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There is never any question too big or small for our experts to handle. We encourage you to ask anything you wish. Our experts have decades of knowledge and love to educate people on the subject of reverse mortgages.
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HUD has requirements you must meet but yes, you sure can if you meet those standards. Give us a call when you have your most recent statement handy and let us see what we can do for you.
Absolutely. There is no limit as to the number of homes you can own just because you have a reverse mortgage on your primary residence.
Credit scores are not as important as overall credit histories and more importantly your past 24 months' credit history on your mortgage, taxes and insurance payments. If you have any questions about specific credit issues, please don't hesitate to give us a call so we can discuss specifics with you.
Yes you can as long as you are both over the age of 62 and both occupy the home as your primary residence.
Whether you choose to take the second payment available to you or not would probably depend on whether you still occupy the home and if you want to draw the money at that time. If you are still living in the home, it is entirely your choice as to whether or not you wish to draw additional funds that are available to you.
There is never a pre-payment penalty on a reverse mortgage so if you have determined that your circumstances have changed and you now wish to sell the home and move, you can do so at any time without a prepayment penalty. You only pay off what you borrowed and the interest that accrued on that amount, so if you think you will be paying the loan off soon, you may want to hold off borrowing any more of the line of credit to keep your interest accrual down. By the way, you can also use another reverse mortgage to buy a home in South Carolina if that is your goal once the first reverse mortgage is paid in full.
As long as the reverse mortgage is on the home that you live in as your primary residence, you may own other property that you rent.
The process would be no different than any other property that was already encumbered by an existing loan, forward or reverse. The owner of the property would have to approach the lender and request a partial reconveyance for the portion of the lot that they wished to split off of the existing parcel. The lender would have to determine if the lot split and the loss of the particular section of land represented an impairment to their security and if so, they may not be willing to allow any reduction to their existing security. They might be willing to do it with a reduction to the existing loan amount and they might have no problem with the split, determining that the acreage in question really does not add/subtract from the value of their security.
At any rate, the borrower always has the right to pay the loan off if terms cannot be agreed upon and then seek a new loan later if it becomes that important to complete the deal regardless of the lender's willingness to participate.
I cannot begin to second guess why the originator said what he said or everything that you can and cannot do at this point with the information available, but the only reason that your son would or would not have been able to buy with you that I can think of based on your statements would be if you are over 62 and he is not and you were trying to use a reverse mortgage at this time to finance the home again in your name(s). Otherwise, I can think of no reason why HUD would have any restriction on whether it would be you or you and your son both obtaining the home if they have already told you that you can pay off the loan and keep the property. I have no knowledge why HUD would have any objection to one or both of you owning the home, especially if there is no concern about reverse mortgage qualification.
Hellos Melissa, How your previous mortgage was obtained has no bearing whatsoever on your reverse mortgage now. Your title needs to be clear and in your name now and there may be some paperwork involved to make sure it is now just your name that usually includes the recording of the Death Certificate by title, but that is routine and we work with this step often. If you live in some states like Texas there may be additional items that have to be resolved with Affidavits of Heirship but in most states, it does not require any additional paperwork or time.
There is no waiting period but the lender may want to use the original purchase price or the appraised value, whichever is less, if the purchase price is much less than the current appraised value, you purchased very recently and there is no evidence of massive improvements to indicate the value increase was a result of your investment in the home.
The vast majority of the time the lender is notified by services they subscribe to that monitor data bases such as the social security data base. When individuals pass, hospitals, mortuaries and others are required to make certain notifications and there are services that monitor these data bases and can alert lenders and others when individuals receiving benefits have passed.
There are very few trusts these days that do not meet the HUD parameters. HUD is very concerned that the trust protects the borrowers' interests without causing issues when/if the borrower passes and most trusts do just that. If you plan to place the property into a trust, just have your trust reviewed before you record the Deed that transfers the title and once you receive the approval, you can transfer the title with no issues. If there are any changes that need to be made to the trust, they can easily be made before anything is recorded with the property.
The lender has to determine whether or not they can accept the Deed in Lieu of Foreclosure by doing so preliminary research. There can be no other liens that would affect the lender's security or the lender would not be able to accept the Deed. Once the lender is satisfied that there are no other clouds on title and has accepted the Deed, it then owns the property and would be responsible for all expenses from that time forward.
This question really deals with the time from notification until the lender takes possession of the home though. I can tell you that the reverse mortgage is a no-recourse loan. However, you should seek the counsel of a competent attorney in the location of the property to determine what actions may or may not constitute additional liability in that jurrisdiction.
The reverse Mortgage does not have a build to perm option. The improvements must be already completed and the certificate of occupancy must have already been issued before we can even start the loan in accordance with HUD rules.
I also need to give you a heads up for properties with acreage and outbuildings. HUD intends to insure properties used for residential purposes and does not get particularly excited with unique properties, large parcels and out buildings. In fact, for the appraiser to even give outbuildings any value, he must also find sales comparables with and without the buildings to adjust to give them additional value. Also, the sale comps should be the same or similar size to support the appraiser's final opinion of value. If the improvements you describe with a home are typical for the area with plenty of sales to support the value, there should not be any problem. However, if the other properties in the area are not similar, it could be a difficult home on which to place a reverse mortgage and you would want to keep this in mind if your sole plan for financing later is a reverse mortgage and the failure to execute that plan would cause real problems.
You can find the procedures for obtaining a reverse mortgage with a spouse who is not yet 62 in our blog here. The thing you really have to remember is that some states (like Texas for example) have restrictions that do not allow this to happen. If you need assistance to determine if you can do a non-borrowing spouse loan in your state, please do not hesitate to contact us.
It is the purchase price, the HUD lending limit ($636,150) or the appraised value, whichever is less.
I can't say for certain without seeing everything, but I believe you will need to wait for the 12 months. Just living there for so long does not get you anything necessarily unless you paid above fair market rents while living there and had a written agreement. Otherwise you are best to wait the 12 months and do the refinance at that time.
