Tag Archives: Reverse Mortgage Ethics

You Need To Know Reverse Mortgage Borrowers Are Highly Protected!

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Reverse Mortgage Documents Have ProtecctionsLegislators, media, some senior advocate groups, and even the general public miss the point that reverse mortgage borrowers are already highly protected.  With more protections than with any other loan or financial decision seniors make they still feel more protections are needed.  Currently the only reverse mortgage is the Home Equity Conversion Mortgage (HECM) which is insured by HUD.  HUD has guidelines and requirements to protect seniors.  Even when there were proprietary (private) reverse mortgage products, they followed HUD’s guidelines.  While there are protections, seniors still have the right to make their own decisions, for better or worse.   Let’s discuss these protections.

  • Third-party counseling is required on all reverse mortgages.  Counseling is absolutely mandated with no exceptions and is provided by HUD trained and approved counselors.  During the counseling sessions the counselors are required to follow a protocol approved by HUD.  Evolving over time, HUD’s counseling guidelines and regulations now require distance between the counselors and lenders.  Lenders are required to provide borrowers with a list of 5 local and 5 national counselors without steering borrowers to any specific counselor.  Additionally, counselors are restricted from steering to lenders.
    • The counselor’s role is to educate about reverse mortgages, explain the allowable fees, and terms of the loan so potential borrowers have an understanding of the reverse mortgage.  They also provide other potential options.  They counselors are not to make a decision for the borrower on whether they should or should not do the reverse mortgage.
  • Cross-selling is prohibited.  Mortgagee Letter 2008-24 (HUD’s guidelines and requirements) states that a “HECM mortgage originator or any other party that participates in the origination of a FHA insured HECM mortgage shall not participate in, or be associated with, or employ any party that participates in or is associated with, any other financial or insurance activity.”  Additionally if a lender or bank has financial departments they must demonstrate to the Secretary of HUD that they have and maintain “firewalls and other safeguards designed to ensure that (i) individuals participating in the origination of a HECM mortgage have no involvement with, or incentive to provide the mortgagor with, any other financial or insurance product; and (ii) the mortgagor shall not be required, directly or indirectly, as a condition of obtaining a mortgage under this section, to purchase any other financial or insurance product.”
    • Lenders require mortgage brokers sign forms that they do not sell insurance and do not cross-sell.
    • All lenders application packages have disclosures stating that annuities and/or other financial products are not required to be purchased with reverse mortgage funds.
  • HUD regulates the fees.  HUD outlines what lenders and third-parties may charge stating they must be customary and reasonable costs necessary to close the mortgage.  Mark-ups are not allowed.  You may find HUD guidelines at their website (http://www.hud.gov/offices/hsg/sfh/ref/sfhp2-15.cfm) and in Mortgagee Letters 2008-34; 2006-07; 2006-04; 2004-18; 2000-10.
  • The Good Faith Estimate (GFE) must disclose all fees.  RESPA (Real Estate Settlement and Protections Act) requires all fees be disclosed at the time of application, restricts what fees can be changed and for the fees that can be changed borrowers must receive new disclosures.
  • The Total Annual Loan Costs (TALC) must be disclosed.  Providing a comparison of the percent of the costs to the amount received through the loan, this document discloses that the longer one keeps the loan the less expensive it is.
  • Sample Closing Documents must be provided at the time of application.  HUD requires that borrowers must receive the sample closing documents as well as a booklet regarding home equity loans.  This gives borrowers time to review the documents they will be signing at closing.  They may also have family, trusted friends or their attorney review the documents during the processing.
  • Disclosures must be provided to borrowers at application.  There are a variety of disclosures including:
    • Non-borrowing spouse disclosures outlining the risks if a spouse will not be on the loan.
    • Taxes and Insurances are the responsibility of the borrower(s).
    • Annuities and/or other insurance and financial products are not required with a reverse mortgage.
      • If annuities are being purchased the costs of the annuity are to be included on the TALC.
  • Three-day Right of Recession.  As with any refinance, there is a three-day right of recession giving the borrower(s) time to review and decide whether or not to proceed.
  • HUD insures and guarantees the funds.  As a HUD insured loan the funds are guaranteed to be available to the borrower as long as the borrower(s) abide by the terms of the loan.
  • Non-recourse loan.  Unlike any other loan, the reverse mortgage is a non-recourse loan which means there is no personal liability to the borrower or the estate as long as the borrower or their estate is not retaining ownership when the loan is due and payable.
  • There are guidelines for marketing practices.  HUD, The Federal Trade Commission and industry associations review and have cracked down on misleading advertisements.
  • State licensing and the SAFE Act.  Many states require mortgage brokers take test and receive licensing in order to originate loans including reverse mortgages.  (Note: FDIC insured banks are exempt from these requirements.)  The Housing and Economic Recovery Act of 2008 (HERA) enhances consumer protections including encouraging states to establish minimum standards for licensing and registration of mortgage loan originators.  The SAFE Act will establish and maintain a national mortgage licensing system and registry for the residential mortgage industry.
Protected MN Reverse Mortgage Borrowers

