Questions About Reverse Mortgages Continue Receiving Misinformation As Responses

Couple Want A Reverse MortgageRecently 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.

Have a conversation about the reasons for a Reverse MortgageI 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.

© 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-tL

Related Articles:

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.

Live in & cash out, too – Thanks, MN Good Age

Cashing out in your home while living in itAlyson Cummings did a fantastic job on her article in the MN Good Age newspaper, “Live in & cash out, too.”  She had interviewed me a few months ago to learn about reverse mortgages for this article.  She said she couldn’t send me a copy prior to publication so I was nervous on whether she would provide accurate information or stick with the many misstatements that are usually in the media.  Or would she misquote me or print my comments out of context.

With excitement and apprehension I started reading the article the other day when I picked up a copy.  As I read I was pleased to see the acknowledgment and the many quotes.  What was even better was the fact that she did an awesome job providing the facts and quoting me accurately.  I’m proud to have been named and quoted in this article!

Whether you are in Minnesota or elsewhere, this is an article you should read!

Kudos to Alyson Cummings and MN Good Age on an excellent article on reverse mortgages!

© 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-YL

Related Articles:

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.

Live in & cash out, too – Thanks, MN Good Age

Cashing out in your home while living in itAlyson Cummings did a fantastic job on her article in the MN Good Age newspaper, “Live in & cash out, too.”  She had interviewed me a few months ago to learn about reverse mortgages for this article.  She said she couldn’t send me a copy prior to publication so I was nervous on whether she would provide accurate information or stick with the many misstatements that are usually in the media.  Or would she misquote me or print my comments out of context.

With excitement and apprehension I started reading the article the other day when I picked up a copy.  As I read I was pleased to see the acknowledgment and the many quotes.  What was even better was the fact that she did an awesome job providing the facts and quoting me accurately.  I’m proud to have been named and quoted in this article!

Whether you are in Minnesota or elsewhere, this is an article you should read!

Kudos to Alyson Cummings and MN Good Age on an excellent article on reverse mortgages!

© 2011 Beth Paterson http://bethsreversemortgageblog.wordpress.com 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/pxPEm-tv

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

We Are Not Chicken Littles - The Sky Is Not Falling on The Reverse Mortgage WorldWith 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.Sky is not falling on MN Reverse Mortgages SIDAC

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.

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

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-s1

Related Articles:

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.

Find security, control in retirement

MN senior couple who benefited from reverse mortgageIn retirement, top priorities are often estate planning, protecting investments and traveling. But large monthly home payments, high interest rates, foreclosures, home repairs and medical expenses can make doing those things difficult.

A solution to finance retirement, no matter one’s circumstances, may be a reverse mortgage.

A mortgage with special terms for homeowners 62 and older, a reverse mortgage has no income or credit score qualifications, and no monthly payment requirements, which offer many advantages for senior homeowners.

Recently, I worked with a couple in their 70s that needed some additional funds for home repairs, including a new energy efficient furnace. Anticipating future medical expenses, they liked that through a reverse mortgage they could get money for their immediate needs, eliminate their mortgage payment and still have funds for their future needs with a growing line of credit.

In a reverse mortgage, a homeowner still owns their home. Those who enter a reverse mortgage continue to be responsible for their taxes, homeowners insurance and maintenance of the property.

In a standard mortgage, homeowners have access to cash from the equity of their home, and also, when the home is sold any remaining equity goes to them or their estate.

In a reverse mortgage, residents also can borrow cash from the equity of their home, and often at interest rates lower than they would qualify for on a regular loan. They do not have to repay that loan until the home is no longer their primary residence.

When the resident is no longer living in the home, if there is any remaining equity, they will receive it just as in a standard mortgage. But if their loan balance is higher than the home can be sold for, there is no liability to them or their estate as long as they do not retain ownership of the home.

Generally, funds received through a reverse mortgage are considered tax-free (one should consult a tax advisor for their individual situation). Social Security and Medicare are also not affected and Medical Assistance and other public benefits can still be received.