The reverse mortgage is just like any other loan. The proceeds would go to pay for the rebuilding of the home, not to the lender. The lender is listed as "also insured" to be certain that any checks are sent to both the borrower and the lender so that both must sign off on the claim check and in this manner the lender can always be sure that the home has been repaired/rebuilt and the borrower does not decide to move to a tropical island somewhere with the proceeds!
There is one instance where all borrowers must be concerned, both on forward and on reverse mortgage loans. There is a clause in the standard loan documents that states that if the property cannot be rebuilt, then the loan would have to be paid off with the loan proceeds. This is almost never an issue because with almost any disaster, the improvements can be rebuilt but there are some instances where this might not be possible. A couple of things that come to mind are landslides wherein the entire lot falls into the ocean or down a mountain and is gone or a sinkhole that becomes unbuildable. So if you think you are in an area where you might have a situation where the house could not be built back, you may want to consider all your options as this is standard language for any loan type.
If it was for a reverse mortgage case, then yes it is still valid and the lender could still use that appraisal. The case number would have to be transferred to the new lender if you were not going through the existing lender but they would still use the same appraisal as well with the transfer.
Heirs can never draw on the loan, only the borrower. So whether funds were set aside or whether the funds are just left on the line of credit, once the borrower has passed, those funds are not available to the heirs. Any money not spent would be money that was never borrowed and therefore does not need to be repaid and on which the borrower never accrued interest, but no one but the actual borrowers on the loan may draw any of the funds.
Now the second part of that question is the $8,000 set aside and whether or not the borrower had access to those funds. That depends on what the set-aside was for. If the set aside was for future servicing fees (servicing fee set aside), then no, mom would not be able to access the funds either. Those funds were never borrowed though and therefore would not be included in the funds required for the payoff. However, if the set aside was for a repair of some sort, once the repair had been completed, those funds would have been available to mom again when she sent in the proof of completion of the repairs. So unfortunately, I can't just give you a "yes" of "no" as to whether or not this specific set aside would have been accessible without further reviewing mom's closing documents to see what the set aside was for and whether it was always intended as a temporary set aside (until something was completed) or a permanent set aside (to pay future costs for the loan or property expenses). But again, the heirs can never draw on the set aside regardless of which type of set-aside it was.
The reverse mortgage will not finance 100% of the purchase price. If you get a great deal on the price of the home, that's great but then you won't be able to turn around and do a reverse mortgage for 100% of the purchase price and have no money into the property, HUD just won't allow it. For the first 12 months, the "official" rule is that the loan will be based on the sales price or the appraised value. If there is a small amount of increase due to bona fide improvements or it's not quite 12 months and the appreciation is verifiable, you can usually get a little slack there but you can't finance the entire purchase price, especially right after you buy the home.
If you apply for the loan 12 months or more after you buy the property, the purchase price is irrelevant. If you are getting that great of a deal, you just need to hand in there for the first 12 months and look to do the reverse mortgage sometime after that.
I am not an attorney and cannot give you legal advice. I can tell you though that the loan is non-recourse, now and forever. The lender has only those rights given to them in the documents the borrowers signed and they cannot change at a later date. As the heir, you did not agree to pay anything and as a no recourse loan, the lender cannot recoup costs from any other asset of the borrower or their heirs.
I do advise you to seek legal counsel because there may be other ramifications of which I am not aware that have nothing to do with the lender that you need to consider. Some areas have special fines or assessments for swimming pools that become hazards that are allowed to breed mosquitos, some for weed abatement, some for other reasons and I cannot begin to know or advise about these issues or how it may affect you if you allow the property to fall into disrepair and you are the legal owner. If you don't pay the insurance, the lender will force-place a policy that will cover only the improvements, none of the contents. However, I can tell you that the terms of the loan are spelled out and the property is all that the lender may look to for repayment and that cannot change at some point after the loan closes whether the loan is sold or assigned at a later date.
Nothing you have me would lead me to believe you would not be able to get a reverse mortgage. The legal description of the project would determine if it is an actual townhome or a condominium though and condos have to be approved by HUD at this time. All properties have to have adequate sales of similar properties available for the appraisal bit other than that, everything sounds good so far.
Almost all reverse mortgages originated today are FHA-insured loans. The proprietary or private loans that were increasing prior to the market meltdown all but disappeared in 2009-2010. There are just now one or two proprietary programs beginning to re-emerge, but their loan amounts as a percentage of the value of the property are much lower in most instances, the interest rates much higher and the underwriting parameters are stricter. They usually do not begin to make sense for most borrowers until the property value meets or exceeds somewhere around $1,500,000 but it varies based on age, program needs, etc. If you are just looking for a higher initial draw on a property that has no current liens and the value is not this high but is above the HUD lending limit of $636,150, the proprietary programs currently available may still meet your needs. If you have a condo not on HUD's approved list, the proprietary program requires condos valued up to $636,150 to be on HUD's list as well anyway so it would not help (and HUD has announced they are making changes that will ease the process for condos probably in September anyway).
So the question still remains what keeps you from meeting the HUD parameters that you think might be acceptable to a private program? If the programs ever return that were available prior to the market melt-down, there may be some additional options available again that FHA/HUD has not typically allowed but for now, the FHA-insured loan is most of the market.
These are all great questions and all deserve an answer. I would contact the Loan Officer one more time and give him/her one more chance to answer these questions to your satisfaction and if he/she will not take the time to do so, there is a good possibility you have not chosen the right company for the loan. We have written about most of these subjects on our blogs and have covered each of these topics but you should be able to get a straight answer to your questions because you do have rights and no, you are not legally required to sign away your interest to the property and should know what you are doing and why.
Perhaps you and your husband should get other proposals from other companies and compare the costs and their willingness to answer your questions IF you are unable to get a satisfactory answer to your questions. Besides, it is never a bad idea to compare the closing costs and get more than one proposal anyway!
The only restriction that the reverse mortgage has is that it will not pay off a loan on the property that is less than one year old. If your loan for the purchase of a solar system is over 12 months old, then not only can the reverse mortgage pay it off, it would have to in order to take the first lien position and ensure that no other liens were remaining on the property at the time the reverse mortgage closes.
