward” by HUD), the closing costs for reverse mortgages may vary depending on the home value and the complexity of the loan. Let’s compare the costs side-by-side for a Home Equity Conversion Mortgage or HECM and a conventional/forward mortgage.

The third party and recording fees are standard for any loan. However, with the reverse mortgage HUD regulates the fees and requires that only the actual cost may be charged to the borrower, they do not allow mark ups such as processing or servicing fees. Look at an estimated comparison based on a Minnesota home valued at $200,000:

Third Party Fees	Reverse FHA	Forward	Forward FHA
Appraisal	$450	$400	$450
Credit Report	$20	$20	$20
Flood Certification	$16.50	$16.50	$16.50
Courier Fee*	$25	$55	$25
Escrow, Settlement, or Closing	$250	$250	$250
Abstract or Title Search	$100	$100	$100
Title Exam	$100	$100	$100
Document Preparation	$100	$100	$100
Title Insurance	$475	$475	$475
Endorsements	–	$100	$100
Recording Fees	$92	$46	$92
County/Mortgage Registration Tax	$323	$480	$480
Plat Drawing	$60	$60	$60
Name Search	$30	$30	$30
Special Assessment Search	$30	$30	$30
Counseling Fee	$125	N/A	N/A
TOTAL THIRD PARTY FEES	$2,196.50	$2,262.50**	$2,328.50

* Courier Fee is for sending a payoff on a current mortgage to the mortgage holder.

** These fees do not include all mark ups/processing fees so these may be higher when mark ups/processing fees are included.

Now let’s compare the Lender Fees:

FHA’s Mortgage Insurance Premium (MIP) is paid directly to FHA. With the FHA HECM Standard this is 2% of the home value and 2 1/4% for a forward. The FHA HECM Saver has a reduced MIP. The advantages with FHA insuring the reverse mortgage include:

Guaranteeing the funds are available for you.
Guaranteeing the lender against default or shortfalls which means the interest rates are lower (currently under 3% on the HECM Standard Adjustable Rate) compared to other mortgages.
Providing a line of credit growth rate (available only with reverse mortgages).
Ensuring as a reverse mortgage it is a non-recourse (no personal liability) loan.

The origination fee is what the originating lender receives to cover the loan officer’s salary, overhead to run the business, i.e. staff salaries, administration costs, computers, electricity, office supplies, marketing expense, gas mileage, health insurance of employees, etc.. The origination fee also includes the processing and underwriting costs which are generally separate and charged to the borrower on forward loans. HUD regulates the reverse mortgage origination fee to be 2% of the 1^st $200,000; 1% thereafter with a cap of $6,000. With a minimum of $2,500.

The reverse mortgage fees are based on the full home value because over time borrowers can access more than the home value at the time of origination.

An estimate based on a $200,000 home value:

LENDER FEES	REVERSE FHA	FORWARD	FORWARD FHA
Origination/Points	$4,000	$2,000*	$2,000*
MIP	$4,000	$0	$3.500
Underwriting/Processing	$0	$700	$700
SUBTOTAL LENDER FEES	$8,000	$2,700	$6,200

Backend fee**	$0	$2,000	$2,000
TOTAL LENDER FEES	$8,000	$4,700	$8,200

Prepaid Interest***	N/A	++	++

*Typical points on Forward loans are 0-4%; this example is based on $100,000 loan at 2% points.
** Forward loans often have a 1% back-end fee.
*** Number of points are directly related to interest rate charged; the more points paid the lower the interest rate; the lower points paid, the higher interest rate.

TOTAL LOAN FEES	REVERSE FHA	FORWARD	FORWARD FHA
	$10,196.5	$6,952.50	$10,528.50

Note: THE DIFFERENCE IS BASICALLY THE FHA MORTGAGE PREMIUM! Refer to above comments on the benefits of FHA insuring the loan.

Because the majority of conventional loans being done now are FHA insured, the reverse mortgage is actually less expensive.

The fees associated with the reverse mortgage are fully financed as part of the loan with no out of pocket expenses other than the FHA appraisal. (As of 2010 Appraisal Management Companies must be used to order and process the appraisal. This fee is required to be paid for by borrower up front or “out of pocket.”) All of the fees must be disclosed on the Good Faith Estimate (GFE).

Keep in mind that there has to be a cost involved because everyone in the transaction needs to be paid for there services. If the costs on a mortgage aren’t paid up-front then they’ll be paid over time with a higher interest.