Protected MN Reverse Mortgage Borrowers

When doing other types of mortgages, loans or financial decisions seniors do not have all of these same protections.  For example they do not have to go through counseling, have the same disclosures requirements, have regulated fees, are not guaranteed or have the non-recourse clause and often do not require the testing and licensing. Think about these situations that don’t have these same requirements or disclosures:

  • A reverse mortgage compares to a regular home equity loan in the fact that regardless of age the mortgages are used to finance lifestyle using the home equity.  With a forward/conventional loan the funds are taken as a lump sum and can be used however one wishes.
  • If a senior is selling they have costs associated with sale and receive funds in a lump sum.  No one is controlling how they use the remaining equity from the sale of the home.  And they have to determine where they are going to live.  If they are renting (i.e. regular apartment, independent living, or assisted living) the money may only last for a short period of time and they may still not have funds for future needs.
  • If the senior (or anyone) does a forward/conventional loan the funds are received in a lump sum.  They can do whatever they want with this equity.  And they have to make payments which can become difficult for them if “life happens.”
  • If they win the lottery they have money in a lump sum which can be spent however they wish.
  • With credit cards seniors (or anyone) are not restricted on how they are used.  They can charge for whatever they want.  And they then have created debt that has to be paid back on a monthly basis.

When you hear that seniors need to be “protected from the reverse mortgage” remember all these protections and know that seniors doing a reverse mortgage have more protections than any other loan or financial decision they make.  As with any decision, especially financial or legal, one should be educated and understand the service or product.  And while these protections are in place, the seniors still have a right to decide for themselves on whether the reverse mortgage is right for their situation.

© 2010 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-gT

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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.

They’ll Say Anything To Get A Reverse Mortgage Application

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Senior Considering a Reverse MortgageMarie lives in a manufactured home (sometimes called a mobile home).  It’s a beautiful home built around the original form so you can’t even tell it’s a manufactured home.  Two years ago I worked with Marie but unfortunately we were not able to do a reverse mortgage because her manufactured home did not meet HUD’s requirements.  While we can do a reverse mortgage on manufactured homes they have to meet the long list of HUD’s requirements.

Two weeks ago Marie called and said she had talked with an originator of a large bank who told her that the reverse mortgage can be done on her home.  Marie said she had called me because she trusted me.  As I discussed the situation with her she said the other originator had told her that they found on the internet that her property had been reclassified.  Additionally Marie said at the suggestion of the other originator she had scheduled her required counseling.

Not believing that a manufactured home could be reclassified, I told Marie to cancel the counseling (potential cost of $125 which she didn’t need to spend if her property wouldn’t qualify) and that I would check to see what I could find out for her regarding a reclassification.

After doing some checking on the internet, reviewing HUD’s requirements and checking with an underwriter, I called Marie back to confirm what I initially thought, her property was not reclassified from HUD’s standpoint and HUD would not insure her property.  A manufactured home is a manufactured home no matter how much you have done to change the look.

Fortunately Marie had called me – if she had proceeded with the other lender she would have spent $125 for counseling, $450 to $500 for an appraisal and then found out that she still couldn’t do the reverse mortgage.  She took it in good humor, stating, “They’ll do anything to get an application.”  While I would have loved to do the reverse mortgage for her, I believe in servicing the client even if it means I won’t earn a commission.

Another call I received was from someone who was shopping for lenders.  They lived on a rural property and after talking with them about their property I determined that it would not meet HUD’s requirements because of commercial use.  This person said they were told by a large bank originator that they could do the reverse mortgage.  If they proceed in with the counseling, application and the process with the other lender when the file gets to underwriting (hopefully) or to HUD they will be very disappointed when they learn the reverse mortgage can’t be done, especially when they have paid for the counseling and appraisal, credit and flood certificate fees.

Reverse Mortgages can be lifesavers for seniors but the property has to qualify.  Keep in mind that some lenders require originators submit a number of applications as part of their employment, even if they don’t close.  These are just a couple of examples, we receive other calls on unusual properties where other originators have led the borrower to believe a reverse mortgage can be done where in fact HUD will not insure the property.  While this is not reverse mortgage fraud, I consider it to be unethical.

Work with Experienced Reverse Mortgage OriginatorSeniors should contact and work with originators who have years of reverse mortgage experience not only in originating but also with HUD’s as well as the investor’s requirements, processing, underwriting.  Ask for references.   Additionally the originator should look out for the seniors, i.e. be a senior advocate – we don’t want to get senior’s hopes up and have them pay out hard earned money if they aren’t going to qualify for a reverse mortgage.

Don’t be afraid to ask the originator questions about their knowledge and experience with the various aspects of reverse mortgages, from origination, processing, underwriting, closing, servicing, etc.  Utilize the questions in my Blog article “Don’t Let Fear Keep You From A Reverse Mortgages But Know What To Look For In a Lender.”  Additional information can be found on our website: “What To Consider When Talking With Reveres Mortgage Lenders” and “Why Choose Prestige Mortgage, LLC/Reverse Mortgage SIDAC.”

© 2010 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-eP

Also read how reverse mortgages have made a difference in the lives of those who do qualify:

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.

