Reverse Mortgages: a Surprise Source of Retirement Income

When today’s seniors were planning their retirement, few of them gave a thought to reverse mortgages. Most of them were confident that their pensions, or retirement savings plans, or even Social Security would carry them through their golden years. In the current economic climate, many retirees are finding it difficult to make ends meet, much less enjoy the leisurely lifestyle they had envisioned.

There is an increasing number of Silver Panthers working as greeters at Walmart. Many seniors who have not yet retired are postponing their departure from the workforce unless forced into retirement by increasing job layoffs. While the country teeters on the brink of the next Great Depression, the financial challenges of our senior citizens are obscured by the sheer number of other financial crises.

In 1961, a single act of kindness set a paradigm for an unlikely source of income for senior citizens. Nelson Haynes of Deering Savings & Loan (Portland, ME) made the first reverse mortgage loan to the widow of his high school football coach, and history was made.

What is a reverse mortgage? It is a loan available to seniors 62 and over. It basically taps into the equity in the house which is paid to the borrower in one lump sum, a line of credit or monthly payments. Repayment of the loan is deferred until the owner dies, the home is sold or the owner is forced to leave to be cared for in a nursing facility.

How does it work? The equity in the property is used as a basis to arrange cash payment to the owner. As with any loan, there are interest rates involved. These rates are usually based on the 1 year T-Bill and the rates adjust monthly, semi-annually or yearly. Changing rates do not affect the payment you receive, but do affect the amount you owe. Your heirs will only receive your home if the value is more than the amount you owe.

Contrary to popular belief, not all reverse mortgages are adjustable rate. The fixed rate reverse mortgages, though, require that payout is made in a single payment. There are pros and cons to both fixed and adjustable rate reverse mortgages. You need to consult with your banking professional to find out which loan is right for you.

Independence Housing Group, LLC

Construction Bridge Loans in Maryland

721 Main Street, Suite 100,
Stevensvillem, MD, 21666

443-249-3664
Toll-Free (877) 90-NewHome
(877) 906-3946
443-249-3666 FAX

Email us: Info@independencehousing.com

There is No Reason to Lose Your Home If You Are 62 Years Old and Have Sufficient Equity

Article by John Bodecker, Reverse Mortgages Montgomery County Md

Every week I see seniors who are falling behind the eight ball for various heart breaking reasons. Many of these seniors should not be losing their homes or near losing their homes. I met a 68 year old man a few weeks ago who lost his beloved wife to cancer. She had been suffering for over seven years and passed away in February. The man told me that the cancer cost him over $30,000 per year out of pocket because the insurance didn't cover all the costs - he had paid over $200,000 dollars in medical bills by refinancing his home while she was sick over the years and his house is currently only worth around $220,000.

His local bank referred him to me for a reverse refinance. My heart went out to him because he did the honorable thing to try pay bills while caregiving for his wife. To add to the pain, he lost her social security of $1,200 dollars per month after she died and now has a mortgage payment and expenses he cannot afford.

I wish I had met him a few years ago before he refinanced the house and incurred a mortgage payment he cannot make. A few years ago, when the house was free and clear, he could have refinanced with a reverse mortgage and could have received a line of credit to pay bills - and now would have no mortgage payment. He did not know about the loan then; and now, I can't help him because he lacks the equity. All he can do is to try for a loan modification and rent out a room in his home and hope the market comes back in a few years to acquire more equity.

This wonderful man and I talked about other options going into his future. He told me that government jobs were coming to his area and government workers would be buying homes. I told him once his home appreciates and he could pull out $60,000, he could sell his home and purchase a new home with the new Home Equity Conversion Mortgage Reverse for Purchase loan. This is a loan that Congress passed in February 2009 to help seniors afford homes with no monthly payments - Income and credit are not important.

The way the loan works is, if he puts down $60,000 as a down payment, the lender/FHA would lend him a matching loan/contribution of approximately $75,000. (Depending on his age, down payment and the purchase price). Then, he would be able to purchase a condo that he is looking at out of state for $135,000 and have no monthly payment until he dies, sells, or moves. He would have title to the property and could not be forced to move even if he stripped the equity and his home went backwards in value. The FHA Reverse for Purchase has many safe guidelines in place for seniors.

I believe this genuine man will pull out of his predicament because he is a survivor. But, I become upset when I realize how his life could have been a little easier if he had been advised sooner about loans for seniors. More education is needed so elderly people can make decisions that alleviate their financial burdens. It's enough grief and hardship to lose a loved one - but the added financial burden can leave the vulnerable widow or widower to the mercy of the banks. I know this because I also lost a spouse to cancer and was left with debt.