Also See: https://reverse.mortgage/solar
HUD did raise the limit a few months back but it was not a huge raise. HUD issued Mortgagee Letter 2016-19 on December 1, 2016 which raised the limit from $625,000 to $636,150 effective with all case numbers assigned on January 1st 2017 and after. The property has to 1) be valued over $625,000 or the increase does not affect you and 2) you only receive the percentage of the increase that you receive as a percentage of the value based on your age under the program. In other words, at this point in time a 62 year old borrower receives 52% of their value for properties valued at or below the HUD maximum lending limit, minus the costs to receive the loan, so the increase to borrowers would be their respective benefit amount based on the age of the youngest borrower.
The increase if not a big one from the standpoint that it will not place a lot of extra funds at your disposal, is a big deal from the standpoint that it is the first increase in the limit since 2009. So although the increase was not significant in the terms of dollars raised, it is very significant in the terms of an increase in limits that was not the result of a stimulus package or other perceived "emergency" measure.
If we pay the costs on your transaction, we pay the costs. You don't finance them, you don't pay them later, you don't pay them back when you pass. We rely on anticipated income from our operations to recoup this cost and you never have to repay it. If we charged you this money later, we could not say that we are paying the cost and would have to disclose this to you in the paperwork.
This is why we cannot offer paid fees on every loan. HUD charges initial mortgage insurance on every loan. Appraisal fees, title and closing costs, and recording fees, etc. are real hard costs on every loan that someone has to pay for. When we show you that we are giving you a lender credit to pay those costs, we are actually paying the costs and you do not ever pay them back or we would have to disclose this on all of your disclosures.
This would give you more cash available for whatever purpose you chose.
I cannot answer this question without seeing the trust and having it reviewed. Typically it is better if the trust is revocable, but there have been instances when irrevocable trusts have been approved as well. You would have to submit the trust for approval and then we would be able to tell you if it would be acceptable and who would need to execute the loan documents.
We can't cross-collateralize multiple properties with the loan, it must be a single residential parcel to be eligible for a reverse mortgage. Then the question still exists about the fact that the improvements physically sit on more than one parcel. The improvements must be entirely located within the boundaries of that one parcel that the reverse mortgage will encumber. They cannot encroach upon neighboring parcels.
The project currently has to be on HUD's approved condo list so you would want to see if it is listed here to be certain it is listed before you make any offers. You would also have to find a lender licensed in the state to determine what they would require of you, unfortunately, we are not licensed there.
I can only assume you have a reverse mortgage on the home you are asking about selling, correct? In that case, when you sell the home, the reverse mortgage would be paid in full with the sale. At that time it would not matter to whom or for what reason you sold and yes, as long as you complied with the terms of the first loan (you paid your taxes and insurance on time, etc), you would be eligible for another reverse mortgage loan.
I'm sorry but I don't think I have enough information to answer your question accurately. Your grandparents own the home and can do anything they want with it. If they want to "sell" it to you, they can just sell you the house and you can use a title company to complete the transaction with the title company requesting a beneficiary's demand for payoff that you would have to pay in full at the close with your funds (whether that be with a new loan or whatever).
But if you are talking about an "inheritance", you are talking about a gift not a sale and then you would be looking at different process. But regardless of the steps you have to take, it's still their house and they can still do anything they want with it - including give it to you if that's what they want to do. But then the question becomes how do you intend to pay the loan off that becomes due and payable as soon as the title changes? If your grandparents sell or gift the home to you, whether they still live there or not and they convey the title completely to you, the loan becomes due and payable and you have to have a means to pay it off.
There is a third choice, especially if you are asking about keeping them in the home anyway. Under the terms of the reverse mortgage, they can add anyone else to title that they would like and the loan does not become due and payable as long as at least one original borrower is still on the title and as long as one original borrower continues to occupy the home as their primary residence. So your grandparents can execute a deed to themselves AND you at this time which would not affect the loan in any way as long as they still occupy the property as their primary residence. If the Deed and vesting they use grants you right of survivorship (usually joint tenancy or tenants in common), when they pass you would become the sole owner of the property. The loan would still be due and payable at that time, but that might achieve your desired results.
I have to give you my standard disclaimer though - I am not an attorney and cannot give you legal advice. I do not know which Deed or vesting is best in your state and therefore, I strongly suggest that you seek out competent legal advice to determine if this is the best way to proceed and to prepare any needed documentation to avoid problems or possible property tax implications due to a transfer of ownership. The attorney may also have advice for you regarding income taxation, etc. about which I do not have knowledge that you should know. My comments are solely to advise you of your rights under the reverse mortgage loan. To determine other facts and possible issues, you really do need to speak with a legal representative in the area.
If your son is the co-owner, he would have to also qualify for the loan and authorize it or sign the home over to you and come off of title. But even then, the current status of the default could create an issue that you need to resolve quickly and would probably require you to get a set aside for the taxes and insurance. At any rate though, the answer to your question is no, you cannot take out a loan without the co-owner of the property's knowledge or approval.
HUD does not have any set waiting period but the National Reverse Mortgage Lenders Association (NRMLA) and all the reputable companies approved through them do recognize an 18 month period during which the lender may not refinance the loan except for extenuating circumstances. Unfortunately, some originators in both the forward and reverse mortgage markets participate in a process known as refinance "churning" that hurts seniors by stripping the equity if they keep charging fees.
Some originators try to justify their actions by telling borrowers that they will cover the costs of the loan and therefore the equity is not unduly under assault, but what they don't tell you is that those investors who purchase the loans in the secondary market see the loans paying off rapidly and then the pricing for the loans becomes much less favorable. The result? The rates and fees start to rise as the investment in the mortgage backed securities becomes a less favorable one and all borrowers pay higher costs all around on every new loan closed. Those originators still try to churn the same loans over and over and all borrowers wind up paying higher fees and rates and never even know why.
Reverse mortgages are nowhere near the size market as the forward mortgage market and the churning was taking a toll. NRMLA saw the harm this was doing to borrowers in the long run just so that some originators could continually churn refinances and determined that an 18 month restriction on refinances was needed to ensure the secondary market would be available for all borrowers in the future. If you feel that you truly have extenuating circumstances though, you can still check to see if you can do your refinance at this time if it has been less than 18 months since you closed your loan.