A Reverse Mortgage Or A Conventional Mortgage For Senior Homeowners? That Is The Question.

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Calling for MN Reverse MortgageThe call comes in:  “I took a loan out 3 years ago and now I want a reverse mortgage because I can’t make the payments.”  I respond, “Great, the reverse mortgage eliminates mortgage payments and allows borrowers to stay in their home.”   I define that a reverse mortgage is a mortgage like any other loan but with special terms for seniors 62 and older and borrowers still have the title and are responsible for property taxes and insurance, association dues (if applicable), maintaining the property and abiding by the terms of the loan.  Then I also review some other details of the reverse mortgage including that:

  • There are no income or credit score requirements to qualify.
  • No monthly payments required.
  • There is no limitation on how the funds can be used.
  • Funds can be received in monthly payments structured as needed, line of credit (with a growth rate), lump sum, or a combination of these.
  • Social Security and Medicare are not affected because it is a loan.
  • Medicaid can still be received with the reverse mortgage.
  • The loan is non-recourse which means there is no personal liability to the borrower or their heirs if they are not retaining ownership.
  • If the home is sold for more than the loan balance, the borrowers or their estate keep the difference.

Then after further discussion and review of their situation, I state, “Let me get some information so I can see how much reverse mortgage proceeds there are in your situation.”

The reverse mortgage needs to be in first lien position which means any current liens need to be paid off with the reverse mortgage.  There needs to be enough funds from the reverse mortgage to do this.  Often when a mortgage was done a few years ago, when I run the numbers I often find there aren’t enough proceeds to pay off their current mortgage.  Sometimes they are only short a few hundred dollars and they can come up with the funds needed to do the reverse mortgage (sometimes it’s only a matter of a monthly payment).  Other times they are short thousands.  For one couple who called a couple of weeks ago they were short over $40,000 to pay off their current mortgage.  Once I run the calculation with these scenarios I then have the difficult call back to tell this senior that the reverse mortgage is not an option.

I often hear of 70 and 80 year olds who are taking out a 30 year conventional mortgage and then they have to work in order to make the mortgage payments.  What happens when they can’t work and can’t make their mortgage payment?

I wish they would get the facts on reverse mortgages and get over their fear and do the reverse mortgage instead of a conventional mortgage in the first place.  Instead of doing the conventional loan, if the reverse mortgage would have been done originally the senior would be in a different situation now – a much better one.

Lower home values and higher loan balances contribute to the issue.  While the reverse mortgage rate is historically lower than conventional mortgages and the reverse mortgage has many benefits over conventional loans, there was a fear that made the senior take out a conventional mortgage instead of a reverse mortgage.  Then “life happens” and we get the call and we often have to deliver the bad news, not enough reverse mortgages funds to pay off the currant mortgage.

Closing costs are comparable (See my Blog, “Reverse Mortgage Costs – High or Mythical’), interest rates historically lower, so in the big picture the reverse mortgage costs less.  No monthly payments and options on how the funds can be received, the guarantee of funds and non-recourse features all make a reverse mortgage a better choice for seniors.

Even if one can qualify for a conventional loan today, when “life happens” (health, medical issues, can’t or don’t want to work any more, home repairs or modifications needed) and the monthly payment can’t be made, the seniors get into the balancing act of,  “Do I make my mortgage payment or pay my other expenses.” and if they can’t or don’t make the payments they’ll be at risk of foreclosure.  With the reverse mortgage this risk goes away because no monthly payments are required so they don’t have to worry about deciding between paying the mortgage or their other expenses.

Let’s look at one senior couple.  Four years ago they took out a conventional loan for $25,000 to meet their immediate needs.  Last year because they needed more funds they looked at a reverse mortgage.  Based on their home value of $120,000 and their age they would qualify for $75,000 in reverse mortgage funds, closing costs of $9,000 and a lower interest than their current conventional loan or than what they would qualify for on a new conventional loan.  (Remember to qualify for a conventional loan income, credit, assets and risks are taken into consideration to determine interest rate.  The reverse mortgage interest rate is not affected by income, credit, or assets.)

Yes, the closing costs on the $25,000 conventional loan were lower than the reverse mortgage because the conventional bases the fees on the amount received, $25,000 in this case and the reverse mortgage bases the fees on the full home value – this is because over time they can be access the full home value or even more than the home value.  In their situation the initial loan closing costs were $3,000 for the conventional loan.

With the reverse mortgage they would have had a lower interest rate, no monthly payment requirements and funds in a line of credit that would grow so more would be available for future needs.  One can’t get these benefits with any other loan.

They decide against the reverse mortgage and to do a conventional loan for another $25,000 and pay closing costs of another $3,000.

Now let’s look their situation in another two years:

  • They initially accessed $25,000 with closing costs of $3,000
  • The 2nd loan they accessed for another $25,000 with closing costs of another $3,000 totally $50,000 in funds received and $6,000 in closing costs.
  • Looking at their financial history, in another 2 years more than likely they will be contacting their bank for another loan.  So at this point their situation would be (if they can even qualify) another $25,000 and another $3,000 in closing costs totally accessing $75,000 and a total of $9,000 in closing costs.  This doesn’t include the interest rate expense that would be higher than on a reverse mortgage.