When considering whether to do a forward mortgage or a reverse mortgage you must consider if you can even qualify for a forward mortgage; then if you can make the payments over time. For example, what happens if “life happens,” could you continue making those payments or would you be facing foreclosure?

You also need to consider that if you do a forward mortgage now (if you even qualify), you’ll be paying the closings costs on that loan and then when you need more funds in the future and you refinance you’ll be paying the closings costs again. These together can equal or exceed the total of the closing costs on the reverse mortgage.

Whereas with the reverse mortgage you pay the closing costs upfront and then without paying closing costs again you have access to more funds through your life as long as you are living in the home as your primary residence. The additional funds would be either through monthly payments, a line of credit if that is the type of loan you have chosen.

In the big picture the cost of the reverse mortgage is less than a forward mortgage over time because the interest rate is lower on the reverse mortgage. Therefore typically it doesn’t take too long for a forward mortgage to make up and then exceed what difference there is in closing costs of the reverse mortgage.

Now that we’ve compared the costs side-by-side, are you surprised that they are comparable to a conventional loan?

Article updated May 2012

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Minnesota 7-Day Cooling Off Period Law is Disservice to Seniors

Posted on July 17, 2011 by Beth Paterson, CRMP

It’s coming up on a year since the Minnesota law went into effect requiring a 7-day cooling off period in addition to the Federal 3-day recission period on all refinances. No matter how much I explain that the law was put into place by legislators with the intention of protecting them, since then every borrower has complained about waiting an extra 7 days. Borrowers have stated:

“I’m being treated like a child, not letting me decide that I’m ready to proceed.”
“Why do I have to wait extra time, I’ve already waited long enough.”
“How fast can we close? I’ve already made up my mind.”
“I took a year to decide, I don’t need more time.”
“This takes away my dignity.”

Or variations of the above but all with the same message.

Borrowers have the right to cancel their loan at any time during the processing which usually takes 30 to 45 days. They are in control of whether they want to proceed or not during the entire time. And after closing they have the Federal 3-day recission period during which time they can also choose to cancel their loan. The additional 7 days is an irritation rather than a protection!

Consequently the Minnesota law makers did nothing to protect seniors when they passed this unnecessary law in the 2010 Minnesota Legislation. If they really want to protect seniors they should look at other things that would be true protections, not putting in unnecessary regulations.

This material may be re-posted provided it is re-posted in its entirety and without modifications and includes the contact information, copyright information and the following link: http://wp.me/pxPEm-sR.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Reverse Mortgages Are Expensive… Compared To What?

Posted on June 28, 2011 by Beth Paterson, CRMP

Everywhere you turn you hear or see in print that reverse mortgages are expensive. I wonder what they are comparing them to to come up with this statement.

A conventional mortgage where one has to qualify for the loan based on income, credit, assets and ability to make the payment? Where the interest rate is based on one’s income, credit, and assets? Where one has to make monthly payments? Where the loan has to be repaid in full either from the sale of the property or from assets? Selling and moving? Where there are fees for a realtor, closing fees, moving costs and rent? Do they really think these options are less expensive?

Have you compared the reverse mortgage to a conventional mortgage? Let’s take a look:

Terms	Conventional Mortgage	Reverse Mortgage
Retain Title/Own Home	Yes	Yes
Use Home For Collateral	Yes	Yes
Lien Placed Against Property	Yes	Yes
Income Requirements	Yes*	No
Credit Score Requirements	Yes*	No
Monthly Payment Requirements	Yes*	No
Repayment Term	15 years, 30 years, etc*	When home is no longer primary residence or 150^th birthday of borrower
Closing Costs	Origination fee, third party fees, possibly FHA Mortgage Insurance	Origination fee, third party fees, FHA Mortgage Insurance Premium**
Amount To Be Repaid	Loan Balance	Loan Balance
Non-recourse, there is no personal liability to the borrower(s) or their estate	Not an option – full loan balance is due and would be paid from the estate if not from the sale from the home	Yes, the estate would NOT have to come up with the difference if the loan balance is higher than what the home can be sold for (fair market valued)

*Terms and interest rate is determined by income, assets, credit score, ability to make payments and points.

** When costs are compared side-by-side the difference is the FHA Mortgage Insurance Premium. And the FHA MIP provides many benefits to senior homeowners who do a reverse mortgage.