Your question is not for us but for a conventional mortgage lender. The question has nothing to do with the reverse mortgage and everything to do with qualification for a second home on a traditional loan (which we do none of working solely with reverse mortgages). And since I have not originated a forward loan in more than 10 years now, I would not be much of a qualified source to answer your question on what you can and cannot do on that loan.
I would think that they would have to use the taxes and insurance you have to pay on the primary residence even though there is no mortgage payment to determine whether or not you qualify with whatever mortgage payment and other obligations there are on that property, but I would not think they would use any kind of minimum payment even though there is no payment on the loan itself. However, as I stated to begin with, I could not make this statement as fact and would suggest you contact a lender who would make this type of loan.
The student loan we could work with although we do have to use the payment or 1% of the loan amount, whichever is greater for purposes of qualification. However, the insurance would not be acceptable by a non-admitted carrier. Unfortunately, we have found some properties over the years that due to issues such as this or zoning, property usage, proximity to external issues, etc. just made them ineligible for the reverse mortgage. If you are unable to obtain insurance from a rate insurance carrier which contributes to the state fund and protects those insured in the instance of bankruptcy of the carrier, we would not be able to approve the loan.
The reverse mortgage cannot be used like an FHA 203K "Rehab" type loan. In fact, if a property is in the process of construction or major rehabilitation, HUD will not even allow us to take a loan application until after the certificate of occupancy has been filed for the completion of the work - and then we can start the process.
In all but just a few states, borrowers with spouses who are not yet 62 can still get a reverse mortgage but the spouse is a "non-borrowing spouse", meaning the younger spouse is not on the title or the loan. The non-borrowing spouse is now protected should something happen to the borrowing spouse but you still need to know about the rules and the expectations before you decide to move forward. You can read all about it in our article here.
You have two completely different issues. One is the transfer of the title to you and the other is the satisfaction of the loan. The reverse mortgage terms allow the heirs of the borrower(s) to satisfy the loan by paying the lesser of the outstanding balance of the loan or 95% of the current market value. So if the loan amount is more than the property is worth, you can keep the home if you wish by paying off 95% of the current market value of the home even though that is less than the amount owed. If you did not wish to do that, you could allow the lender to take the property back through the foreclosure action and bear no responsibility or cost, but since you do want the home, it sounds like your decision is to move forward with the payoff of the existing loan at 95% of the current market value.
That is the only information about which I can advise you - the items regarding the terms of the reverse mortgage. If you would like advice on stopping a foreclosure with a chapter 13 Bankruptcy, you really must seek competent legal counsel. I also don't understand why you would even want to try to list with a broker and sell. If the property is over-encumbered, to list it would just mean a loss and then real estate commissions would need to be paid on top of that. For these reasons, I would not be able to advise you on the ability or practicality of adversely impacting your credit to go the bankruptcy route, nor can I see the benefit of listing the home for sale if there is currently more owed on it than it is worth.
Chances are good that there will be enough to pay off your existing loan but that's not for certain, it would depend on the age(s) of the borrower(s). But even if it would pay off your mortgage balance, only you can make the decision of the costs are too high based on the benefit. Let me explain that.
Many of the costs are fixed and depending on where you live, you might have as much as $5,000 or more in loan costs to pay off an $18,000 mortgage which may or may not leave you any money, depending on the age of the youngest borrower (or non-borrowing spouse) to be considered for the loan. And if the youngest borrower or non-borrowing spouse is 62 or younger, you might even have to bring in a little bit of money just to close the loan. Only you would be able to decide if it would be worth it under those circumstances to proceed with the only benefit being the elimination of the $18,000 mortgage. With possible costs of close to 30% of your existing mortgage though, I certainly would not recommend the loan for your circumstances.
You are precisely correct, and this is why we do not see the HECM for purchase currently being used much for these transactions. Builders will often allow them on standing inventory they have not been able to sell otherwise, but do not want to wait for the loan to start only after the certificate has been filed, especially knowing that there could still be issues with the loan approval (appraised value, etc) at that time. However, our industry has approached HUD about this issue and pointed out the problem, including the fact that HUD does not make the same requirement of their forward borrowers and there has been some whispering of possible changes. I can't make any promises and we are bound by the current restrictions, but the issue has been brought to light and there is hope.
I'm afraid I can't answer this question. The loan becomes due and payable when no borrowers still occupy the property. I don't know how the title is set up to pass or to whom upon his demise though and I could not comment on property rights of other heirs even if I did have this information, this is a legal matter.
HUD does not allow the use of borrowed funds. They do however allow you to use gift funds from a friend or relative. Also, depending on how short you are, have you checked to be sure you are getting the best possible deal and the most possible fees paid? I would certainly make sure that you are getting the absolute most out of your loan by getting another bid to be certain that there is not more with which the lender can help you. We have many programs available where we can cover some if not all of your closing costs bringing that shortfall down to a minmum. Please request your free quote here.
The purchase reverse mortgage works exactly the same with regard to the amount of money you receive under the program as does the refinance program with the only difference being that you have access to all the funds at one time to use to buy the home. That being said, the younger you are (but still 62 or over), the longer you could keep the loan and accrue interest without making a mortgage payment. So yes, older borrowers do receive a higher loan to value benefit than do the borrowers at the younger end of the eligible spectrum.
To determine your eligibility under the program, you can visit our online calculator or request a no-hassle no-obligation quote from our purchase calculator here.
I'm sorry, but I am confused. A reverse mortgage lender can never "seize" a home or freeze anyone's other assets under any circumstances. A reverse mortgage is a loan just like any other loan and it is a non-recourse loan at that! The lender can begin foreclosure proceedings in accordance with the legal documents and the borrowers' heirs have legal rights as well and can often stay those proceedings when warranted, you should check with a local attorney to determine the necessary steps in the area where the property is located. Even if a lender begins foreclosure, the process is not instantaneous and heirs can still begin the sales process, and contact the lender or HUD for additional time if needed.