They would have been smarter if the reverse mortgage would have been done initially or at least at this point in time.  Over time would have been able to access more than $75,000 including the growth rate, closing costs would have been the same and interest expense would have been less.  In addition they would not have had to make payments, improving their cash flow through the years, the funds would be guaranteed for them, and the reverse mortgage is non-recourse so in the end they only pay what the home could be sold for without having to come up with the difference, or they get to keep any remaining equity if the home is sold for more than the loan balance.  (On a conventional loan the borrower or the estate could be responsible for the difference if the loan balance is higher than what the home can be sold for.)

And a few years from now they may not qualify for a conventional loan so they would have paid the $6,000 in closing costs to receive $50,000 and have made payments through the years.  Then when “life happens” and they can’t afford those payments, they could be facing foreclosure, and maybe not qualifying for a reverse mortgage.  And if they do qualify for the reverse mortgage, they will then have to pay the closing costs adding the closing expense on top of what they have already paid.  All in all, the reverse mortgage would have been less expense in the long run.  View “Is Waiting To Do A Reverse Mortgage The Best Decision” for a comparison of funds now or in the future.  It’s important to note that their banker thought that the reverse mortgage through us was a much better option for this couple.

Satisfied MN Reverse Mortgage Client

Satisfied MN Reverse Mortgage Client

Marlene who initially did a conventional mortgage and then turned to us to do a reverse mortgage said when she did the conventional loan she didn’t understand the reverse mortgage and so was afraid to do it.  At the reverse mortgage closing she said she wished she had done the reverse mortgage in the first place.  She’s just glad that we were able to help with the reverse mortgage when we did.

In conclusion, when one is in their senior years the reverse mortgage is generally a better choice than a conventional mortgage, even if they do qualify for a conventional loan.  If one does the reverse mortgage instead of a conventional loan their retirement years will be so much smoother, less stressful – they’ll have peace of mind along with security, independence, dignity, and control.  And when at a future date they do decide to do a reverse mortgage we won’t have to deliver the bad news that there aren’t enough funds to pay off a current mortgage.  They should have done the reverse mortgage in the first place.

© 2010 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-cz

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.

Changes With The Good Faith Estimate Leave Reverse Mortgage Borrowers Confused And At Risk

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Reviewing Reverse Mortgage Fees

Reviewing Reverse Mortgage Fees

As we welcome in the new year we are also looking at many changes with reverse mortgages.  The first of which is the New RESPA (Real Estate Settlement and Procedures Act) requirements.  These include a new Good Faith Estimate (GFE) and HUD-1 (closing Settlement Statement).  (Note, these RESPA changes apply to conventional loans also – so if you are looking are refinancing or purchasing you’ll want to be familiar with them too.)  The intent is to make it easier for borrowers to compare fees between service providers, application and final HUD-1 Settlement Statement fees, and disclosure of yield spread premiums or lender paid fees.

With the new regulations a GFE will ONLY be provided with an actual application.  It is no longer allowed for the informational or quote package to include a GFE.  The borrowers are at risk because they may just want to receive estimates on the fees when they request a GFE, and not knowing the new regulations they will be signing an application and the broker/lender may start processing the loan even before they’ve made a final decision – especially the unethical originators and lenders.  Besides the info needed for information purposes such as name, address, birth dates, home value/estimated home value, amount of balance of current loans, information that will trigger the application include the Social Security Number, monthly income and assets and other pertinent personal information.  This information should NOT be provided until lender is chosen and ready to proceed with an application.

Included are now three fee categories on the GFE:  those that cannot change, those that have a 10% tolerance, and those that can change without restrictions.  There are areas of allowance for “Changed  circumstances” which will include:

  • Fees that may change due to a difference in the appraised value include, i.e. origination fee, FHA Mortgage Insurance Premium, Title Insurance, MN Registration Tax, inspections, surveys, certifications, etc.
  • Required services not known prior to the application, such as but not limited to roof, foundation, engineering inspections or certifications, and surveys.
  • Recording fees for unknown liens, mortgages, loans, judgements, title changes such as deeds, trusts, death certificates, Power of Attorney, and release fees, etc.
  • Required services by providers chosen by borrower rather than the lender, such as title services and fees, title insurance, and notary fees
  • Other circumstances particular to the borrower of transaction, including the need for flood insurance or environmental problems
  • Acts of God, War, disaster or other emergency
  • Changing from one product to another.
  • Home Owners Insurance

Signing Reverse Mortgage ApplicationA new GFE will need to be provided to the borrower within 3 days for these changes to be permitted at closing.  It is the broker/lender’s responsibility to disclose and document the disclosure of the new GFE to the borrower(s).  If not disclosed properly, the broker/lender will have to pay the difference, it cannot be charged to the borrower(s).

At the time of inquiry and for information purposes only, we, Prestige Mortgage/Reverse Mortgages SIDAC, will, as we have always done, be providing an explanation of closing costs.