Compared to Selling and Moving? Let’s take a look.

Terms	Selling & Moving/Rent In Senior Housing	Reverse Mortgage
Retain Title/Own Home	No	Yes
Credit Score Requirements	Yes (rental properties look at credit and income to determine if you’ll be able to pay the rent or need to rely on government programs)	No
Monthly Payments Requirements	Yes, Rent. Rent in Assisted Living will range from $2,500 to $8,000/month depending on services. Additional services, i.e. home care, will be additional.	No
Realtor/Originator Fee	4% to7% Realtor Fee. On a $200,000 home = $8,000 to $14,000.	Origination Fee is 2% on the 1^st $200,000; 1% thereafter max of $6,000. On a $200,000 home = $4,000.
Third Party Fees/Other Fees	Yes	Yes; FHA Mortgage Insurance Premium
Non-recourse, there are is no personal liability to the borrower(s) or their estate	Not applicable	Yes, the estate would NOT have to come up with the difference if the loan balance is higher than what the home can be sold for (at fair market value)

Where else can one access funds with these benefits for the cost of the FHA Mortgage Insurance Premium? To say the reverse mortgage costs are high compared to a conventional mortgage or to selling and moving is like comparing apples to oranges.

So I still ask, reverse mortgages are expensive? Compared to what?

This material my be re-posted provided it is re-posted in its entirety and without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-sm

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

We Are Not Chicken Littles – The Sky Is Not Falling In the Reverse Mortgage World!

Posted on June 22, 2011 by Beth Paterson, CRMP

With Bank of America and Wells Fargo exiting the reverse mortgage industry along with the picture the media paints, I’m reminded of the story of Chicken Little thinking the sky is falling, looking at the doom and gloom. Or jumping to the conclusion that because they have left the industry the reverse mortgage option is going away.

However, the sky is not falling in the reverse mortgage world! Reverse mortgages are still available and a viable option for senior home owners.

There are still lenders lending, some new ones even entering the industry. FHA is still insuring the Home Equity Conversion Mortgage (HECM), covering the risks for the lenders when the home values drop. Investors are still investing in reverse mortgages. Servicers are still servicing reverse mortgages.

HUD still guarantees the funds are available for borrowers. Monthly payments are still not required. The loans are still non-recourse which means no personal liability to the borrower or the estate if the loan balance is higher than what the home can be sold for at the time the loan is due and payable; the FHA Mortgage Insurance Premium covers the difference. Reverse mortgage borrowers still have protections including the required counseling by a third-party HUD trained and approved counselor. The HECM Standard, HECM Saver and HECM Home Purchase programs are all still available.

Seniors still own their home. The majority of people want to remain in their home. Staying in one’s home can be less costly than moving and renting in senior housing. The reverse mortgage remains a viable option to help seniors remain in their home.

Reverse mortgage interest rates are still low. The funds can still be received in monthly payments, line of credit, a lump sum or a combination of these. The line of credit still has a growth rate. The monthly payments to the borrowers can still be received as tenure/for life or structured as one needs. Reverse mortgage funds are still generally considered tax free. Social Security and Medicare are still not affected by a reverse mortgage. Medicaid (Medical Assistance in Minnesota) can still be received with a reverse mortgage.

The funds can still be used for: Paying off current mortgages and helping one out of foreclosure. Paying for home repairs and home modifications, medical expenses, home care and long term care. Paying taxes and protecting other assets. Fulfilling dreams or whatever one needs or wants.

In the world of Reverse Mortgages SIDAC, we are NOT Chicken Littles, the sky is NOT falling. We ARE STILL offering reverse mortgages through lenders who are committed to helping seniors stay in their home and have security, independence, dignity and control.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

You Originate reverse mortgages…What Do You Do to Deserve all that money?

Posted on June 15, 2011 by Beth Paterson, CRMP

Often stated, the reverse mortgage is expensive and the fee the originator makes is part of the reason. Originating reverse mortgages is not as easy as one, two, three but a very time consuming process.

As we were going through the application and process, Joan, a recent client, said, “I sure hope you are being paid well for all this time and effort you put into my loan.” I hear these comments from most all of my clients.

