7 Warning Signs of A Bad Reverse Mortgage Officer

As in any industry, there are good reverse mortgage officers and not so good reverse mortgage officers. The following are some ways to help separate the good from the bad.

1. Does Not Return Phone Calls– Communication is an important part of the relationship between a reverse mortgage officer and their client. The process is not always straight-forward, and the borrower may have questions along the way. Therefore if the reverse mortgage officer regularly does not return calls or does not return calls for long periods of time, it may be time to look elsewhere.

2. Unavailable – In the same vein as #1, if a reverse mortgage officer is continually unavailable, it is hard to complete a reverse mortgage transaction. If the borrower wants to meet with the reverse mortgage officer or has a question for them, the borrower should be able to reach them. If they continually can’t, it may be time for the borrower to find a reverse mortgage officer they can talk to.

3. Part-time Gig – While economic times have meant that people may be trying to add extra jobs to make up for a loss of income, the point that your loan officer is more likely to pay more attention to your case and do a better job on the file if getting dinner on the table is on the line is a valid one. Especially if your reverse mortgage officer has another job in a completely unrelated field, you may want to find one who specializes in their trade and can give your file the attention it needs… full-time.

4. Weary Traveler – Although economic times have led more people to switch jobs recently than they may have liked, be wary of a reverse mortgage officer who has switched companies extensively over the course of their career. There may be a reason why.

5. Inconsistent Answers/Unknowledgable – Reverse mortgages may not be the most basic product on the market, but a good reverse mortgage officer should be able to answer most questions you may have and know where to go to get the answers to the rest. Beware of reverse mortgage officers who change their answers or are inconsistent. Also beware if there are many questions that they cannot answer. And while most states require loan officers to be certified, if a borrower is suspicious they can always check to make sure their officer is licensed.

6. Pushy or Impatient– A reverse mortgage is a significant financial decision, so beware of reverse mortgage officers who try to push the decision on the borrower or hurry the borrower through the process. The loan officer should make sure that the borrower is comfortable with the process. If the borrower feels uncomfortable, they might want to seek out a reverse mortgage officer who will make them feel more so.

7. Behavior problems– See if any complaints are on file against your reverse mortgage officer or their company. If there are, borrowers might want to receive an explanation and possibly a different officer to work with.

Thanks to 6 Signs of a Crummy Real Estate Agent for inspiration.

Rethinking Accessibility and Aging in Place: Part 2

Another component to aging in place safely is safe driving. Many suburbs and rural areas are not easily navigatable without the ability to drive. This means that when seniors lose their mobility and/or ability to drive safely, many of them are forced to move out of their homes. Other times, seniors who choose to stay become a part of a “homebound elderly” population, which does not make aging easy.

In the last week or so, AAA has announced a number of resources to help senior drivers stay safe on the roads. Programs like Carfit help ensure that senior’s cars are safe so that they are less likely to be killed in a crash. Drivesharp, one of the newest AAA offerings, is a computer software program that strengthens the brain’s ability to process what drivers see, so that they can focus better, keep track of more on the road, and react faster when driving. Many of these problems are more likely to plague seniors, and improvements in visual processing decrease crash risk. Roadside Review and I Drive Safely’s Mature Drivers Course are two other examples of programs targetted towards helping senior drivers improve their skills and abilities so that they can stay on the road longer, prolonging their ability to remain in their home.

For more information, visit www.aaa.com or www.aaaseniors.com.

This Week’s Reverse Mortgage Rates: July 21, 2009

This week’s reverse mortgage rates are below. These rates are effective for the week beginning July 21, 2009.

APR:

HECM CMT 300: 3.48

HECM CMT 325: 3.73

HECM CMT 350: 3.98

HECM LIBOR 250: 2.786

HECM LIBOR 275: 3.036

HECM LIBOR 300: 3.286

Expected Rates:

HECM CMT 300: 6.55

HECM CMT 325: 6.80

HECM CMT 350: 7.05

HECM LIBOR 250: 6.21

HECM LIBOR 275: 6.46

HECM LIBOR 300: 6.71

Expected rates for the HECM LIBOR and HECM CMT rose dramatically this week, increasing by over a tenth of a point for each. This occured despite the fact that the APR for the LIBOR declined.