While we have always provided accurate GFE’s (usually within only $100 difference between application and actual fees at closing) you can now expect all lenders to be providing the GFE fees to be the same as at closing.

Unfortunately in the process of trying to make sure all fees are disclosed to borrowers the new 3 page GFE (formerly 1-page)  is more complicated and will be more confusing for borrowers.  We will do our best to help borrowers understand the fees, changes, and forms.

Review a comparison of Minnesota Reverse Mortgage costs to conventional loan fees in the post, “Reverse Mortgage Costs – High or Mythical?”

© 2010 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-cg

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.

Be Educated About Your Options of Care and Financing The Care

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Your Road Map for your journey of agingEducation and planning are the keys to making decisions especially when it involves care while aging.  You need to be proactive and know what resources and options are available.  With the education and a plan you have more options and can be proactive rather than reactive.

As Forest Gump said, “Life is like a box of chocolates, you never know what you’re gonna get.”  This is especially true for aging.  In mid November I was fortunate to participate in and be considered a trusted advisor at the Minnesota Private Duty Home Care Conference, “Keeping Mom and Dad at Home”.  During the conference attendees were encouraged to plan the future as they would a trip, looking at what would they put in their suitcase for the journey of aging and be prepared for what isn’t known to happen along the way.

Conference attendees reviewed what is known about seniors and their families.  We looked at what is known about seniors:

  • They underestimate their situations
  • They don’t want to worry or be a burden to their children
    • So seniors don’t tell their children what’s going on
  • They want their families help
    • Families often don’t have the time or the financial means to help
  • Role reversal is uncomfortable
  • They are fearful of nursing homes and moving
  • 93% say they want to stay in their home

Then we looked at what we know about the families of seniors:

  • They want to help
  • They are busy; they are the sandwich generation dealing with their own family, careers, life
  • They see changes but don’t know what they mean or what the warning signs are
  • They may become frustrated with their parents denials
  • Role reversal is uncomfortable
  • It’s generally women who are doing the caregiving; Minnesota is #1 in the country for working women.

Consider what’s important to the seniors, what do they want for their journey?  It’s important to involve the seniors in the process, the plan, and have them agree with the plan.  Discuss their wishes along with what you think is needed.  What will provide them their security, independence, dignity and control of their life?  Including a mediator and/or trusted advisor is a good idea.  If they are resistant to bringing someone else in, discussing their options, or accepting outside help, tell them that they may not need this but that you do.

By being educated and having your plan in place if a crisis occurs means more options will be available along with decreased costs.  Being reactive at a time of crisis means less options are available along with greater costs.  Emotional and reactive decisions make for poor choices and actions made from regret and guilt.

Part of the education and planning means getting the facts.  Unfortunately we have been conditioned to think that seniors will end up in a nursing home; that an assisted living facility provides all the care needed and is often the only option; that home care is short term and the nursing home and/or assisted living is safer than being at home.

Receiving Home CareWe need to recondition our thinking to:

  • Seniors can live at home indefinitely
  • Home care can provide a nursing level of care at home
  • Living at home can be safer; you receive a 1 to 1 ratio of care versus 1.5 or more of care per person
  • Living at home is affordable

Let’s compare the costs of home care options and assisted living rent and with home care options:

Home Care 1 $1,296/month 3-hour visits, 4 days a week, $27/hour
Home Care 2 $3,024/month 4-hour visits, 7 days a week, $27/hour
Home Care 3 $4,536/month 6-hour visits, 7 days a week, $27/hour
Home Care 4 $8,500/month 24-hour or live in care, one-on-one care, $275/day; includes a live in caregiver and frequent visits from a RN
Assisted Living Rent for 1 person $2,800/month 1-bedroom$3,200/month 2-bedroom Care packages range from $300 to $2,700 and would be above and beyond the rent; additional care would be charged per hour by a home care agency; there is an additional charge for a 2nd person in the apartment
Assisted Living Rent & Home Care 1 $4,096/month One bedroom apartment, 1 person plus additional care at 3-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 2 $5,824/month One bedroom apartment, 1 person plus additional care at 4-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 3 $7,336/month One bedroom apartment, 1 person plus additional care at 4-hour visits, 4 days a week, $27/hour from home care agency
Nursing Home $6,000 – $12,000/month Single or double room, level of care and facility amenities

Let’s look at selling and moving into an assisted living vs staying at home with a reverse mortgage:

Details: Home Value $200,000; 80 year old (reverse mortgage funds available will depend on age, older one is more funds available)

Selling Staying in home with a Reverse Mortgage
Third Party Closing Costs $2,211 $2,211
Less Real Estate Agent/RM Origination Fee & FHA Mortgage Insurance Premium $12,000 (6%) $8,000 (2% origination + 2% FHA MIP)
Net Proceeds $185,789 $110,108 in Line of Credit; $862/month tenure-for life; or term payments structured as needed (based on rates of 11/24/09)

Now let’s take the net proceeds and compare living in an Assisted Living to living at home with a reverse mortgage and receiving home care.