To help you understand the work and time we, as reverse mortgage expert originators, put into originating and processing a reverse mortgage let me walk you though an outline and approximate time involved. Note: While you may not read the outline word for word (yes, it’s long), you’ll at least have a good idea of the time involved for originating each reverse mortgage. Make sure you go to the last five paragraphs for the conclusion.

Take the phone call from one interested in a reverse mortgage. Generally spend 30 to 60 minutes providing initial information and getting information to run calculations to determine eligibility.
We generally spend time on researching property values. This can be critical to determining the feasibility of completing a reverse mortgage if there is a significant mortgage balance outstanding and important even without debt payoff concerns just to give the homeowner the most accurate estimate of loan proceeds possible – 20 to 60 minutes.
Enter information into computer program, run calculations, prepare informational folder – approximately 45 to 60 minutes.
Drive 60+ minutes round trip to the prospect’s home for an initial educational meeting.
Discuss their situation and educate them on the reverse mortgage and possible other options – 1 to 3 hours.
1. Leave a list of reverse mortgage counselors for the required FHA HUD insured Home Equity Conversion Mortgage (HECM) counseling.
Generally there are numerous phone calls to answer additional questions. These calls can be 15 minutes to an hour or more each call.
1. Sometimes talk with family members or have an additional 1 to 2 hours face-to-face with prospect and their family.
Receive phone call that the prospect is ready to proceed with the loan. Schedule application time and date – 10 to 30 minutes (longer if they have additional questions).
Call prospect to gather information needed for application as well as which option they are choosing – 15 to 20 minutes.
Enter complete information into computer program – 20 to 30 minutes.
Prepare the full application package for signatures and a separate borrower set – 60 minutes.
Drive 60+ minutes round trip for the application. Drive time can be 5 to 10 hours round trip if the client is outside the metro area. (Some lenders will mail the application however I believe that the face-to-face meeting provides better explanations of each of the forms one is signing.)
Spend 1 to 2 hours to review information on application and get signatures.
If counseling wasn’t completed prior to the application, work with borrower to receive counseling and counseling certification with signatures of both the counselor and the borrower(s) which is needed prior to starting the processing of the loan – 15 to 30 minutes.
1. Originators now need to make contact with the chosen counselor, prior to the counseling session, and provide certain financial information to the counselor (calculations, etc) – 15 minutes.
2. Make phone calls to have the signed counseling certificate faxed – 60 minutes. Or will drive to pick up certification – another 60+ minutes round trip plus 10 to 15 minutes with borrower.
Review file and prepare for submitting for processing – 15 to 30 minutes.
Start processing. We are a reverse mortgage broker (one who works with more than one lender) and we process the loans in our office, we don’t send them off somewhere to another office or state to be processed. While the processor is different than the originator, the originator of a broker is often involved in the facilitating the processing by working with the processor and the borrower through to the closing and funding, not just taking an application.
1. Enter information into processing software program (one we have developed on our own) – Processor: 30 to 45 minutes.
2. Request FHA Case Number – Processor: 10 minutes.
3. Order Title Report – Processor: 10 minutes.
4. Order appraisal from Appraisal Management Company – Processor: 10 minutes.
5. Order Insurance Binder – Processor: 10 minutes.
6. Pull Flood Certificate – Processor: 10 minutes.
7. Pull Credit Report – Processor: 10 minutes.
8. Pull other required documentation – Processor: 10 minutes each when necessary.
9. Review Title Report when received – Processor and Originator: 15 to 30 minutes.
10. Review appraisal when received – Processor and Originator: 30 minutes.
11. Review Insurance Binder – Processor: 10 minutes.
12. Review Flood Certificate – Processor: 10 minutes.
13. Review Credit Report – Processor: 10 minutes.
14. Request any changes if necessary – Processor: 10 minutes for each change that is necessary.