As far as the other assets are concerned, the loan is a non-recourse loan. Plain and simple, that means that the lender can look to no other assets for repayment of the debt - it cannot seize any other assets. So when you say they "froze their assets", by freezing their assets, are you referring to the reverse mortgage proceeds? Because if that is what you mean, then yes, no further loan proceeds are paid out after the borrowers pass, no matter what time frame has transpired (you indicated 21 days before they passed but there would be no reason for that based on your comments). If the borrowers are not alive to draw assets, then there is no way additional funds could be drawn afterward. If you are referring to any other assets, it simply cannot be done, legally or otherwise since they have no rights or title to anything other than a security interest in the real property against which the loan was secured. They don't even own the home unless they go through the foreclosure process and receive the home at foreclosure sale and until such time the home is still owned by your parents or their heirs.
I'm sorry for your loss, but there is something amiss here. What is the status now? Have you removed your parent's belongings from the home? Has the property been listed for sale as of this date? It's been almost 4 1/2 months, are things progressing so that when you approach HUD and the lender you can show them that you are making an effort to finalize things? These are all factors they will want to see but as for the rest of your comments, I can't really say anything one way or the other without looking at the entire situation to determine the actual facts because the lender doesn't even have the ability to "seize" a house without going through the legal foreclosure process and they can never freeze assets other on the reverse mortgage program.
The reverse mortgage is just a loan/lien against the home and does not help or hinder your right to sell the home or retain the proceeds. If your mom granted you documents that would allow it without a reverse mortgage, you can do it with one. You would just sell the home the same as with any other loan and pay off the loan with the proceeds.
If the daughter is the sole heir, she doesn't have to "purchase" the home, she merely has to pay off the loan because she probably already owns the home. She needs to find out if the father died intestate or if there was a will. With any luck, there was a trust and daughter became the successor trustee and the property may not have to go through probate. All this can be answered by an estate attorney.
The loan will be due and payable and the daughter will have to obtain new financing in her own name. If the outstanding balance on the reverse mortgage is higher than the value, then she can retire the debt for 95% of the current market value instead of the full amount owed, making it possible to still obtain FHA financing in many cases. For those answers, she should contact a forward lender to review her credit and income for the refinance loan.
I'm sorry, I cannot advise you on this matter. The central air unit and the cabinets are all fixtures under the laws of most states which make them real property and therefore, part of the house. Ordinarily, I would say that if you took something from a home you did not own, you could have problems. If the title has passed to you as your mother's heir, then now you do own the home and I guess my first question would be if you can't buy it, have you looked into selling it and is there any money you would gain from the sale?
This is a matter to discuss with an attorney as any intentional stripping of fixtures in the home could leave you open to prosecution, I just don't know and I would suggest that you determine the sale value of the home compared to the amount owed before you consider any actions. Maybe the first meeting ought to be with a local realtor, that one would not cost you a dime!
I would be willing to guess that lenders receive notification most of the time by means other than the family so when you ask "how much time...", I'm not sure if you are referring to the time before the lender finds out anyway or what. I think that being ready and having a plan really helps when the time comes and expressing that plan to the servicer when called will make all the difference in the world.
You always own your home. Every Deed of Trust contains an "Assignment of Rents" should the lender need to foreclose but absent such an event, the rents still go to you.
The reverse mortgage is not a 0% down loan and does require quite a hefty down payment, anywhere from 50% to 35% depending on the borrowers' age(s) and the closing costs in the area. The reverse mortgage allows borrowers to stay in the home for the rest of their lives without having to make a mortgage payment and so the interest accrues on the loan and the loan balance grows, The loan would not work if it started at 100% of the balance.
Since the only loan programs we offer her are reverse mortgages, I really don't have a suggestion for you. Since he is an army Veteran, I would suggest that you check with the lenders offering VA loans to see what programs they have that might work for your brother and please thank him for him for his service to our country!
At anytime you would like an estimate of the required down payment you can use our reverse mortgage purchase calculator found here.
In conversations I have had with various servicers, it seems that they are not able to accept a Deed in Lieu of Foreclosure unless the property is "broom swept clean" all personal items are removed and the title is clear. They do not wish to be responsible for the personal items left in the home and they cannot ignore any other liens that may be on the title (if any). If you want them to accept the property and not have to continue on, then you should empty the home of all personal effects and then if there are no other loans/liens on title that would create an obligation if they accept a Deed in Lieu of foreclosure, they can do so at that time (and often do). Otherwise, they will have to wait for the full foreclosure when the law will protect them from liability when all the personal items are removed after the home has been foreclosed upon and/or any other lien holders would take whatever steps they need to at that time to legally protect their interests.
A lender may not currently begin an application on a unit located in an unapproved project so the project would have to be approved at this time in order to start a reverse mortgage loan. This may change in the future, but for now, that is the process. There are companies that can help with the project approval and are staffed with folks who quite often are former HUD employees and know the process well. Two such companies with whom we have known borrowers that have worked successfully are:
http://fhacondosapproval.com/TheFHACondosApprovalProcess.php or www.tattersallconsulting.com.
You can contact either one of them and they can walk you through the entire approval process or you can wait and see if HUD changes their process to allow for units in unapproved projects in the near future.
HUD does allow refinances as long as the benefit to the borrower meets their requirements. And yes, the word is that they will be changing the condominium approval requirements but that has not happened as of this time and we are not sure if it will take place before they make their year end changes next September. There was some talk of it happening in April but it never materialized so we know there is a push to make it happen, just don't have the particulars or timing yet.
Firstly, I am not an attorney and I would suggest you contact legal representation to get a solid answer if you are concerned about legal rights. Especially since I don't think I understand your question. I can't tell if you are saying that your mom got a reverse mortgage on her own home after she implemented a trust and a power of attorney meant to protect your sister or if she was named as the POA of your sister (her daughter), was named in your sister's trust and obtained your sister's property as a result of her passing.
If it was your mom's property, I don't know why any of the rest of the situation would matter, mom doesn't need any of your approvals to do a reverse mortgage on her own home. If you are concerned that she obtained the property by way of fraud, then an attorney would have to advise you there. I honestly have no idea if the courts would allow you to invalidate a lien that was placed in good faith or if they would require you to seek recourse from your mom if it was determined that you should have gotten something from your sister that your mom denied you from getting due to an action she took that she should not have taken.
