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Posts Tagged ‘reverse mortgage industry’
Friday, October 23rd, 2009
 The government’s $8,000 tax credit to new homebuyers has been under a lot of scrutiny in recent months. The tax credit was designed to help stimulate the housing market and lead to increased home ownership. To that end, it has been extremely successful. However, abuses within the system appear to have also been quite high. While the reverse mortgage industry found itself under scrutiny for what appear to be under about a dozen complaints, the federal government has started 167 criminal investigations and 107,000 civil investigations into possible fraud. Of the 1.4 million people who claimed the over 10 billion dollars in tax credits in 2008-2009, 60% had incomes under $50,000– leading to questions as to whether they could even afford a home.
The new homebuyer tax credit has certainly had many positive effects. Of the 1.4 million home sales, 350,000 to 400,000 were estimated to be a direct result of the credit’s availability. That accounts for 25-30% of the eligible home sales. In some areas, real estate agents have reported that up to 70% of their clients were considering buying a home as a direct result of the tax credit. With sales of existing homes at their highest level in two years, many are attributing the strong numbers to the tax credit, which expires November 30. Sales increased 9.4% in September according to the National Association of Realtors.
So which is it? It seems that the tax credit likely has had a positive effect on the market. However, the rock-bottom prices and increased inventory have also likely contributed to many first-time buyers choosing to enter the market. The increase in first-time homebuyers is a good sign for the real estate industry, but it is still a disconcerting one. If 60% of the 1.4 million people who claimed the tax credit from 2008-2009 had incomes of under $50,000, could they really afford to own a home? Will we see another foreclosure crisis within the mortgage industry down the line as these homebuyers are faced with rising rates or declining incomes? The answer to these questions remains to be seen.
While the pros of the tax credit may outweigh the cons, with the damage to the real estate industry wiping out the savings of many throughout the country, if the credit is extended, it should be done so with caution. While the image of every American owning a home is a promising one, the government has an obligation to ensure that those owning homes can actually afford to do so. Otherwise, history is at risk of repeating itself.
Sources: The New York Times: Home Tax Credit Audit Shows Abuses
The New York Times: Tax Credit Lifts Home Sales to Two-Year High
The Associated Press: Northeast Home Resales Post 11 Pct Annual Increase
Tags: first-time homebuyers tax credit, foreclosure, fraud, government, home sales, homebuyer, housing market, Mortgage, mortgages, new homebuyers, real estate, reverse mortgage, reverse mortgage industry, reverse mortgages, tax credit
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Tuesday, September 22nd, 2009
 Reverse Mortgage Guides is pleased to announce the launch of a new section of the site entitled, “Tools for Lenders.” The Tools for Lenders section includes tools for reverse mortgage lenders and loan officers, as well as for those wishing to enter the reverse mortgage industry. Some features include:
- a free downloadable reverse mortgage calculator
- a reverse mortgage industry job board
- a link to the industry news section of Reverse Mortgage News
- an article with advice on how to get started in the reverse mortgage industry
We expect the section to continue to grow in the future, and welcome feedback as to what you would like to see in the section. In addition, we have decided to open the section to advertising. If you are interested in advertising within the lender section, contact reva.minkoff (at) reversemortgageguides.org.
A link to the section can be found in the footer of nearly any page on Reverse Mortgage Guides.
Tags: advertising, job board, lender, lenders, reverse mortgage, reverse mortgage calculator, reverse mortgage guides, reverse mortgage industry, reverse mortgage job, reverse mortgage jobs, Reverse Mortgage News, reverse mortgages
Posted in Industry News | No Comments »
Monday, July 27th, 2009
 Wilmington Savings Fund Society (WSFS), FSB announced earlier today that effective today they will begin winding down 1st Reverse Mortgage Company’s operations. Starting on July 31st, 1st Reverse will no longer accept any new applications. They remain committed to completing all loans currently in the pipeline (or in the pipeline by July 31st). This includes processing, underwriting and funding the loans.
The news about 1st Reverse Mortgage is slightly disconcerting in light of Senior Lending Network folding earlier this month. While 1st Reverse was not as large of a player as Senior Lending Network, it did complete a significant volume of loans. Although the time seems ripe for the reverse mortgage industry to grow and prosper, the folding of these companies lends some support to the argument that the problems in the real estate market are negatively impacting the reverse mortgage industry, rather than providing the industry with enough business to flourish despite the economy.