15. Phone calls with borrower for clarifications on any information that is on title, credit report, etc. For example if a mortgage is on title that we didn’t know about, showing taxes weren’t paid, a judgment is on title or the credit report – Originator: 15 to 30 minutes each call.
16. When appraisal is received, enter new value, if repairs are required, etc. in software program for calculations – Originator: 10 minutes.
17. Update processing software program with changes – Processor: 10 minutes.
18. Call borrower to advise borrower of appraised value, required repairs if any, and any calculation changes – Originator: 15 minutes.
  1. Or up to several hours based on the appraised value, repairs, or other factors, the borrower decides a program change would be in their best interest (i.e., a change from fixed rate to adjustable rate), or contractor bids or additional inspections are needed for repairs.
19. Prepare re-disclosure for borrower – Originator: 10 to 15 minutes.
  1. Or up to several hours or more if, based on the appraised value or other factors, the borrower decides a program change would be in their best interest (i.e., a change from fixed rate to adj rate).
20. Mail re-disclosure to borrower – Originator: 10 minutes.
21. Review all documentation to make sure everything needed is in the file for underwriting – Processor: 20 to 30 minutes.
  1. Multiple follow up calls to the borrower may be necessary to remind them and/or advise them on missing, corrected or additional documents that are necessary (i.e., SS card shows maiden name, etc) – Originator: 10 to 20 minutes each call.
22. Scan and submit file to underwriting – Processor: 15 minutes.
23. Request final fees from title agent – Processor: 10 minutes.
24. Address any underwriting conditions by contacting title company, appraisal management company, borrower, or making other necessary changes – Processor: 30 minutes to several hours depending on the condition. Conditions are required so that HUD will insure the loan and the investors will provide the funding.
25. Have borrower sign loan commitment – required in MN to be signed and dated by borrower and can’t close for 7 days – Originator: 60+ minutes round trip to get borrower’s signature plus 10 to 15 minutes with borrower. Can be done via fax or scanned and emailed if borrower has this capability. If they live outside the metro area and don’t have capability to fax or scan and email the commitment will be done through the mail delaying the time for the closing (not what the borrowers want at this point).
26. Gather, review and Submit changes/conditions to underwriter – Processor: 10 to 15 minutes.
27. Discuss with borrower how they want their reverse mortgage funds and their availability for closing – Originator: 15 to 30 minutes.
28. Schedule closing according to availability of title agent/signer (and possibly a notary), borrower and loan officer and lender’s closing department’s timing requirements, and possibly with family members and/or Power of Attorney (POA) – Processor and Originator: 30 to 40 minutes each of the phone calls.
29. Prepare closing document request to send to lender – Processor: 15 minutes.
30. Receive closing documents, review that the numbers match those in our program – Processor: 10 minutes.
31. Attend closing. We believe in attending the closing with our borrowers to assist in explaining the closing documents. We generally close at borrower’s home for their convenience or would drive to the title company’s office – Originator: 60+ minutes round trip drive time. Drive time can be 5 to 10 hours round trip if the client is outside the metro area.
32. Closing with borrower – 1 to 1 ½ hours.
33. Follow up on funding conditions, i.e. missed signatures or documents, if there are any (we rarely have any) – Processor: 10 to 30 minutes.
  1. If necessary, we may make another trip to the borrower’s home to get a signature on a document in order to keep on schedule for funding) – Originator: 60+ minutes round trip drive time. If outside of the metro area we will assist borrower via phone and having sent over-night the necessary documentation – 60+ minutes.
34. Keep borrower advised of funding status, i.e. when funds were wired to their bank and payments made for paying mortgages, taxes, etc. – Originator: 10 to 15 minutes per phone call, generally 2 calls.
35. Once funded, send thank you letter – Originator and Processor: 15 minutes to prepare and mail.
Answer questions from borrowers during the life the loan – generally 15 to 30 minutes each call. We often talk with our borrowers once or twice a year.