Selling and Living in an Assisted Living1 Living at Home using a Reverse Mortgage2
$185,789 ) $2,800 (rent only) = 5.5 yearsNo remaining equity from home. No rent or mortgage payment as long as you live in the home as your primary residence3Borrower is still responsible for household maintenance, i.e. taxes, insurance, utilities and stay in your home as long as primary residence (i.e. approximately $755/month for a $200,000 home)May have retained equity depending on how long you stay in the home and the home appreciation.  The loan is non-recourse.
$185,789 ) $4,096 (rent and Home Care 1) = 3.7 years No remaining equity from home. Roof over head; funds to cover home care 1 with term payments from RM = 9.8 years3 Additionally it is likely that there would still be retained equity in the home after the 9.8 years.
$185,789 ) $5,824 (rent and Home Care 2) = 2.6 years No remaining equity from home. Roof over head; funds to cover Home Care 2 with term payments from RM = 3.33 years3 Additionally it is likely that there would still be retained equity in the home after the 3.33 years.
$185,789 ) $7,336 (rent and Home Care 3) = 2.1 years No remaining equity from home. Roof over head; funds to cover Home Care 3 with term payments from RM = 2.1 years3
Additionally it is likely that there would still be retained equity in the home after the 2.1 years.
Then where will you go?Some assisted living will accept Medical Assistance or other public programs such as Elderly Waiver however your choices may be less. You can stay in your home and have a roof over your head without rent or mortgage payment even after funds from a reverse mortgage are used.Medical Assistance or other public programs such as Elderly Waiver or Alternative Care can be received even with a reverse mortgage.  Reverse mortgage does not impact receiving Medicare or Social Security.

1These rates do not take into consideration care packages or increases in rent charges so it’s likely that the number of years the net proceeds would cover will be less.

2With the reverse mortgage there is a growth rate factor that is passed along to the borrower.

3This time can be extended if you are receiving Medical Assistance or other public programs such as Elder Waiver, Alternative Care or qualify for Medicare covered Home Care.

Able to Stay in Home with Home CareYou have choices and can have control over where want to live and the care you receive. You have the right to say, I want to stay in my home (or keep my parents in their home).  When educated and with a plan for the journey,  you will have more choices and life will be easier.

Additional Suggested Reading:

© 2009 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-9A

Note:  This information and these home care and senior housing figures are  reflective of costs in Minnesota and are a compilation provided by the home care agencies at the 2009 Minnesota Private Duty Home Care Conference.  They are approximations and can vary by company, agency, facility and geographic area.

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.

One Bad Apple Spoils The Bushel of Reverse Mortgages

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Reverse Mortgage ApplesEvery industry has their bad apples and reverse mortgages are no exception.  However the few and far between “bad apples” in the reverse mortgage industry are not representative of the industry or the product as politicians, media and some reporters are stating.  Headlines such as “Beware of Reverse Mortgages” is a disservice to seniors because it scares away the seniors who could benefit from a reverse mortgage.  So even the reporters and politicians are bad apples spoiling the bushel of reverse mortgages.

There is little evidence of subprime lending and fraud with reverse mortgages.  The National Consumer Law Center Report recently released which claims reverse mortgages are the next subprime mortgage is not based on statistical evidence.  As Peter Bell, President of the National Reverse Mortgage Lender’s Association has pointed out, the cases sited in this report are over 3 years old and some have been dismissed in the legal system.

Some of the instances mentioned in this report are not abuses by lenders but by those who took advantage of seniors who had the reverse mortgage.  My Blog article, “It is NOT Reverse Mortgage Fraud When…” outlines some claims of reverse mortgage fraud that aren’t really reverse mortgage fraud.

Let’s look at the bad apples of fraud in the reverse mortgage industry:

  1. One bad apple was where a scheme was set up to flip homes using a reverse mortgage.
  2. Another bad apple was an investor who sells the property using a quit claim deed then the buyer applies for a reverse mortgage using an inflated appraisal and a fake mortgage company.  The senior then refinances using a reverse mortgage paying off all debts including the fake mortgage providing the investor funds – some of these seniors were homeless prior to the scheme and didn’t understand the terms of the loan or the need to pay taxes and insurance on the property.  Protections have been implemented to stop these types of schemes.
  3. An originator who proceeded with the loan closing knowing the borrower had passed away was another bad apple.
  4. HUD has charged another bad apple for violating HUD’s regulations and is in the process of proceedings to have that company’s FHA license pulled and the people involved will be put on HUD’s sanction list and not be allowed to work in the industry. (This lender does both conventional and reverse mortgages – the violations were based on conventional loans, not reverse mortgages s0 this was not really reverse mortgage fraud but it likely could have been.)

Out of all the reverse mortgage lenders and reverse mortgages these are the only instances I found to be real fraud and this is not an issue with the product itself but with a person or persons.  If there are more, I couldn’t find them in my search of reverse mortgage fraud through the many sites and articles found at the FBI, Federal Trade Commission, HUD, National Reverse Mortgage Lender Association, and other industry reports.  Obviously with only these instances, reverse mortgage schemes and fraud are not increasing or set to be the next subprime focus.