Most states allow a married couple to drop the younger borrower from title long enough to obtain a reverse mortgage and HUD now also protects the rights of the non-borrowing spouse to live in the home for life as well. However, not all states will allow it (such as Texas) and it's not a good idea for all borrowers. I suggest that you consider it carefully and if you do decide to continue, add your spouse back to title as soon as the loan closes so that there are no issues later if something should happen to you before "you get around to it" later.
I'm sorry but I cannot answer this for you. Ownership rights have nothing to do with the mortgage and I am not an attorney and could not give you legal advice. You should consult with an attorney for help with such a matter.
I don't know how you were conducting your search, but if you go to the HUD website (HUD.gov) and in the search box in the upper right hand corner type in "approved lender list", you will have the opportunity to type in the names you wish to search. I just did so and typed in All Reverse Mortgage and these were the results I obtained: As you can see, all three of our branches do show as approved lenders but I really don't know what you search or did differently so I can't comment on why they didn't show on your search. We are there and are an approved lender though and it does show when I do the search so I would just say try again, maybe there was a glitch when you last attempted or possibly a misspelling?
Good Afternoon Xavier,
HUD doesn't usually do any inspections. The lender servicing the loan will typically do a certification once a year to verify that the borrower is occupying the home and reserves the right to do a physical inspection if it feels one is warranted to determine that occupancy requirements are still being met. Other than that, there is no annual inspection of the interior of the home or anything like that if that is what you mean.
If you are also a borrower on the original loan, there is no notification requirement as there is still a remaining borrower living in the home and the terms are still being met.
Every time a reverse mortgage is originated, a new appraisal must be completed. This is true whether it is a previously non-borrowing spouse or the original borrowers - we still have to do the appraisal from an FHA approved appraiser.
There are some things that the title company will have to do in order to insure the title now with the change but if you supply the necessary documentation to the title company in conjunction with your loan, they can take care of that for you while completing the loan process.
Under the terms of the mortgage, the borrower and her heirs still now the home but the mortgage is due and payable when the borrower is no longer living in the property as her primary residence. If they are not sure if this is a permanent move for her yet, she can be absent up to 12 months on a temporary stay before the lender can deem that her departure is permanent. Therefore, the son can still live there while mom and son make their decision if mom is going to be out of the home permanently and if so, he should begin making plans to sell the property as soon as possible and not wait until the last minute.
Hello Clyde, I am not a financial advisor and would be happy to answer any questions about the loan you may have. For a lot of folks, the reverse mortgage makes a lot of sense and when it works it works well. For others, even the benefits of a reverse mortgage will not sufficiently improve their circumstances enough to where the loan makes sense for them. If the loan will enable you to live comfortably and not require you to continue to deplete your savings just to remain in your home, it might be a very good option for you.
On the other hand, if it only slows things down and you still have to use a portion of that retirement account each month just to get by, the loan may just be delaying the inevitable (a sale of the home and relocation) to a time when you have even less equity to carry you through. I would advise you to talk to your financial advisor and your family and see if the mortgage will resolve the issue that is requiring you to deplete your savings. Take a look at your income and your outgo and determine if this loan will resolve the issues that are making you exasperated at this point. Only you can really decide if you should get this loan but with the help of your family and trusted advisors, you can make the best decision possible with the available information.
We wish to proceed with the deed in lieu of foreclosure process for our reverse mortgage. I believe that the time necessary to complete the process could extend beyond the date when property taxes and Home Owners Association fees are next due. I intend to make those payments to avoid delinquency. At the end of the deed in lieu process, can I expect a final closing settlement like that which is typical for a normal real estate closing in that expenses such as property taxes and HOA fees that have been paid in advance by the property owner for periods that extend beyond the closing date are rebated to the property owner, or are those amounts forfeited?
The property must meet all of HUD's requirements to be eligible so any rental properties must meet the HUD parameters. However, if you do receive rental income on your home, it is your income to do with as you see fit.
A reverse mortgage is like any other loan. All loans contain provisions for insurance requirements and if the property cannot be repaired, there are also provisions in the loan documents for those circumstances as well. If you are concerned about your property being protected from earthquake damage, you should look to your insurance provider to see if you have adequate insurance for such issues and if not, what coverage is available for your protection.
I don't know what company you are dealing with but I know most of the servicers and they know as well as you that they have no recourse against you and that they cannot sue you for a debt you never agreed to pay! The loan states right in the documentation that it is a non-recourse loan and your mom signed the paperwork to obtain the loan, neither you nor your brother ever signed any agreement to pay for anything. The loan documents for a reverse mortgage specifically state that the security for the loan is the property, not the heirs and not any other assets belonging to the borrower(s).
Your mom paid the HUD mortgage insurance to cover against any losses for just this reason. The lender will post a claim with HUD, not with you or your brother. HUD allows heirs to pay off the loan at the lower of the outstanding balance or 95% of the current market value if you do want to keep the home, but you are not required to do so. Most of the time, lenders and servicers would love to receive a Deed in Lieu of foreclosure to speed up the process, but this is not always possible. They have to make certain that the title is clear, that the person willing to sign the Deed in Lieu has the legal right to do so and that the property is completely vacant and is in what is referred to as "broom swept condition". Otherwise, the foreclosure process may have to continue so that the lender is relieved of all legal liability and other liens when they take title.
If the property is completely clear and clean and you have the title now and are able, you may want to offer them a Deed in Lieu of Foreclosure at this time or if you would like to keep the home, tell them that you would like to keep the home and pay off the obligation at 95% of the current value as allowed by HUD. Otherwise, let them know that you are not responsible for a debt you never agreed to and they can continue their foreclosure process and that they will eventually own the home as is outlined in their loan documents.
You can use the proceeds for whatever purpose you want, but HUD limits the amount you can take at the single draw if you are not using the funds to pay off an existing loan so you may want to request a proposal to see if the reverse mortgage will give you the proceeds you need for such an undertaking.