Used reverse mortgage to vacation with daughterA single woman I worked with appreciated that the reverse mortgage was explained to her and her children so they could all understand the details.  With no restrictions on how the funds are used, after doing the reverse mortgage she got new windows and siding as well as took a vacation with her daughter.

Another couple I recently helped used their reverse mortgage to pay off their current mortgage and eliminate monthly payments. Not having to make payments, the husband was able to retire – a much awaited and deserved event at the age of 70.

A reverse mortgage has allowed thousands of Minnesota seniors to remain in their home with security, independence dignity and control no matter what their circumstances.

*** Written by Beth Paterson, MLO #342859, as Guest Colomist in The Edina Sun Current, Edina, MN Thursday, Feb. 3, 2011 www.minnlocal.com Sun Newspapers

© 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-oX

Related articles:

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.

Who Should You Believe About Reverse Mortgages?

Questioning Who To Believe About Reverse Mortgages?With the media publishing articles about reverse mortgages by so called reporters and comments by professionals (financial, CPA, attorney), legislators,  and the general public, everyone has an opinion about reverse mortgages.  The many articles that have surfaced about reverse mortgages including in MSNBC, Time Magazine, Parade Magazine, Consumer Reports, and the National Consumer Law Center Report all provide information trying to give the impression the reporters have done their research.

Unfortunately these so called reporters have NOT done their research and their articles are NOT based on facts of reverse mortgages. They don’t have documentation supporting their statements. If they had done their research and had the documentation to support their statements the articles would read much differently.  Consequently the articles misrepresent reverse mortgages and are painting negative images based on the so called reporters’ biased opinions which spread the misconceptions and  misunderstandings of reverse mortgages.

Even the articles that outline the facts have comments that reflect ignorance of reverse mortgages.  And the sad point is that people are believing these sources who don’t have the facts or take the time to get the facts.

Think about it.  Would you go to a plumber for health issues?  Of course not!  You go to a doctor.  And don’t you go to a specialist for the area of your concern, i.e. a heart specialist for heart disease?  So why go to the media, professionals, legislators or others instead of going to a reverse mortgage specialist for the facts on reverse mortgages?

Let me share 15 facts about reveres mortgages that are often misunderstood:

  1. A reverse mortgage is a mortgage just like any home equity loan where one uses the equity of the home but it has special terms for seniors 62 and older.
  2. The lender or bank does NOT own the home – YOU OWN THE HOME, you keep 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.
  3. There are no income or credit score requirements to qualify for the FHA Home Equity Conversion Mortgage (HECM). (Some proprietary jumbo reverse mortgages may have credit qualifications.)
  4. No monthly mortgage payments are required.
  5. There is no limitation on how the funds can be used.
  6. Offers more options – Funds can be received in monthly payments structured for life or as needed, line of credit (with a growth rate), lump sum, or a combination of these.
  7. Social Security and Medicare are not affected because it is a loan, not considered income.
  8. Medicaid (Medical Assistance (MA) in Minnesota) and other government benefits can still be received with the reverse mortgage.
  9. Borrowers can stay in the home as long as it is their primary residence or in the case of a couple as long as one borrower is still in the home as their primary residence.  The due date on the mortgage is the youngest borrower’s 150th birthday.
  10. At the time of sale if the home is sold for more than the loan balance, the borrower(s) or their heirs receive the difference.  The lender or bank does NOT keep the difference!
  11. The loan is non-recourse which means there is no personal liability to the borrower or their heirs if they are not retaining ownership.  So borrowers or their heirs don’t have to come up with the difference if the loan balance is higher than what the home is be sold for as long as they are not retaining ownership.  Borrowers are not leaving a debt to their children.
  12. As borrowers use the funds/equity and are not making monthly payments the loan balance increases meaning because they used the money now, there will be less available when the loan is being repaid.  (With a conventional mortgage one is using the equity but making monthly payments which repays the interest and a portion of the principal each month.)
  13. Fees are regulated and only HUD allowed fees are permitted with no mark-ups or junk fees.  Even though many times they are considered expensive or high they compare to conventional loans, in fact the difference comes down to the FHA Mortgage Insurance Premium.  You can see a comparison of the costs in my article, “Reverse Mortgage Costs – High or Mythical?” and “Do You Understand The Reverse Mortgage Closing Costs?
  14. FHA offers and insures through HUD the majority of reverse mortgages known as the Home Equity Conversion Mortgage or HECM, making it the most highly regulated mortgage available.   The advantages 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 adjustable rate; 5.56% on the fixed) compared to other mortgages.
    • Providing a line of credit growth rate (available only with reverse mortgages).
    • Insuring as a reverse mortgage it is a non-recourse (no personal liability) loan.
  15. The HECM borrowers are highly protected.  See my Blog article “You Need To know Reverse Mortgage Borrowers Are Highly Protected!