Rethinking Accessibility and Aging in Place

A kitchen in a universally accessible home.

Aging in place is a goal of many seniors, for good reason. A reverse mortgage is one product that can help seniors remain in their homes, but if mobility concerns are an issue in a house that is not senior-friendly, aging in place can still be difficult. Now, some recent developments have come together nicely to make aging in place a little easier:

Suffolk County in Long Island, NY recently ammended its housing code to state that any affordable housing built with county funds must incorporate accessible design. Such design concepts include no-step entryways, 36 inch doorways and passageways, and an area in showers for grab bars. Other mentioned features include homes with elevators already built-in and doors that open with levers, not knobs.

While accessible design can help people of all ages in cases of accident, disability, or injury, it is an especially important issue within the senior community. If a property is built in a universally accessible manner, it is less likely that a senior would be unable to live there as they get older. According to Judy Pannullo, Executive Director of the Suffolk Community Council, it costs only $700 more to build a house with universal design principals, though the cost of renovating an existing home to conform can be much higher.

Finally, programs such as the HECM for Purchase program make it easier for seniors to purchase new homes, including those that might be more accessible than their previous homes. The HECM for Purchase program allows seniors to buy a new home providing only a down payment and paying for the rest using the home’s existing equity. As a result, they have no mortgage payments during their time in the home.

New Housing Starts See Unexpected Jump in June

More people are starting to build new homes again, or at least, that’s what the numbers from the unexpected rise in housing starts in June appear to show. The number of housing starts rose 3.6% (or about 20,000 seasonally adjusted starts) to 582,000 units. Even larger leaps were seen in the number of housing starts of single family homes (14.4%) and the number of permits to break ground (8.7%). Analysts had expected these values to remain unchanged from previous months.

While the number of housing starts and permits to break ground are still down around 50% from a year ago, the increase is still a sign of progress. It seems that few aspects of the real estate industry have defied analyst’s expectations recently, and the large unexpected jumps are a definite exception. Although one wonders slightly whether developers will be able to fill all their new properties, it is good to see people building homes again. Perhaps once the new properties are completed, the worst of the recession will be over.

Reverse Mortgage Glossary – Part 2

Part of 2 of our reverse mortgage glossary, focusing on the second half of the alphabet of some basic reverse mortgage terms. Early posts will focus on terms for beginners, but later posts will become more advanced. The glossary will then be posted on our website.

Mortgage Terminology Part 2:

Mortgage Servicer – handles reverse mortgage after it is closed; esnures terms of reverse mortgage are kept by both sides.

Principal Limit- The total loan proceeds available at origination from the reverse mortgage.

Principal Residence – The dwelling where the borrower maintains his or her permanent place of abode and spends the majority of the calendar year. The borrower may have only one Principal Residence at a time.

Processor – Person that handles reverse mortgage process between time of application and closing.

Refinance – the process of paying off one loan with the proceeds from a new loan secured by the same property.

Settlement – See “Closing.”

Title – A legal document establishing the right of ownership.

Title Search – A check of public records to ensure that a person is the legal owner of a property and that there are no liens or other claims outstanding on the property.

Leaving No Choice But to Fall Behind on a Mortgage

A new study by Northwestern’s Kellogg School of Management and the University of Chicago’s Booth School of Business revealed that 26% of borrowers who defaulted on their mortgage payments did so strategically. The study pointed out that one in six borrowers would choose to walk away if their shortfall was over 50% of their home’s equity. This finding is especially intriguing due to the falling housing prices in areas like California and South Florida, where many borrowers have found themselves incredibly upside down on their mortgages. These borrowers generally do not qualify for reverse mortgages even if they are old enough to be eligible, since they do not have enough equity in their homes.

However, it is logical that borrowers would not want to remain in a situation where the amount they owe on their mortgage is becoming increasingly more than their house is worth. And especially given the current state of the economy, some of these borrowers have found their situations change such that they can no longer afford the payments in the first place. With so many homes available at bargain basement prices, it is unsurprising that borrowers might choose to try to walk away to a better situation, regardless of the negative effect it may have on their credit.