Yes, there is always a risk of potential increase of scams and fraud as there is a risk of increase of scams with anything including increase of theft from a store, identity theft, medical or insurance practices or products, on and on.  And while everyone doing a reverse mortgage, a conventional mortgage or any financial transaction should know the facts and beware of scams, three or four instances does not mean the product should be avoided.  Would you stop shopping because it involves using cash or a bank card just because there is a risk of increase of theft or identity theft?  No, you just take precautions.  Do you stop driving your car because there is a risk of increase of car theft.  No, of course not, you just take precautions.

HUD has many protections in place making the reverse mortgage the safest loan available to seniors.  These protections include required third-party counseling, now with a new protocol (see my Blog article “New Protocol for Reverse Mortgage Counseling”), regulating fees, prohibiting cross-selling, implementing a wait period for home purchases (a result of a scam) as well as review of marketing practices and disclosure of fees.

Meg Burns, Director, FHA Single Family Program Development U.S. Department of Housing and Urban Development (HUD) has stated, “the program has the potential to benefit seniors with a wide variety of financial needs and, as such, should be thoughtfully considered by all seniors making financial planning decisions.”  She has stated that widespread abuse is unsubstantiated and shares the reverse mortgage industry’s concern about decisions based on lack of knowledge, as outlined in her statement, “I have grave concerns about the overzealous attention by legislators to the reverse-mortgage sector.  Federal regulators are going to pay attention, but they don’t know the product.  We have yet another party entering this world who wants to layer on additional consumer protection, but they don’t understand the product well enough-[and yet] we have auditors nipping at our heels.”

Instead of highlighting how many seniors have benefitted from the hundreds of thousands reverse mortgages that have been done and how originators have bent over backwards to help seniors save their home from foreclosure, eliminate mortgage payments, have cash to repair or modify their home or have funds for medical expenses or home health care, or funds for their retirement during the economic downturn the media and politicians focus on the rare instance of fraud.

Consider a few of the many comments we have received on how the reverse mortgage made a difference for seniors:Satisfied Reverse Mortgage Borrowers

  • “Thank you!  I now have my bills paid, money in the bank, and I can take a vacation this summer.”
  • “It helps me keep up with bills I cannot cover with my limited income.  It also allowed me to remodel my home to improve its value and be more comfortable.  I greatly appreciate it.”
  • “The Reverse Mortgage helps out a great deal and solves many problems.”
  • “It has relieved us of a great deal of stress and makes grocery shopping a lot easier too.”
  • “The only way we could comfortably stay in our home of 42 years”
  • “A reverse mortgage means I’ll have a place to live even in case of serious illness.”

Options should be considered however their homework has not been done when reporters, politicians, and even “senior advocacy” groups state:

  • “The reverse mortgage should be a last resort.”  A last resort to what?  As one of my borrowers stated, “When retired it is the last resort.”
  • “Get a home-equity line.”  First, most seniors don’t qualify for a conventional loan and if they could, they would have to make payments (often what they are trying to eliminate or avoid).  And even if they can afford the payments today, what happens when “life happens” and they juggle between making mortgage payments, paying their utilities or paying medical bills and putting food on the table.

Besides, the reverse mortgage IS a home equity loan.  It is a home equity loan with special terms for seniors including no income or credit score qualifications, no monthly payments and is a non-recourse loan insured by FHA with a lower interest than they can qualify for with a conventional “forward” loan.  The loan is not due and payable until the home is no longer the primary residence or on their 150th birthday.  It also offers more flexibility on how they can receive their funds including monthly payments, line of credit, lump sum or a combination of these.

  • “Sell and move.”  Most seniors want to stay in their home where they have raised their children, are familiar with the neighbors and neighborhood and have a lot of emotional ties.  Additionally moving and selling can cost more than a reverse mortgage.  Read my Blog, “I Want To Stay In My Home – Don’t Tell Me To Sell!” which compares the costs.

Another common misstatement and myth is “reverse mortgages have high fees.”  Actually the costs of the reverse mortgage are comparable to a conventional FHA loan.  When comparing costs side by side to a conventional loan the difference is the up-front FHA Mortgage Insurance Premium.  The benefits of FHA insuring the loan include guaranteed funds, a lower interest and the loan being non-recourse.  For a better understanding of costs and a comparison read “Reverse Mortgage Closing Costs – High or Mythical?”

To make sure you aren’t working with a predatory lender, check references, check to ensure they are a HUD approved lender, know they specialize in reverse mortgages, have experience, knowledge, and are willing to meet with you to review the details, before the application, during the application and at closing.  You should review “Don’t Let Fear Keep You From A Reverse Mortgage But Know What To Look For In A Lender” to know the questions to ask when talking with an originator.

Our company is proud to receive comments such as “I am completely satisfied with all aspects of my reverse mortgage. From start to finish, it was handled very professionally. I never had a feeling that my questions and input were not of importance (thank you – I had many questions!!) Beth, you assured me that the procedure was on time and going smoothly, and that was a wonderful feeling! Thank you for being the kind of super advisor that makes you so special”

So don’t let the bad apple spoil the bushel of reverse mortgages for you.  Get the facts, know what to look for in a lender, and explore the option to see if it might benefit you as it has benefitted hundreds of thousands of senior homeowners.

