Why is There FHA Mortgage Insurance on Reverse Mortgages?

Mortgage insurance began in the United States in the 1880s but the industry first enjoyed major growth following the implosion of the 1920s real estate bubble. In the 1950s, Milwaukee lawyer Max H. Karl invented the modern form of private mortgage insurance, which helped to put home ownership within reach for millions of families. Private…


Reverse mortgages for purchase, – still a relatively new idea.

Do you have too much house? Are you considering downsizing but concerned about qualifying for a new mortgage? Perhaps a reverse mortgage for purchase may be a problem solver for you. Since 2008 a little known product called a reverse mortgage for purchase is available for people over 62 who wish to downsize to a…


MAKE PAYMENTS ON A REVERSE MORTGAGE? It’s not required but some people may want to…

  It’s not commonly done nor is a commonly known that you can make payments on reverse mortgages. It is acceptable to make payments on reverse mortgages and may make sense for you to do so for your future. HOW REVERSE MORTGAGES WORK: Reverse mortgages liquefy a portion of your homes equity creating increased cash…


4 Important Questions to Ask When Considering a Reverse Mortgage

Reverse mortgages have become an increasingly important financial tool for people 62 and older who want to remain in their home and fund their retirement. One half of all reverse mortgages were made in just the last couple of years. With over 78 million baby boomers approaching retirement, reverse mortgages are no longer mortgages of…

consumer financial protection bureau

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) is seeking information from consumers about their reverse mortgage experiences. They will use the information that is submitted to determine whether new regulations are needed and to inform their suggestions to Congress. If you have a reverse mortgage or considering a reverse mortgage, tell the CFPB what you think…


What Happens When My Reverse Mortgage Becomes Due? Settling your Loan Account

The National Reverse Mortgage Lenders Association has launched a borrowing with confidence campaign for reverse mortgage borrower. The association created a “Roadmap” for reverse mortgage borrowers and potential borrowers to guide them in the process. This month we will discuss what happens when your loan becomes due.

As a reverse mortgage borrower you are not required to make any monthly payments on your loan. The loan is paid off when you or your surviving spouse no longer resides in their house as their principle residence.

The reverse mortgage is a non-recourse loan, which means your heirs are not responsible for any remaining loan balance if the balance exceeds the value of your home. The mortgage insurance you pay to FHA will pay off the debt for you. Any remaining equity in your home is retained by your estate if they sell the home.

When a person on the reverse mortgage passes, the remaining spouse is responsible for informing the loan servicer. In addition the heirs must notify servicer, with all the borrowers have passed away within 30 days. Servicers do audit deaths of reverse mortgage borrowers. Any payments made to borrowers stop at this time. Interest on the reverse mortgage insurance premiums and homeowners insurance continue to whom tell after the reverse mortgage is settled. The servicer will notify the heirs that the reverse mortgage is now due and payable. The loan can be paid back of other resources or by selling the home. If there is balance from the home sale after the reverse mortgage is paid it belongs to the estate.

If all reverse mortgage borrowers on title sell the property, passed away, or do not maintain the property as their principal residence for a period exceeding 12 months, this is called a maturity event. A maturity event means the loan is due and payable. It is very important that your estate communicate with the servicer to ensure the loan is paid in a timely manner.

The estate will have six months to satisfy the debt. If the debt is not satisfied within six months, they may request to 90 day extensions. Again, it’s very important that your estate communicate with the servicer as to their intentions process of repaying the loan. If the estate is actively working to refinance your property or to sell it, they may be asked to provide documentation of the process.

You may want to print out a copy of this article and put it with your will or living trust. It might also be advisable to discuss it with the person or family member who will be in charge of settling your estate.

If you have any reverse mortgage questions, please call me, Angella 866-949-7030. Is my pleasure to be of service.


Creating Retirement Income with Reverse Mortgages

Who ever thought that it would make sense to get a mortgage that would decrease your home equity? Well in certain instances it does. Lending philosophies have changed over history and they will continue to change in the future.
Before the Federal Housing Administration (FHA) existed only 50% financing was available for an American to buy a home. FHA created the pathway to home ownership for low and middle income Americans.
FHA was created in 1934 when the housing industry was defunct. Americans didn’t own in those days they rented. The American dream to own a home was for many, just that a dream. FHA changed all that. The US government created FHA to help military families buy homes. They insured the financing which would have been other wise unattainable to those families. Starting in the 1950’s FHA made it possible for Middle America to become homeowners. This government program created the pathway for our housing market to grow and make it common place for home ownership. Currently, most every homeowner is financed through a private institution because FHA paved the way.
In the 1980’s Congress started to study reverse mortgages and their potential of helping the elderly in financing care and retirement. FHA began to insure reverse mortgages. In 1988 Fannie Mae announced its intention of purchasing reverse mortgages insured by FHA. Reverse mortgages like most programs started as a pilot program. FHA’s insurance assured these loan programs become successful. Now, as our society grows older, and we are living longer, a reverse mortgage can make the difference between getting older in poverty, just getting by or supplementing retirement income to make a more comfortable retirement lifestyle.
So why consider turning your equity into cash? Americans are not good savers. AARP says that a majority of Americans are counting on Social Security for most of their retirement income. The challenge is that Social Security’s intake will fall short of its expenses in 2017 by some estimates. This is the year when the first of the Boomers turn 70 and will be counting on Social Security to fund a majority of their retirement. Boomers haven’t saved enough money for retirement. What might make sense to supplement retirement income?
The largest asset that most Americans own is their home. The home they worked to pay off or near pay with years and years of payments. Why would a Reverse Mortgage make sense for a senior or a senior boomer in the future? Because it will make the difference between working part time to make ends meet or not, paying for medicine or medical care or not, paying for long term care or depending on the government for care or not. A Reverse Mortgage can make a difference in people’s lives. A Reverse Mortgage can create a life with the security of never losing their home, never making another house payment and creating retirement income they can count on.
When the “Silver Tsunami” hits I predict a paradigm shift in how we view our largest asset.
FHA has created paths for us in the past and I believe they have again now. I think you’ll see hybrid reverse mortgage products that will be designed to help fund our retirement. In Australia for example, you can attain a reverse mortgage on a commercial property. I think that a paradigm shift on how we can best use the largest asset that many Americans will own during their lifetimes is occuring. It is my belief that Reverse Mortgages will be as common and as important to the American retirement plan as the IRA or 401k.
Angella Conrard is a Reverse Mortgage Advisor and the President/Founder of the National Aging in Place Council – OC. For more information on current products visit her website www.reverse-your-mortgage.com. Or contact Angella Conrard directly at 1-866-949-7030.