At Applicaiton Receive Reverse Mortgage Sample Closing DocumentsThese facts are all supported in the documents signed at application and at closing including the Important Terms and the Loan Agreement. With the reverse mortgage the sample closing documents are required to be provided to borrowers at the time of application so they have the opportunity to review, have their family and/or attorney review the documents before signing.  If they read them they will have the facts as outlined above.

One would think it is a simple answer to the question, “Who Should You Believe About Reverse Mortgages?”  However seeing the many articles along with the comments it appears people believe the wrong source.  So are you going to believe the media and non reverse mortgage professionals about reverse mortgages?  I encourage you to get the facts from a reverse mortgage specialist just as you get your health facts from the health care specialist.  Then decide if it is right for your situation.

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

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-n4

Related Articles:

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 Letter to Minnesota Governor Tim Pawlenty Regarding Reverse Mortgages

Emailing the MN Governor about reverse mortgage legislationFrom the time I first heard about the proposed reverse mortgage legislation in 2009, SF489, I have been writing to and in contact with MN Governor Pawlenty’s office.  This year even prior to having details of the bill I started contacting Governor Pawlenty’s office, sending emails regarding the suspected legislation.  After Friday evening May 14, 2010 when I finally found the details of the bill SF2430 I again sent Governor Pawlenty a message requesting a veto this time outlining with the details of the issues of the bill.  Following is the latest letter I sent to him requesting a veto.

Dear Governor Pawlenty,

After having time to review the reverse mortgage amendment to SF2430/HF2699 I want to provide the reasons why this reverse mortgage legislation should be vetoed.

Besides the facts I have pointed out previously:

  • This bill has not been transparent – the amendment was just added on the afternoon of May 14, 2010 with no prior knowledge of the details to those of us in the reverse mortgage industry.
  • This reverse mortgage legislation is controversial.  Any reverse mortgage legislation should not happen without a full hearing.
  • While it appears they pulled the language of suitability, this bill still contains some of the same language as the 2009 SF489/HF528 which was vetoed last year which would mean increased costs to reveres mortgage borrowers and/or cause some lenders to refrain from offering reverse mortgages in Minnesota.

The main issues include:

1.  Why should a lender receive a civil penalty an dhave to pay $1,000 for something a counselor does or doesn’t do?  Who and how is this going to be overseen?

 

The language of this is subjective setting up an opportunity for litigation and lenders may decide not to lend in the state if there is a risk of civil penalty for something they have no control over.

 

  • Implementing state laws that are different than the HUD requirements will make it more difficult for prospective borrowers to receive counseling.
    • Some of the counseling opportunities currently available to our Minnesota borrowers will no longer be an option as some of the counseling agencies may decide that with different regulations they will not provide counseling in the state.
  • Having the state oversee counseling different than the HUD requirements is likely to be costly for the state in seeing that these regulations are followed by counselors in the state as well as across the country.

2.  Adding the language for Lender default and forfeiture may mean lenders will choose not to loan with this requirement and HUD may choose not to insure the loans with these requirements.

3. Seven-day cooling off period; right of rescission will mean the loans will be more expensive for seniors and without the opportunity to waive the provision under certain circumstances such as foreclosure may mean that seniors could lose their home because the reverse mortgage could not be done timely.