Tags: 1st Reverse Mortgage, economy, real estate market, reverse mortgage, reverse mortgage industry, Senior Lending Network, Wilmington Savings Fund Society, WSFS
Posted in Industry News | No Comments »
Monday, June 29th, 2009
 The New York Times featured an article on the HECM for Purchase Program. Friday featured a welcome piece of publicity for the reverse mortgage industry: Bob Tedeschi’s mortgage column in The New York Times was about the HECM for Purchase Program. Now that the new underwriting procedures for HECM for Purchase loans have been laid out in a recent HUD mortgagee letter, HECM for purchase loans are beginning to close. However, as the article points out, New York has not been well represented in that mix due to the fact that HECM for Purchases cannot currently be used to purchase a co-op.
The column mentions the high fees associated with the loan. Taxes are higher in NY than in most other states, so that does not help. The column also points out that the HECM for Purchase program is probably not a good idea should one intend to move again within 2-3 years. And, while Tedeschi cited the importance of reverse mortgage counseling, he also pointed out that the quality of counseling can vary, steering prospective borrowers towards those who have past HUD’s certification test.
All in all, though the column could probably be a little clearer, it hopefully will serve as a good step in educating prospective buyers about the HECM for Purchase program. And, afterall, there is a saying, “There is no such thing as bad publicity.”
Tags: counseling, hecm, HECM for purchase, loans, New York Times, NYTimes, reverse mortgage, reverse mortgage industry, reverse mortgages
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Tuesday, June 16th, 2009
 When members of the reverse mortgage industry talk about cross-selling and when prospective borrowers approach a reverse mortgage, they often talk about “long term care insurance.” Long term care insurance is a product that is completely separate from a reverse mortgage in which borrowers pay premiums in order to hopefully receive coverage/reimbursement to pay for long term care, should they need it. Long term care would include things like a stay in a nursing home or an attendant to help a senior bathe and dress. It appears extremely difficult to find information on the exact way these programs work in an objective manner online. From all the chatter it should come as no surprise that at a Senate hearing today lawmakers and watchdog groups cautioned that more consumer protections are needed.
Some of the concerns about long term care policies include that there is no guarantee that a policy purchased today (or 10 years ago) will still meet the needs of the client in 20 or 30 years (people are often advised to buy long term care insurance when they are still in mid-life, before they need it). Since some private long term care insurers are partnering with Medicaid, consumer protections become more dire because at least 30 states will soon have programs to encourage middle-income residents to acquire long term care. Among the desired protections are ensuring that the premiums do not increase too dramatically, that complaints are addressed in a timely fashion, and that insurance agents are trained. Consumers are urged to educate themselves about the fee increases in their policy, the events that will activate it, and how they will be protected against inflation.
Finally, as is true with reverse mortgages, many other products can prove to be viable options for those exploring long term care insurance, including mutual funds, investments, and, in some cases, even reverse mortgages.
Tags: consumer protection, consumer protections, insurance, long term care, long term care insurance, Medicaid, premiums, reverse mortgage, reverse mortgage industry, reverse mortgages, Senate
Posted in Consumer News | No Comments »
Friday, June 12th, 2009
 The US Department of Housing and Urban Development (HUD) released a new Mortgagee Letter 2009-19 on Friday afternoon, detailing new changes in the condominium approval process. The letter covers the two processing options for condominiums: HUD Review and Approval Process (HRAP) and the Direct Lender Review and Approval Process (DELRAP). The letter can be found at: 09-19ml.
Check back next week for more information.
Tags: condo, condominium, DELRAP, Direct Lender, HRAP, HUD, mortgagee letter, reverse mortgage, reverse mortgage industry, reverse mortgages
Posted in Industry News | No Comments »
Thursday, June 11th, 2009
 The Wall Street Journal released the results of their monthly forecasting survey of economists. Of interest to the reverse mortgage industry: the economists expect housing prices to continue to decline. Even more worrisome, they expect the 10-year treasury bond, one of the factors upon which the CMT HECM interest rate is based, to nearly double to 4.40 by December 2010. Housing starts are also expected to be a low value this year. The majority of respondants don’t expect the Case-Schiller index to rise until Q1 or Q2 of 2010. Yet, there appears to be a discontinuity between the expected performance of the economy and the expected performance of the housing market. In other words, 92% of the economists believe the economy can sustain a recovery while housing prices are still falling, and given that many see the recession ending soon, it seems like they predict that will be the case.