What is described above is an ideal no-problem/issues loan. The majority of our loans can have multiple issues that increase our time investment significantly including POA, Conservatorships, Trusts, non-borrowing and non-occupying individuals on the title, private liens and a long list of property issues including manufactured homes, condos, rural properties, repairs, etc. These can result in additional huge time requirements on the originator’s and processor’s part.

We also continually market for new clients meeting with referral sources and reverse mortgage prospects (some of whom decide to wait or not do the reverse mortgage), as well as other marketing efforts.

A good loan originator will take time to meet with the prospects, educate them, their families and advisors. They will also be familiar with the processing and assist with the processing as well as be available to answer questions even after the loan is closed. Originators, processors, underwriters, lenders, title companies and their settlement agents, and all involved in the loan process need to be compensated for their time, experience, and expertise.

The originator does NOT receive the full fee collected. The fee received by the reverse mortgage broker covers the originator’s salary, the processor’s salary, marketing expenses, overhead for the business such as computers, office supplies, copiers, health insurance for employees, etc. Originating a loan is not charged by the hour. However if we calculated time versus pay, with some borrowers, because of various problems that come up or they need some extra hand holding, if we were to be paid by the hour there have been times when I would make less than $10 an hour.

As we go through the application and process, my borrowers, as Joan did, recognize the time we put into helping them with their reverse mortgage and don’t question the fee we are paid. I hope this outline helps you also understand that it is a time consuming process and the reason the fees are what they are. And when broken down “all that money” is not really all that much compared to the time involved.

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-rv

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Are You Confused on Whether to Use A Reverse Mortgage Broker, Bank Or Lender?

Posted on May 7, 2011 by Beth Paterson, CRMP

I’m sure you have heard the terms “Mortgage Broker,” “Bank” and “Lender,” but do you know the difference? Do you know for which your loan officer or originator works? Do you know how to check on their background? I’m writing this article to clear up the confusion so you learn the difference and the advantages of working with a Reverse Mortgage Broker.

A mortgage broker is a company in the mortgage business who works with various lenders but does not loan the money. Sometimes referred to as an originating lender.

A Bank or Federal Insured Depositary Institution will often have mortgage loan officers who are employed by the bank and offer only the banks mortgage products, giving borrowers limited choices. A bank may choose to be FHA approved and offer the HUD insured reverse mortgage, the Home Equity Conversion Mortgage, often called a HECM.

A lender is a company who lends money, but is not necessarily a bank. They too often employ loan officers who only offer their mortgage products (called their retail department) which has limited choices for borrowers. Lenders may also choose to be FHA licensed and offer the HECM.

Banks and lenders may have a wholesale department where their reverse mortgage products are offered through approved mortgage brokers. Not all mortgage brokers can offer reverse mortgages. To offer reverse mortgages the loan officer’s company must be approved by an FHA approved lender. Lenders will only approve mortgage brokers who meet certain criteria.

Let’s look at why working with a reverse mortgage broker instead of a bank or lender’s retail loan officer has it’s advantages.

Mortgage brokers often work with more than one lender which allows the borrowers to have more options available to be in their best interest and work with the lender/servicing company with the best customer service.
As of January 1, 2011 all mortgage brokers (reverse or traditional) are required to be licensed both at the Federal and State levels. This is managed through the National Mortgage Licensing System or NMLS.

To meet the Federal Licensing requirements we needed to take 20 hours of education, pass a test (a very challenging one, I might add), pass Federal background checks, have our credit reports checked and be finger printed.

Each state has their own licensing requirements. Minnesota required 20 hours of education and 8 hours continuing education each year.

Lending practices and standards, ethics, and Real Estate Settlement Procedures Act (RESPA) regulations were covered in the education and on the test.

The test focused on conventional lending products so those of us who only offer reverse mortgages had additional challenges to pass the tests.

FDIC Bank and NCUA Credit Union originators do not have the licensing requirements so they have not received the education, passed the tests or gone through the same background checks. At some point the bank and credit union originators will be required to be registered . This will still not be the same as meeting the licensing requirements.

Mortgage Brokers who provide you any information about your loan including various loan options and interest rates must be licensed.

Mortgage Brokers are required to have their company and individual NMLS numbers on all marketing materials. In Minnesota the company NMLS number is identified as “MO” or Mortgage Originator. The individual is identified with their “MLO” or Mortgage Loan Originator number. If you don’t see these numbers on business cards and marketing materials including brochures, flyers, blogs, email signatures, presentations, etc. they are either not licensed or out of compliance.

You can check out your originator on the NMLS website at http://www.nmlsconsumeraccess.org/ This will provide you with a lot of valuable information on who you are working with to originate your loan including:

If they are licensed (if not listed or don’t have a license number, they are not licensed to originate loans)

If they are authorized to conduct business. And which company they are authorized to represent.

If they are licensed in your state. (You want to make sure the person you are talking with and that signs your application is licensed in your state. Don’t work with a person over the phone that is not licensed in your state. I have heard stories where borrowers talk with one person on the phone but another one signs the application because the call center person is not licensed in the state. This is against the law.)

The company where they currently work. (Does it match the information they have given you?)

Where they worked in the past.

Their company and branch license information.

Banks and lender’s retail departments often have a phone/call center representative. Conversations and applications are often done over the phone and through the mail verses reverse mortgage brokers who often take time to meet with borrowers face-to-face in their own homes. This means one may receive more personal service from a reverse mortgage broker.
Large bank institutions often have their eye on the bottom line by departmentalizing activities which forces loan officers to focus on just taking applications and not understanding all aspects of the reverse mortgage including the processing and servicing. My blog post, “They’ll Say Anything To Get An Application” points out a couple of these situations.