You can only have one reverse mortgage at a time but yes, many borrowers have had a reverse mortgage on a home and then sold that house. Moved and used a reverse mortgage to buy their next home.
With a reverse mortgage, purchase or redo, you must occupy the property as your primary residence and when you no longer do that, the loan becomes die and payable. If you want to later rent out a property on which you have a reverse mortgage, you would not necessarily have to sell the home but would have to replace the loan with other financing.
Good Morning DeWayne,
You're fine. As long as you keep living in the home you meet the terms of the mortgage and there is nothing to worry about with regard to occupancy issues or the passing of one spouse since you are both on the original loan.
Borrowers do incur mortgage insurance on the FHA-insured HUD Home equity Conversion Mortgage (HECM) reverse mortgage. The amount is determined by the value of your home for the initial premium and that is 2.5% of the value or sales price whichever is less, up to the maximum HUD lending limit of $636,150. The annual renewal is 1.25% of the outstanding balance.
Heirs are entitled to the remaining equity of your mother's home once it is sold, of course if that is how her will was set up. You cannot borrow any additional funds from her available line of credit, that would be the same scenario as taking her credit cards to the department store and trying to spend money that is not yours to borrow from.
It's not illegal, but it is against the terms of the loan. Since there is no law broken, the only entity that would be interested would be the lender.
I suspect that the impounds they mentioned is the HUD LESA or Life Expectancy Set Aside for taxes and insurance. Without seeing the extent of the credit, I have a hard time making any kind of qualified statement but it would not be uncommon to see this kind of a provision based on HUD's new financial assessment guidelines with credit issues (a bankruptcy and foreclosure proceedings) within the past 24 months.
The mortgage insurance premium or MIP would not be eliminated with the refinance. All of the HUD Home Equity Conversion Mortgages (HECM or "Heck-um") require the MIP until the loan is paid in full. Refinancing the loan would pay the first loan off but would start a new loan which would also require FHA/HUD Mortgage insurance. The only way to eliminate this charge entirely would be to pay the loan off without starting a new reverse mortgage loan. Whether or not the refinance would actually benefit your rate would be a question of comparison but rates have risen in the past 18 months, they have not dropped so I don't know if a refinance will help you there either.
However, the only way you will know for sure is to request a proposal. When checking about the viability of refinancing an existing reverse mortgage, the lender needs the usual information but also needs a copy of your current reverse mortgage monthly statement and it really helps if you have a copy of the closing statement from when you closed that loan. The information we need to determine if you meet all the HUD requirements can be found on those two documents as well as in public records and we will be able to let you know if a refinance will work for you.
This is tough to answer without more information but if the payments the town allows are standard installments at which there are no fees or penalties and you are considered as agreed at all times, then the payments should be allowed. If the county or town allow you to make payments but you are technically outside of the allowed methods and timeframes, then it is not allowed. The only escrow arrangement with a reverse mortgage has to be set up before the loan is closed and that is a set aside to pay the taxes and insurance. If you have the funds in your reverse mortgage available, possibly you can take out enough to pay one installment of the taxes and then begin to pay them for the next year in your payments which would always put you a little ahead, but always on time as well if those payments are not the as agreed payments?
Your husband can add you back to title at any time whether you are on the loan or not. In fact, the loan documents specifically state that there is no call event as long as your husband remains on the title and lives in the home no matter who is added to title later (so you could add yourself and children as well if you wish). Adding yourself and family members back to title prevent a probate scenario if something should happen to your husband while you are not on title.
But Ellen, I am concerned with something else you have written here. The mortgage company cannot just "place you on the loan" and I have not heard of any companies who have given a wholesale representation to borrowers that they would not call the loan due and payable when the borrower on the loan passes. The current lender may not even have the authority to make that decision if the loan has been sold into a mortgage backed security or if they sold the loan to another lender by the time the event occurs. Therefore I would be really careful to be sure that the assurances you think you have are real. The only way I know of is to be a borrower on the loan documents at the time the original loan closed (which you were not), an eligible non-borrowing spouse at the time the loan was closed at which time the loan proceeds were determined by using your date of birth (which if the loan closed more than 7 years ago before you turned 62, this designation did not exist), or by refinancing the loan at this time using both of your dates of birth and both of you being on the loan now.
There is no way of which I am aware to "add a borrower" to an existing loan and therefore, I believe you do not have the protection that you believe you have. HUD has implemented a method by which lenders may chose not to call a loan due and payable with a surviving spouse but as I stated, I am not certain that your current lender can give you assurances at this time that you will always be covered in this instance because this protection is not written into the loan documents on which your loan originally closed as they are for eligible non-borrowing spouses today. I would encourage you to not only change the title asap to add both you and your husband to title (make sure you have someone who is familiar with the process help so that it is done as a non-taxable event) but also to do a review of the circumstances should your husband pass. You may find that a refinance into both your names at this time would be very advantageous, even if you did not get a lot more money from the new loan and you may find that you and secure a new loan for very little or next to no cost. We would be happy to look at this for you if you
She will be considered a "Non-borrowing spouse" and would not be allowed to be on the title or the loan when the loan closed BUT since HUD does allow eligible non-borrowing spouses (which is because she also lives in the home) to continue to live in the home for their lives as well without making a payment, the Principal Limit would still be determined based on her younger age.
It is very possible and I would encourage you to request a no-obligation, no cost proposal from our website Here. We will be glad to let you know and there is never any undue pressure or hassle.
I would need more information to determine whether or not mom is eligible for a refinance of her HECM loan, I would invite you to visit our website and request a free- no obligation quote based on all the factors. I would caution you though, if something happens to mom, the loan would become due and payable and this is something that both of you should consider since it might affect your future living arrangements if you are not able to refinance the loan later and would have to sell the house and move at that time.
The appraisal determines both value and needed repairs. HUD will allow for some repairs to be completed after the close while holding money aside to complete the repairs under some conditions, but usually only those repairs that cannot be completed due to weather related delays. There are companies who specialize in HUD repairs though and will agree to complete repairs with the agreement that they will be paid after the closing if that would work in your circumstance. If you choose to complete needed work in this manner, remember that the repairs are between you and the contractor, not the contractor and the lender! Make certain that you understand all repairs and costs and agree fully with the work to be done. If you are unhappy with the work, you would have to confront the contractor about the repairs so make sure you feel comfortable with the company/individual doing the work in advance and check references.