To get the details and facts straight, the media should read a couple of my other Blog articles:  “The Media Needs Their Reverse Mortgage Facts!”  “But Wait, There’s More… Reverse Mortgage Facts the Media Needs To Know” and “When You Don’t Know What You Don’t Know About Reverse Mortgages.”

© 2009 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-8l

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.

New Protocol for Reverse Mortgage Counseling

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Receiving Reverse Mortgage CounselingSince its inception when HUD started insuring reverse mortgages 20 years ago, anyone considering a reverse mortgage must receive counseling from a 3rd party HUD approved counselor.  Now effective this October a new protocol has been put into affect.  To remain on HUD’s Counseling Roster, counselors must have passed the National HECM (Home Equity Conversion Mortgage) Counseling Exam.  Only counselors who are employees of HUD-approved housing counseling agencies can take the exam and then be eligible to counsel potential reverse mortgage borrowers.  Additionally they must have completed at least one HECM related training course within the past two years and meet some background check requirements.

With the intention to keep lenders from influencing counselors, lenders are required to provide potential borrowers with a list of 10 counselors, 5 are to be local and the additional 5 are the national counseling agencies.  Also according to HUD’s requirements lenders are prohibited to provide only one or two counselors and/or steering to a particular counselor.

The purpose of the third party counseling is to make sure potential borrowers are familiar with the terms of the loan, the costs, and advise them of other potential options.  The advantages can be if the potential borrowers have not talked with a lender or a lender has not provided the details they are getting the basics of the reverse mortgage.  If they have talked with a lender and the lender has done a good job explaining the reverse mortgage, the counselor will reiterate what the lender has explained.  Counseling sessions should generally take about an hour and HUD allows counselors to charge up to $125 commensurate with the time of the counseling session.

Through the years we, the ethical lenders,  have been amazed how counselors have not followed HUD’s requirements, steered to particular lenders, told borrowers they shouldn’t do the reverse mortgage, how they should take their reverse mortgage funds, charged the full allowable amount of $125 for only 15 minutes of counseling time, and a number of other violations of HUD’s regulations.

Receiving Reverse Mortgage DetailsWhen we from Prestige Mortgage, LLC, Reverse Mortgages SIDAC, meet with our prospective borrowers we usually take an hour to two hours going through the details and the calculations, reviewing their situation and discussing options for their situation.  After the counseling session when we ask our borrowers how the counseling session went, we consistently hear, “They covered just what you did.”  This means our borrowers have received enough education to have a good understanding of the loan.

Besides the new protocol to be a counselor, there will be a new protocol for the counseling session.  Prior to the counseling session HUD is requiring that prospective borrowers receive calculation pages comparing programs, the amortization schedules, the Total Annual Loan Cost (TALC)  and a booklet titled, “Use Your Home to Stay at Home” published by the National Council on Aging.

From what we understand counselors will be doing a financial analysis.  Additionally counselors will be asking 10 questions in which borrowers will need to answer at least 5 correctly in order for them to receive the counseling certificate.  If they can’t answer the questions correctly then they will not receive the certificate and will need to wait a minimum of 7 days and then go through another “limited” counseling session to review the topics they didn’t understand.  And if counselors feel the prospective borrowers don’t comprehend the basic reverse mortgage details, they can withhold the counseling certificate.

The intention is to help borrowers assess their situation and whether the reverse mortgage is right for their financial situation.  While on the surface this sounds like a good idea, the concern is whether the counselor will be passing along their opinion and not letting the borrower really make their own decisions and withholding the counseling certificate if they choose based on their opinion.  This has happened in the past with counselors telling borrowers they should cut back on getting their hair done, not using the proceeds for a trip, shutting off their cable TV, etc..  I believe the discussion should be held however, the final decision should still be the borrowers.  And we have to consider what provides seniors their security, independence, dignity, control and choices of their life.  Visit my Blog articles: “Who Are We To Judge How Reverse Mortgage Funds Should be Used?”  and “Is Your Opinion of Reverse Mortgages Denying Seniors?”

I’m proud that we take so much time educating our borrowers and discussing their situation and options so they can make their decision based on the facts of the reverse mortgage.  Also that they have the information and knowledge to be able to answer the questions they will be asked during the counseling session.

With the new protocol of the counselors, I believe (hope) the best counselors will remain and the counseling sessions will provide the education without the opinions of the counselors being shared.  I also hope that the counselors will be following the required protocol knowing that if they don’t HUD is likely to pull their ability to counsel.  Time will tell if the new protocol of the counselors and the counseling session will benefit borrowers or make it more cumbersome and/or discouraging for the borrowers.

The best I can do is continue to educate borrowers on the facts of reverse mortgages, discuss their situation and options and respect them to make the decision best for their own situation and have the information they need when they go through the counseling session.

© 2009 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-85

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.

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

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MN Reverse Mortgage Borrowers Working With Experienced OriginatorThere 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.

© 2009-2011 Beth Paterson, Beth’s Reverse Mortgage Blog,651-762-9648

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-1G

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.