I am proud to be a mortgage broker, MO #173899, to have passed my licensing requirements, MLO #342859, offer options that can be best for my borrowers as well as personal service. I have pride in having 100% customer satisfaction documented with our customer survey.

Don’t Let Fear Keep You From A Reverse Mortgage But Know What To Look For In An Originator

Posted on June 13, 2009 by Beth Paterson, CRMP

There seems to be a fear that lenders who caused the downfall of the mortgage industry are entering the reverse mortgage industry and will be the next subprime product. Legislators here in Minnesota and elsewhere and even the US Banking Regulator, John Dugan, has made statements to this account. However, in reality those originators are few and far between in the reverse mortgage side of things.

Originating the reverse mortgage takes patience, kindness, a “social worker” attitude and a teacher aptitude versus a sales approach. The subprime lenders don’t fit this profile. They are looking for a quick and fast process to make money and move on to the next “deal.”

Because of this fear seniors and their families are afraid to consider a reverse mortgage that could really benefit them during their retirement years. Addressing this issue, Atlanta’s NBC affiliate featured Joe Morris, President of Generation Mortgage, a leader in the reverse mortgage industry and a lender whom we at Reverse Mortgages SIDAC, are partners. You can view the interview by clicking here: http://www.11alive.com/news/local/story.aspx?storyid=131277.

While seniors and their families shouldn’t be afraid of the reverse mortgages and lenders shouldn’t have the high fear factor of the induction of subprime lenders into the reverse mortgage arena, there are some lenders that shouldn’t be originating reverse mortgages. You can help protect against this. To help ensure that you are working with an originator (also referred to as Loan Officer/Reverse Mortgage Specialist, Reverse Mortgage Advisor or Reverse Mortgage Consultant) who is experienced, knowledgeable and meets the industry’s standards, consider the following when talking with reverse mortgage lenders. Yes, the list is long but knowing the answers to this list of questions will help protect you.

How much experience does the Reverse Mortgage Originator have with reverse mortgages (not just conventional mortgages as they are quite different)?
- Work with experienced reverse mortgage lenders who specialize in reverse mortgages. Ask how many years they have been originating and if/what training they have received.

How many reverse mortgage loans has the Reverse Mortgage Originator done?
- Experienced loan officers have originated hundreds of loans. Ask how many they have originated, not just their company or lender, but them personally.

Do the mortgage company and Reverse Mortgage Originator have the required federal and state licensing?
- Mortgage Brokers/Originators have completed federal and state education, testing and licensing requirements. FDIC Banks and Credit Unions are registered but have not completed the education, testing and licensing requirements.
- Ask your originator to provide documentation that they are licensed and/or look them up at http://mortgage.nationwidelicensingsystem.org under “Consumer Access” – if they are not listed they are not licensed to originate loans.
  - In Minnesota all individual mortgage loan officers (performing marketing, educating, originating functions) have to be licensed.

Who is the mortgage company’s lender sponsor?
- Originating mortgage broker companies have to be sponsored by a Reverse Mortgage Lender who is FHA licensed.
Do they offer all reverse mortgage programs available for FHA’s HECM and when available, proprietary (private)?
- Experienced originators should offer and be familiar with all the various programs available.

Do they assist you in determining which program is most suitable for your needs?
- Experienced originators should discuss the various programs and help you to assess the program most suitable for your needs.

Do they just try to “sell” the program to you or do they help you determine if the program is appropriate for your situation?
- An originator should not pressure you or sell you a particular program, they should discuss the various programs and have YOUR best interests at heart.

Will they meet with you face-to-face for an information session and the application? Or do they just mail you the application package?
- Because of the complexities of the program, originators should meet with you face-to-face to complete the application package. These sessions normally take around 2 hours to review all the documentation and insure you understand what you are signing. Don’t sign a package that is mailed to you – find an experienced local lender to work with you.

Do they disclose ALL information and identify ALL costs, explaining the program(s) and details and terms accurately and clearly so you understand them?
- Originators should be willing to disclose and discuss all information regarding reverse mortgages in terms and a way so you understand them. They should welcome your questions and be able to answer them to help ensure you have an understanding.