Independence Housing Group, LLC

Construction Bridge Loans in Maryland

721 Main Street, Suite 100,
Stevensvillem, MD, 21666

443-249-3664
Toll-Free (877) 90-NewHome
(877) 906-3946
443-249-3666 FAX

Email us: Info@independencehousing.com

State of Maryland Reverse Mortgage Guidance Advisory

January 12, 2010
REVERSE MORTGAGE GUIDANCE ADVISORY
Background
On December 16, 2009, the Federal Financial Institutions Examination Council ("FFIEC") published in the Federal Register the proposed guidance Reverse Mortgage Products: Guidance for Managing Compliance and Reputation Risk (the "Guidance").

Reverse mortgages are complex loans secured by the borrower's home and are offered to borrowers who typically have limited income. A reverse mortgage may provide the only funds available to a consumer to pay for health care needs and other living expenses. Accordingly, lenders offering reverse mortgages must institute controls to protect consumers and minimize compliance and reputation risks to the institutions themselves.

The Guidance is intended to be used by financial institutions offering reverse mortgages to ensure that their risk management and consumer protection practices adequately address the compliance and reputation risks raised by reverse mortgage lending. It addresses policies, procedures, internal controls and third party risk management practices associated with offering both HECM and proprietary reverse mortgage products.

Although the Guidance is not yet final, the Commissioner strongly encourages Maryland lenders offering, or considering offering, reverse mortgage products to review the Guidance to help ensure that they have appropriate risk management and consumer protection policies and practices in place. View the Guidance.

Summary

Highlights of the Guidance include that:

Consumers receive clear and balanced information about the relative benefits and risks of reverse mortgage products, at a time that will help consumers' decision making processes.
Institutions offering proprietary reverse mortgage products follow or adopt relevant Home Equity Conversion ("HECM") requirements for mandatory counseling, disclosures, restrictions on cross-selling of ancillary products and reliable appraisals.

Institutions offering either HECMs or proprietary reverse mortgages develop clear and balanced product descriptions and make them available to consumers shopping for a mortgage.

Institutions making, purchasing or servicing reverse mortgages through a third party conduct due diligence and establish third party relationships and compensation.

Institutions offering reverse mortgage products ensure that they do so in a manner that complies with all applicable laws including, but not limited to, Truth in Lending Act, Real Estate Settlement Procedures Act, Equal Credit Opportunity Act and Fair Housing Act. Institutions should also be aware that state laws, especially those that prohibit unfair and deceptive practices may also apply to reverse mortgage transactions.

The above highlights are not intended to cover all aspects of the Guidance and, as noted above, we recommend that you review the Guidance in its entirety.