Yet this is exactly the situation the government should be remedying. Many programs to help borrowers during the recession have left out those homeowners who are dramatically underwater on their mortgages, but these borrowers (who appear to often come in larger groups as neighborhoods fall dramatically in value) are some of the ones who need the help the most and whose mortgages, through no fault of their own, no longer make financial sense. Rather than simply becoming content to let homeowners walk away and take the hits to their credit or entrap them in their home, the government should work with lenders to establish a solution that helps bail out and reevaluate those whose mortgages are worth far more than their homes. Both sides should be able to win from the situation, rather than the current reality in which the banks, the borrowers, and the communities lose.

Reverse Mortgage Glossary – Part 1

The terms surrounding a reverse mortgage can be confusing. Below is the first post in our series of a reverse mortgage glossary. Early posts will focus on terms for beginners, but later posts will become more advanced. The glossary will then be posted on our website.

Mortgage Terminology Part 1:

Adjustable-Rate Mortgage (ARM)- A loan with an interest rate that changes with market conditions on pre-determined dates.

Appraisal- A report that states an opinion on the value of a property based on its characteristics and the selling prices of similar properties or comparable properties in the area.

Appreciation- An increase in the value of a house due to changes in market conditions or other causes.

Closing – The final step after a lender approves an application. The occasion when a borrower signs loan documents, including the mortgage or deed of trust, and when closing costs are paid.Also referred to as “settlement.”

CMT – Constant Maturity Treasury – Also often known as a “treasury bill” or “T-Bill,” it helps set the interest rate for some adjustable rate mortgages.

Deed of Trust-The legal document encumbering title to a property.

Equity- The portion of the value of the property that exceeds the current amount of your home loan. If, for example, the property is worth $100,000 and the loan is for $75,000, then there is $25,000 (25% equity) remaining in your home.

HECM (Home Equity Conversion Mortgage) – The most common type of FHA insured mortgage. HECMs encompass 100% of reverse mortgage transactions in 2009, and 99% in 2008.

HELOC (Home Equity Conversion Loan) – a loan sometimes mistakenly considered similar to a reverse mortgage.

This Week’s Reverse Mortgage Rates: July 14, 2009

This week’s reverse mortgage rates are below. These rates are effective for the week beginning July 14, 2009.

APR:

HECM CMT 300: 3.46

HECM CMT 325: 3.71

HECM CMT 350: 3.96

HECM LIBOR 250: 2.793

HECM LIBOR 275: 3.043

HECM LIBOR 300: 3.293

Expected Rates:

HECM CMT 300: 6.42

HECM CMT 325: 6.67

HECM CMT 350: 6.92

HECM LIBOR 250: 6.10

HECM LIBOR 275: 6.35

HECM LIBOR 300: 6.60

Both the HECM Libor and the HECM CMT saw significant drops in Expected Rates and APRs this week. Hopefully the rates will continue to fall, as they have the last few weeks.

States Provide Mortgage Foreclosure Modification Programs

While the government’s mortgage modification and foreclosure prevention program has not been gaining as much traction as many in the administration may have wished, other states have found a different solution. Connecticut and New Jersey unveiled their own mortgage foreclosure modification programs, and have found them to be increasingly successful. In Connecticut, over 2,500 people have participated in the program since its introduction in July of 2008, with a 60% success rate at avoiding foreclosure. Another small number were able to negotiate stays on the foreclosures until they could find another housing option. In New Jersey, 614 borrowers have qualified for mediation, with a little over a third of them negotiating to keep their homes.

In both states, borrowers who receive foreclosure notices are sent letter by the judicial branch informing them of their eligibility for the programs, so why are the numbers so different? 40% of those eligible participate in Connecticut, but only 5% participate in New Jersey. The difference between the two programs is that in New Jersey, borrowers must go through financial counseling before proceeding to mediation. In Connecticut, the borrowers go directly to a mediation. Connecticut borrowers still do generally receive counseling, but it generally occurs after the first mediation.

We have spoken at length about the ways in which counseling is able to help borrowers at risk for foreclosure (as well as those considering a reverse mortgage). However, the more hoops a borrower must jump through, the less likely they are to participate in a program. If it turns out to be true that the 35% difference in borrowers who are participating in these programs is primarily due to whether or not counseling is required, it would be an interesting case for reducing the emphasis on counseling in order to increase participation and results. Yet it would be surprising if this was the only reason for the change in participation rates.