 

 

  • It appears they changed the 10-day rescission period language to a seven-day cooling off period but it would have the same negative consequences as the 10-day rescission period.
  • Language is vague and subjective, i.e. “written commitment to make the reverse mortgage loan. “ What does “written commitment” mean?  This makes it more likely for litigation.

4.  This law would be additional costs to the state. While the bill may not be showing as a having a budget expenditure, there would be additional costs to the state in overseeing that state laws are followed versus the difference from the federal regulations.  If the loan becomes more expensive to seniors and/or lenders choose not to loan in the state more seniors are likely to lose their homes without the reverse mortgage option.  Consequently the foreclosures would increase and more housing would be needed for seniors and much of this would be born as state expense.

5.  All lenders do not have to abide by the state rules. Federal chartered banks do not have to abide by the state rules because they are federal chartered yet brokers and non-federal chartered banks and lenders would have to follow any state laws.  This would be a monopolistic-like advantage for the FDIC banks over other lenders. This obviously does not foster fair competition between all lenders and small business.

6.  Seniors can apply for and if they qualify can receive a conventional or home equity loan to refinance without all the regulations that are done with a reverse mortgage. Sometimes they may feel it is easier and less invasive to do so.  Unfortunately many who have taken a conventional or home equity loan run into problems making the required monthly payments then inquire about a reverse mortgage.  With the lower home values many times these seniors do not qualify for the reverse mortgage and then often face foreclosure and lose their homes.  Or they may just use credit cards to finance their retirement expenses then run into problems when they can’t make the payments.  There aren’t additional requirements for seniors to qualify for credit cards.  And there aren’t additional requirements for seniors to take out a car loan.  So why have such tight regulations on reverse mortgages when seniors can make other choices that could be more detrimental to them.

7.  Implementing this legislation is insulting to our seniors who have worked hard all of their lives – they are not children, they have lots of experience and knowledge – some that we could and should learn from – so why are we treating them like children?  They have the right to be educated on their options then decide what is right for their situation, not have legislators, counselors, or lenders make decisions for them.

Keep in mind that:  A reverse mortgage is a mortgage just like any other loan but has special terms for seniors 62 and older. And besides the special terms to benefit them to qualify and improve their life the reverse mortgage borrowers are already highly protected (see attached article)!  I would like to educate those making legislative decisions on the facts and terms of reverse mortgages then determine what legislation needs to be implemented for proprietary reverse mortgages.

Again, I ask that you veto the reverse mortgage legislation SF2430/HF2699 to protect Minnesota Seniors and the reverse mortgage businesses.

 

Thank you,

Beth Paterson
Executive Vice President
Prestige Mortgage LLC
Reverse Mortgages SIDAC
Security, Independence, Dignity and Control
The Experts Excelling In Service
Phone:  651-762-9648
Toll Free:  1-877-590-9648
Fax:  651-653-0878
Be sure to visit our website and
Blog for reverse mortgage facts and details:
www.RMSIDAC.com and
http://BethsReverseMortgageBlog.wordpress.com
Follow on http://Twitter.com/RMSIDAC

While Governor Pawlenty recognizes the issues as he stated in his 2009 veto letter, the unfortunate fact is that this legislation was not a stand alone bill but is attached to a foreclosure bill and without the line-item-veto authority may be signed into law.  If this is the case it will be very unfortunate for Minnesota seniors as well as the reverse mortgage industry.

© 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-k2

Related articles:

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.

Down To The Wire… The MN Reverse Mortgage Amendment Was Sneaked In and Likely To Have Negative Consequences For Seniors And Reverse Mortgage Businesses

Not disclosing any of the details before hand, the reverse mortgage amendment was added to bill SF2430/HF2699. Being passed in Congress we now hope to receive a veto from Governor Pawlenty to protect Minnesota Seniors and the reverse mortgage businesses.
I along with others have concerns about the bill:

  • This bill has not been transparent. While I have been inquiring and searching for information for months, I did not learn the bill number or the details of the bill until the evening of May 14th – just before the May 17th end of the 2010 legislation session.
  • This reverse mortgage legislation is controversial. Any reverse mortgage legislation should not happen without a full hearing. And without all of us impacted, especially brokers and lenders who are not federal chartered banks having an opportunity to see and address any proposed legislation.
  • This law would mean increased costs to reverse mortgage borrowers and/or cause some lenders to refrain from offering reverse mortgages in Minnesota. As with the 2009 SF489/HF528 bill which Governor Pawlenty vetoed last year this bill still contains some of the same language and would have the same impact.
  • Reverse Mortgage Borrowers are highly protected – why confuse the issue with state laws. Currently the only reverse mortgages available in Minnesota are the FHA insured Home Equity Conversion Mortgages or HECMs and these are highly protected and regulated by HUD. Visit my blog, “You Need To Know Reverse Mortgage Borrowers Are Highly Protected!” for details.
  • There are so many changes on the Federal level it would be a disservice to Minnesota seniors to implement state laws. The state would have to oversee any differences from federal regulations.
  • This law would be additional costs to the state. While the bill may not be showing as a having a budget expenditure, there would be additional costs to the state in overseeing that state laws are followed versus the difference of the federal regulations.  More seniors are likely to lose their homes without the reverse mortgage option.  Consequently the foreclosures would increase and more housing would be needed for seniors and much of this would be born as state expense.
  • All lenders do not have to abide by the state rules. Federal chartered banks do not have to abide by the state rules because they are federal chartered yet brokers and non-federal chartered banks and lenders would have to follow any state laws. As I sated in my blog, “Do You Know The Best Kept Reverse Mortgage Secret in Minnesota?,” this would be amonopolistic-like advantage for the FDIC banks over other lenders. This obviously does not foster fair competition between all lenders and small business.

If Govenor Pawlenty signs the SF2430/HF2699 bill into law there will be negative consequences to our Minnesota seniors as well as reverse mortgage brokers and lenders in Minnesota.

While some are claiming the changes made from the 2009 bill now has widespread support, those of us in the reverse mortgage industry have not had an opportunity to review or address this legislation – we are NOT supporting it.  Sneaking this legislation on at the last minute when it has not been transpartnet and is so controversial seems to me does not fit into the democratic consitution of our country or state.

I have asked that Governor Pawlenty veto the bill so we in the industry, who are senior advocates and would be directly impacted by the law chances, have the opportunity to review and address as well as write proposed legislation that will be in favor of protecting seniors as well as the reverse mortgage businesses.

Please join me in requesting Governor Pawlenty veto SF2430/HF2699 by sending him an email at tim.pawlenty@state.mn.us.  Use my above outlined issues as reasons for  your request for a veto.

Thank you for your assistance in protecting Minnesota seniors as well as revesre mortgage borrowers.

© 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-jJ

Related articles:

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.

Do You Know The Best Kept Reverse Mortgage Secret in Minnesota?

MN Reverse Mortgage LegislationDuring the 2009 Minnesota Legislation Session a reverse mortgage bill, SF489/HF528 was introduced and then passed by the Senate and House but eventually vetoed by Governor Tim Pawlenty.  During this session I was very involved in addressing my concerns as a reverse mortgage originator, processor and senior advocate, testifying against the bills at every hearing, writing to the Attorney General Lori Swanson, the authors of the bills, Senator Tarryl Clark and Representative Jim Davnie as well as Governor Pawlenty explaining the facts of reverse mortgages and the issues with the bill if signed into law.  Actually I was the only person who testified during this legislation that has actually originated and processed reverse mortgages.  The others who testified were all lobbyists, attorneys or had little knowledge and no experience with the details or originating reverse mortgages.

Some of the issues of the bill included a 10-day rescission period, originators determining suitability and cross-selling prohibition that those who do a reverse mortgage could not purchase insurance products within the 18 months after the reverse mortgage closing.

Governor Pawlenty’s veto letter stated that it is important that reverse mortgages continue to be offered in Minnesota and the legislation could have unintended consequences causing mortgage bankers to refrain from offering reverse mortgages.  He stated the suitability clause was poorly written and would cause litigation.  Governor Pawlenty encouraged the authors to rewrite legislation that protects seniors but does not limit the availability of reverse mortgages in Minnesota.