Do they know what costs are not allowed by FHA?
- HUD regulates the fees and a mark-up of fees are not allowed – you should only be paying the actual cost of the service. Your originator should know which fees are allowed by HUD and which aren’t. They should fight for you if a title company is charging processing fees. (Many charge processing fees without the lender or originator addressing it with their title company.) The cost of the appraisal should be their actual charge – ask them what they charge, the settlement statement should reflect this actual amount. (Proprietary products, when available, followed these same guidelines.)

Where are their loans processed?
- Your loan should be processed in an office where they can provide a personal touch vs sending them across the country to a processing center.

How fast do they process their reverse mortgage loans?
- Because the rates can change so quickly, processing (application to closing) should be able to be completed in 30 to 45 days under normal circumstances. If additional documents are needed from you and you don’t provide them, the processing could take longer.

Who does the processing of the reverse mortgage loans? Does the processor have experience processing reverse mortgages, not just conventional mortgages? How much experience does the Reverse Mortgage Originator have with processing and solving the issues that arise during processing?
- Because reverse mortgages are different than forward mortgages, the processor should have experience with reverse mortgages. Loan Officers should also have an understanding of the processing and assist in solving any issues that arise during the processing – they should not just be focused on getting the sale and then moving on.

What type of customer service do they provide? Do they have testimonials and/or references?
- Experienced originators should pride themselves on their customer service and be able to provide testimonials and references – ask for them.

Will they (the Reverse Mortgage Originator) answer questions and continue to provide customer service once the loan is closed?
- Originator’s customer service should include being available even after the loan is closed. If they don’t have a lot of experience and/or they move from one lender to another you may not get your future questions answered.

Does the Reverse Mortgage Originator have the knowledge and experience on how the reverse mortgage and other Minnesota programs interact? Programs such as Medical Assistance/Medicaid, Elder Waiver, home improvement loans from cities and counties.
- Originators should be familiar with how the reverse mortgage interacts with other programs. If they don’t find a different lender to originate your loan. You may not need this now, but you may in the future.

Does the Reverse Mortgage Originator have the knowledge and experience with the requirements of the reverse mortgage if there is a power of attorney, guardian or conservator, a bankruptcy, Trust or Life Estate?
- Originators should have knowledge of what the requirements are or you may start your loan but it may not make it through underwriting or be insured by HUD if your loan doesn’t meet their requirements.

Do they or the companies work with (mortgage company, lender, underwriter, servicer, etc.) offer financial or insurance products in addition to the reverse mortgage? Are they trying to cross-sell (selling more than one product) during the origination of your reverse mortgage? Will you be contacted and offered other services such as financial or insurance products by them or the companies they work with after the loan is closed?
- Cross-selling is not allowed. Originators should only specialize in reverse mortgages and not sell or encourage you to purchase other products. You are not required to purchase annuities, insurance or financial products with your reverse mortgage proceeds.

Are you treated with respect and dignity?
- You, of course should be treated with respect and dignity. If you feel you are not, find a different lender.

Do they protect your privacy and confidentiality and not distribute personal financial information to any third party without permission from you?
- To protect against identity theft you want to be assured that your information is private and kept confidential. Ask what their policies and procedures are.

Do they encourage you to discuss the loan transaction with family and/or trusted advisors?
- Originators should encourage you and welcome talking with your family and/or trusted advisors about your decision to do the reverse mortgage.

When completing the application do they leave you copies of what you have signed and copies of the sample closing documents?
- At the time of application or within three days, originators are required to leave you copies of what you signed including the calculations and Good Faith Estimate, two booklets, and samples of the closing documents. If you do not receive these, request them, if you have problems receiving them, change to a different lender.

Do they provide a list of FHA counselors without steering you to a particular one?
- HUD does not allow a lender to steer or be involved in your choosing or receiving counseling.

Be cautious that you do not complete an application or give the lender the counseling certificate until you have made your final decision of the lender you are choosing. Once an originator or lender has the counseling certificate they can obtain a FHA number and lock you into using them when they might not be your choice of originator or lender.

Don’t be afraid of reverse mortgages or reverse mortgage lenders. Reverse mortgages won’t be the next subprime product. Be educated on reverse mortgages and work with an originator and lender who is experienced, knowledgeable, meets the industry’s requirements and fulfills the above list of expectations.

Updated 2011.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

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