Independence Housing Group, LLC

Construction Bridge Loans in Maryland

721 Main Street, Suite 100,
Stevensvillem, MD, 21666

443-249-3664
Toll-Free (877) 90-NewHome
(877) 906-3946
443-249-3666 FAX

Email us: Info@independencehousing.com

Reverse Mortgage Myths in Maryland

Reverse Mortgage Myths: Independence Housing Group Information from M&T Bank - Reverse Mortgage Myths & Truths. Below are some of the most common reverse mortgages myths. Simply click on the myth and you will be directed to the appropriate truth. You can also scroll down all the myths and truths below. Myth: “The bank will assume ownership of my home if I get a reverse mortgage.” Myth: “I can’t qualify for a reverse mortgage if I have an existing mortgage, or other real estate secured debt.” Myth: “A reverse mortgage is for desperate people who have little income.” Myth: “I could get forced out of my home.” Myth: “I have to have good credit score to qualify for a reverse mortgage.” Myth: “There are big out-of-pocket expenses.” Myth: “Having a reverse mortgage will require that I make monthly payments.” Myth: “My heirs won't inherit my home.” Myth: “My Medicare and Social Security benefits will be affected by a reverse mortgage.” Myth: “I’ll have to pay taxes on the money I receive from a reverse mortgage.” Myth: “A reverse mortgage is similar to a home equity loan.” Myth: “The bank will assume ownership of my home if I get a reverse mortgage.” Truth: FALSE. The borrower retains title to the property. The reverse mortgage lender is merely extending a loan to the borrower secured by the home / property. Because ownership of the home is retained, the borrower is responsible for the payment of property taxes, insurance and home maintenance. -Back To Top- Myth: “I can’t qualify for a reverse mortgage if I have an existing mortgage, or other real estate secured debt.”  Truth: FALSE. Even if you have an outstanding first mortgage, or some other real estate liens (i.e. a home equity loan, tax lien, etc.), you still may qualify for a reverse mortgage. The proceeds of the reverse mortgage must first be used to pay off such debts however. This is a significant benefit as many borrowers use a reverse mortgage loan simply to eliminate their mortgage or home equity loan payments. -Back To Top- Myth: “A reverse mortgage is for desperate people who have little income.” Truth: FALSE. M&T’s reverse mortgage is a valuable tool that’s been used by homeowners in a variety of situations to enhance their quality of life and better manage their assets. -Back To Top- Myth: “I could get forced out of my home.”  Truth: FALSE. FHA/HUD reverse mortgages specifically state that you cannot be forced out of your home. The only requirements of a reverse mortgage are that you continue to keep your home as your primary residence, in a good state of repair, with property taxes paid and insurance coverage in place. -Back To Top- Myth: “I have to have a good credit score to qualify for a reverse mortgage.”  Truth: FALSE. A reverse mortgage has no credit score requirements. To qualify, homeowners must have sufficient home equity, be at least 62 years of age and use an eligible property as their primary residence. -Back To Top- Myth: “There are big out-of-pocket expenses.”  Truth: FALSE. Reverse mortgage closing costs can be financed, as a result, “up-front” funds are not required. -Back To Top- Myth: “Having a reverse mortgage will require I make monthly payments.”  Truth: FALSE. You are not required to make monthly payments on your reverse mortgage. When you sell your home, when it is no longer your primary residence, or when your estate is settled, the loan must then be repaid. -Back To Top- Myth: “My heirs won't inherit my home.”  Truth: FALSE. Your estate will only owe the balance of the reverse mortgage. If, for example, you obtained a reverse mortgage and owed $25,000 after 5 years, then decided to sell the house for $200,000, the lender would be repaid the $25,000 and you or your heirs would receive $175,000. -Back To Top- Myth: “My Medicare and Social Security benefits will be affected by a reverse mortgage.”  Truth: FALSE. Reverse mortgage payments should not affect Medicare or Social Security benefits. Additionally, reverse mortgage payments should not affect Social Security Income (SSI) benefits or eligibility as long as any reverse mortgage advances are spent within the month they are received (Consult your Social Security, Medicare or other financial advisor to determine how reverse mortgage payments may affect your particular situation). -Back To Top- Myth: “I’ll have to pay taxes on the money I receive from a reverse mortgage.”  Truth: FALSE. Reverse mortgage funds are considered loan proceeds and are therefore not taxable income. (Consult your tax advisor). -Back To Top- Myth: “A reverse mortgage is similar to a home equity loan.”  Truth: FALSE. Home equity loans have qualifying requirements relative to credit score that a reverse mortgage does not. Also, a home equity loan will require that you make regular monthly payments. -Back To Top-

Reverse Mortgage Consultation in Maryland

Independence Housing Group is able to facilitate the closing of your non-compliant FHA Reverse Mortgage deals.  We are a private company that can allow your client to age in place.  Do any of the following apply to your current files?

• Appraisal to low
• Appraisal was rejected due to FHA minimum requirements
• Appraiser says home is to dilapidated
• FHA repair requirements exceed allowable escrow
• Client does not have enough equity for escrow

Then IHG can help you move those files from your desk or trash can to the closing table through our turn key rehab solutions.  Every deal is different but normally IHG is able to allow your clients to:

• Age in place
• Have pride in their home
• Live the way they always wanted
• Increase their standard of living

So please contact me today to schedule a corporate presentation for your office or just you.  We would like to teach you, your loan officers and your support staff:

• How to close more deals
• Assist more people
• Earn more money
• Receive referrals

Independence Housing Group, LLC

Construction Bridge Loans in Maryland

721 Main Street, Suite 100,
Stevensvillem, MD, 21666

443-249-3664
Toll-Free (877) 90-NewHome
(877) 906-3946
443-249-3666 FAX

Email us: Info@independencehousing.com

About Independence Housing Group in Maryland

About: Independence Housing Group Independence Housing Group, LLC (IHG) was founded in the fall of 2008 by Maryland native Dudley Dixon, Jr. The founder and his team bring more than 50 years of experience in the residential home construction, mortgage lending, and real estate industries. The entire IHG Team is family oriented and realizes the importance of taking care of those who took care of us - The Great Generation.0 Their combined expertise and professional know-how allows them to take each project from concept to successful completion to give each senior customer the safe, well-built, comfortable home they deserve. IHG provides a unique solution for seniors to achieve a reverse mortgage when they have little to no other options. Our solution is a turnkey product and the senior is provided with a no risk plan to facilitate the completion of their reverse mortgage. That being said a proposal from IHG will not consist of a line by line quote pricing out each and every aspect of the job, however it will reflect the scope of work IHG will complete and a total amount for the complete service. IHG is not just a General Contractor; we are a provider of solution based bridge financing for non-compliant FHA reverse mortgage properties. IHG has to burden costs for legal, title, permitting, financing, interest, supervision and any hidden pitfalls that may arise during a particular deal. Every IHG solution provides security to a senior because we are an at risk stipulated sum contractor who can self finance all of our own projects.	Success In Action           Learn more about Reverse Mortgage for Seniors