While predictions are nothing but predictions, a severly increased 10-year treasury bond rate and falling home prices would not be good for the reverse mortgage industry, disqualifying more customers and reducing the amount borrowers are able to receive for their homes. All that can be done now is to wait…
Tags: case-schiller index, economic, economic forecasting, economist, economists, home price, home prices, housing market, interest rate, predictions, reverse mortgage, reverse mortgage industry, reverse mortgages
Posted in Industry News | No Comments »
Wednesday, June 10th, 2009
 The reverse mortgage industry received a pleasant surprise this morning when the Wall Street Journal wrote a big feature on reverse mortgages on the front page of the personal journal section. While much of the article explains what reverse mortgages are and how they work, an interesting piece for lenders is the section on how much money the FHA has lost through reverse mortgages. HUD asked for $800 million taxpayer dollars to boost its loan-loss reserves as housing prices continue to decline. Jeff Lewis, the chairman of Generation Mortgage, mentioned that about 1/3 of the borrowers who might have closed reverse mortgages two years ago would no longer qualify today due to the declining home values. Perhaps in connection with this, the article mentions how sudden pricing changes by Fannie Mae have recently disrupted some reverse mortgage transactions, as borrowers realize they will qualify for less money at closing than they did when they began the application process, sometimes even having a shortfall.
The stresses on the industry are noteworthy, especially as interest in HECMs increases. The number of reverse mortgages being closed has proliferated in recent months, yet housing values do continue to decline. Hopefully these financial considerations will not too greatly imperil the government programs.
Tags: fannie mae, financial considerations, generation mortgage, HECMs, housing prices, HUD, reverse mortgage, reverse mortgage industry, reverse mortgages, Wall Street Jounral, Wall Street Journal, WSJ
Posted in Consumer News, Industry News | No Comments »
Friday, May 22nd, 2009
 Minnesota Governor Tim Pawlenty Minnesota Governor Tim Pawlenty vetoed the SF 489 on Thursday, the Reverse Mortgage legislation that was being debated in the state legislature there. Pawlenty wrote that while he agreed with the goal of the legislation, it might have the unintended consequence of making reverse mortgages less available in the state of Minnesota and increasing the costs. Governor Pawlenty also felt that the suitability criteria as defined in the bill was too vague, and asked the bill’s authors for greater specification in order to avoid unnecessary litigation.
The vetoing of the bill is a positive step, avoiding vague legislation, and helping to ensure that the goal of protecting consumers does not prevent the product from being available or accessible. In addition, Governor Pawlenty’s acknowledgement of the many benefits of a reverse mortgage and support of the product are other positive signs for the reverse mortgage industry.
Tags: bill, Governor Pawlenty, Minnesota, reverse mortgage, reverse mortgage industry, reverse mortgage legislation, reverse mortgages, state legislation, Tim Pawlenty, veto
Posted in Consumer News, Industry News | No Comments »
Monday, April 13th, 2009
 Last week, NRMLA (National Reverse Mortgage Lenders Association) announced that it is planning on offering a new designation for Certified Reverse Mortgage Professional/Loan Originators. To receive the credential, candidates will need to have at least 2 years of experience, closed over 50 loans, take 12 hours of classes, and pass a background check before they can even take the exam.
NRMLA cites the certification as an important step towards protecting consumers in reverse mortgage transactions. However given the size of the reverse mortgage market, it seems likely that the designation will be more easily available to those from larger firms and to those who specialize in reverse mortgages.
While there is clearly an advantage to specializing in reverse mortgages, there are many small lenders and independent loan officers. Although the designation is a useful step to help enfranchise consumers and ensure quality, the certificate should be available to dilligent and experienced officers at all firms– not just those that conduct the largest volume of reverse mortgages and have the largest amount of resources.
Tags: banks, certification, lenders, loan officers, loan originators, National Reverse Mortgage Lenders Association, NRMLA, reverse mortgage, reverse mortgage industry, reverse mortgage lenders, reverse mortgages
Posted in Industry News | No Comments »
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The government’s $8,000 tax credit to new homebuyers has been under a lot of scrutiny in recent months. The tax credit was designed to help stimulate the housing market and lead to increased home ownership. To that end, it has been extremely successful. However, abuses within the system appear to have also been quite high. While the reverse mortgage industry found itself under scrutiny for what appear to be under about a dozen complaints, the federal government has started 167 criminal investigations and 107,000 civil investigations into possible fraud. Of the 1.4 million people who claimed the over 10 billion dollars in tax credits in 2008-2009, 60% had incomes under $50,000– leading to questions as to whether they could even afford a home.
