Jumbo Reverse Mortgage to Return
Michael Branson Jr. 5/19/10 11:42pm
It looks as though the Jumbo Reverse Mortgage programs are
going to make their comeback to the marketplace. This is very exciting news for those whose
scenario does not fit within the parameters of the Government product. Jumbo Reverse Mortgages were an excellent
option for Homeowners who had liens and property values that went well above
the limitations of the Government Insured Reverse Mortgage Product. In years past, before the Economic Stimulus
plan that raised the national limit to $625,500, homeowners had the option of
going with a Jumbo Reverse Mortgage Product in lieu of the Government product
if it would provide a more beneficial circumstance, i.e. more money.
The Limit on the Federally Insured Reverse Mortgage of $625,500 means that no value of your home in excess of $625,500 can be considered in the calculation for how much money will be available to a homeowner. For example, two homeowners of identical age, qualifying for the same program will receive the same amount in proceeds whether their home was worth $630,000 or $2,000,000. A Jumbo Reverse Mortgage would most likely be much more beneficial to the Homeowner with the $2,000,000 home.
With the "Credit Crunch" that took place in Wall Street over
the past couple of years, the Jumbo Reverse Mortgage programs were suspended by
the Lenders who were offering them leaving the only option for a Reverse
Mortgage being the Government product. The
Government Product (HECM or "Heck-Um") has gone through some significant upgrades
in that time making a Reverse Mortgage possible for more homeowners, but it
still was unable to assist those in the higher property value brackets from
being able to pay off their existing liens and enjoy a Reverse Mortgage unless
they had the liquid assets to cover the difference. For many homeowners, this was just not a
feasible or reasonable request to bring in the funds to cover the difference
and therefore they were left without the ability to obtain a Reverse
With the return of the Jumbo Reverse Mortgages, many more
Homeowners age 62 and over will have the option to determine whether or not a
Reverse Mortgage is a viable option for them. Let's face it; everyone has been affected in some way, shape or form by the
current economic landscape. Even those
in the higher tax brackets with more expensive homes have felt the effects of
the current economy. There were many
homes lost to Foreclosure that may have been prevented in the event that the
Jumbo Reverse Mortgage products were still being offered. The Jumbo Reverse Mortgages will once again
open up more possibilities for homeowners across the United States to take
advantage of a Reverse Mortgage loan, and quite frankly it couldn't have come
at a better time.
The current limits on the Federally Insured Reverse Mortgage are set to expire this year. This means the current limits of $625,500 could possibly go as low as the previous limits in place that were $417,000. We unfortunately do not know at this juncture what exactly will be the limits on the HECM loan once the Stimulus Plan increase expires. In addition to the Limits expiring this year, there is much speculation about the HUD considering a decrease in the calculations on the program across the board which would provide homeowners with less available cash that they would be eligible to borrow. However, with the re-emergence of Jumbo Reverse Mortgages, homeowners will once again have multiple options when considering a Reverse Mortgage.
There are more reasons for excitement of the idea of the
Jumbo Reverse Mortgages coming back to the market other than increased
borrowing capacity. They also in many
instances had different underwriting guidelines that provided more options. Three examples of this pertain to property
types, closing costs and occupancy.
As it stands, the Federally Insured Reverse Mortgage must be a homeowners primary residence only. There were Jumbo Reverse Mortgages that permitted a borrowers 2nd or Vacation Home. We do not know if that in fact will be the case again, but the possibility is definitely something to be prepared for. Another key difference in favor of the Jumbo Reverse Mortgage loans was that there was no Mortgage Insurance Premium to be charged to the homeowner which lowered the total closing costs on those programs. Thirdly, a key difference is regarding Condominiums. For the Federally Insured Reverse Mortgage product, the entire Condo Project would have to go through an extensive approval for FHA. On the Jumbo Reverse Mortgages, this was not the case in the past, and those homeowners in a Condominium Project merely had to receive a "Spot Approval" which was an Underwriters review of the association through a 1 page form known as a "Condo Certification".
All in all this is some very good news for the Reverse
Mortgage industry and those homeowners who have been patiently waiting for the
day to come that they would have the ability to consider a Reverse Mortgage for
their home and alleviate their monthly mortgage payment.
If you are interested in a notification when Jumbo Reverse Mortgages are again available please complete our online request or call us Toll Free (888) 801-2762
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