Early during the 2010 legislation session I heard through the grapevine that a FDIC bank was supporting and “pushing” a bill modeled after the California reverse mortgage law into this legislation session.  For months now I have been researching to find details about this potential legislation but to little avail.  While I was so involved during the 2009 legislation, and as an actual originator trying to educate the bill authors and legislators on reverse mortgages, the process and issues with their bill, I was not contacted by any of them to assist with any new legislation.

Last month the National Reverse Mortgage Lenders Association (NRMLA) stated that a senator was expected to add an amendment on reverse mortgages to a bill that was slated to pass.  My research has continued and  I have learned that, yes, the author of last year’s Senate bill is working on finding a bill to add the reverse mortgage amendment to but with no confirmation of which bill and/or the verbiage of the anticipated amendment.

MN Reverse Mortgage Best Kept SecretI have also learned that a FDIC bank is working on verbiage for the reverse mortgage amendment.  Not sure if this would be the same bill or two different bills.  For some undetermined reason this legislative act has taken on a shroud of secrecy.

My concern with this process and any amendment that may be added to legislation is that this is a very controversial issue that could impact those of us who are brokers or lenders that are not federal chartered banks. We are not on the same playing field – federal chartered banks do not have to abide by the state rules because they are federal chartered yet brokers and non-federal chartered banks and lenders would have to follow any state laws.

What does this mean?  If a 10-day rescission is implemented, the FDIC bank would still be working off the 3-day rescission; yet non-federal chartered banks and lenders would have to operate with the 10-day rescission.  The same is true for a suitability clause and for cross-selling.  This would be a monopolistic-like advantage over other lenders.  This obviously does not foster fair competition between all lenders and small business.  Is this the purpose of the FDIC Bank in supporting and pushing through legislation that they don’t even have to follow?  Is this for their gain rather than for the seniors?

Additionally this legislation has not been transparent. We have not been able to find out exactly what the legislation entails. From what I have heard there is potential that it could be similar to or even worse than last year’s legislation but this is being kept a secret.

I feel that any reverse mortgage legislation should not happen without a full hearing. And without all of us impacted, especially brokers and lenders who are not federal chartered banks having an opportunity to see and address any proposed legislation. Without disclosing the information and keeping this a secret and not consulting those who it will actually be impacting (i.e. the non-federal chartered bank originators who actually work in the field on a daily basis and with the seniors) it appears legislators are not looking at protecting seniors yet looking out for their own political gain.

When we are trying to help homeowners stay in their home, receive help with their mortgages and/or avoid foreclosure it would be a disservice to seniors to pass Minnesota reverse mortgage legislation at this time. Additionally at this time when there are so many changes on the federal level through HUD affecting reverse mortgages, it will be a disservice to Minnesota seniors to pass state legislation adding to the confusion of the product.

© 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-jg

Additional suggested reading:

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.

Basics of Reverse Mortgages – On The Radio

Reverse Mortgage MN on The RadioThis past week I had the pleasure of being a guest on the radio show, “The Unexpected Caregiver” hosted by Kari Berit.  We covered the basics of reverse mortgages to clarify the facts and share some stories of Minnesota reverse mortgage borrowers and how they have benefited from a reverse mortgage.  Rather than writing this blog post I thought I’d share the link to the show for your listening:  The Unexpected Caregiver – The Reverse Mortgage Basics with Beth Paterson – Part 1

Next week I will again be a guest on the radio show when we will cover the myths of reverse mortgages.  Be sure to come back and check out this show to learn more about reverse mortgages.

Kari was a great host and deligtful to work with.  In addition to Kari hosting the radio show she is an author, speaker and coach.  Her book, “The Unexpeccted Caregiver” is full of ideas and resources to use as a caregiver.   I love her book and highly recommend it.  You can find more information at her website, www.TheUnexpectedCaregiver.com

© 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-j0

Related articles:

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.