If you mean by making money available the day the loan funds, a lot of that depends on you and your location. We cannot begin processing your loan until you have completed the HUD required counseling. In some states (like CA), there is a waiting period after the counseling before we can do anything on the loan other than just send out the application. In California, that wait is 7 days. In some other states and in rural areas, appraisals take much longer than in metropolitan and suburban areas. Colorado, Washington and Oregon are notoriously longer turn times for appraisals and in rural areas of the country it can be the same case in any state.
But assuming you have your counseling done and you do not live in an area where appraisals take longer to complete, we count the time from the date the completed and signed loan application is returned to this office and that can usually be completed in 35 - 40 days assuming no appraisal or title issues that we have to resolve (and then the delay can be just a day or longer depending on the issue and how quickly it can be resolved). The loan will close after the federally mandated 3 day right of rescission which does not count the day you sign your loan documents and do that is a minimum of 4 working days which do not count Saturdays or holidays. Then your proceeds are wired to your account. If you take extra time to return documents or the signed loan package, that would be extra time that would not be included in this timeframe and that's why this answer started with "a lot of that depends on you and where you live"...
There are two dates that HUD used in the reverse mortgage that you refer to. They used to use just the date that corresponded with the borrowers being 99 years old with just the knowledge that borrowers could stay for life but that "knowledge" was not adequate for most borrowers who had long lineage in their families and had some reasonable hopes of living beyond the age of 99. So HUD added the second date in the Loan Agreement which represents 150 years old since the contract needs to have a conclusion date to be a valid contract in most states.
HUD pushed the date out to a date that represents the borrower being 150 years old in the Loan Agreement knowing that would be more than ample time for any borrower. The loan allows you to stay in your home for life and the 150 years should be more than ample to cover the life span of any borrower.
You can purchase any homes and as many homes as you like and it has no effect on your reverse mortgage whatsoever - as long as you continue to live in the property secured by the reverse mortgage as your primary residence. If you move to be closer to your children they you no longer meet the terms of your reverse mortgage and so you would want to determine what you plan to do with the home first. Would you want to sell it, refinance it with another loan or pay the loan off with other available funds? Those would be your options if you plan to move because the loan would become due and payable if you no longer lived in the home.
Once you move out of the home permanently, the loan can be called due and payable so you may want to keep this in mind.
HUD does have a provision to allow for Life Estates but you must be able to meet the HUD parameters as specified below. Since I believe the way you have explained this the trust would be the "Remainder man", it would not meet the HUD requirements as stated but that could be determined with a full review of the circumstances if you wish to pursue it further.
The reverse mortgage is a loan just like any other loan. The same rules would apply to the property disposition in the case of a reverse mortgage borrower who passed as would with a borrower who had a traditional or forward loan. Those answers may change with the location of the property, whether or not the borrower had a will or died intestate, whether or not there are heirs. But the loan does not change those options, it is a loan or lien against the property that must be paid or the lender would eventually have to foreclose to protect their rights and the property would be sold at auction if no heirs stepped forward.
Yes, there is an FHA appraisal performed and the property must meet all of HUD's property requirements. I really could not begin to get into all of HUD's requirements (which the property will probably meet anyway) since the HUD manual for properties must be 300-400 pages long and it would be impossible to cover all aspects in a comment like this. If the property is a 1 - 4 family residential home, has similar homes that have sold recently in the near vicinity and is in good repair, you are probably just fine. If there are a lot of quirky or unique issues or the property is in disrepair, is zoned something other than residential or has commercial influences, hazards (propane or gas tanks nearby, high voltage electrical overhead, etc) then you would be best to discuss your specific home to determine what areas of concern there might be.
As long as the foreclosure was not an FHA insured loan that resulted in a loss and you have re-established your credit and it has been clean since then, you should be able to get a reverse mortgage. You would have to write a letter of explanation and the BK and foreclosure should be the result of something that was out of your control and not just because property values trended downward and you didn't want to keep paying, but with any reasonable explanation you should be fine.
Your loan being modified does not impede the reverse mortgage process, your payment history of any loans on the property, the taxes and insurance and your overall credit will be reviewed and could have an impact on the terms of your reverse mortgage though. Many folks for whom we have closed reverse mortgage loans had obtained loan modifications at one point or another in the past so I would invite you to contact us with the specifics and we would be happy to go over your credit history as it relates to HUD's Financial Assessment Rules.
As long as you meet the HUD requirements and have the down payment, yes. We have borrowers who qualify on just Social Security income now.
There is no secret formula and we can determine eligibility very quickly. Call or email us if you are considering buying and we can run the numbers for you and send you a written proposal.
I can only guess that you are referring to an approved HUD condominium project? HUD currently requires that the project be approved before we can do a single loan in that project (and that includes even taking a loan application). There are some things you can do about that.
Firstly, you might be lucky enough to still find a lender who is working with HUD condo approvals if you need to proceed immediately. Many lenders ceased trying to get projects approved after HUD changed the guidelines in 2010 because so many of the projects submitted were rejected by HUD and the process is fairly long and labor intensive. Some HOA's did not want to cooperate in the first place and spending weeks getting the documents together just to wait 6 - 8 weeks for a HUD rejection was not a profitable venture for most lenders. I do not know if any lenders still offer this service or not.
There are several companies that have sprung up that do condo approvals. Most are staffed by former HD employees and are very good at knowing if the project is going to be one of the high ratio of projects that are rejected long before the documentation is sent to HUD. Some even have a guarantee that there is no cost is the project is denied but this does not avert the need to pay their fee if in fact, they are able to get your project approved.
Finally, and it sounds like this may be your best bet, HUD has announced that they are going to reinstate a process they employed prior to 2010 in which lenders could approve a limited number of loans in some projects without having to get the entire project approved. The process used to be called the spot approval process and it will be launched under a new name but we do not know exactly when or what the parameters will be yet. There will be some requirements the project has to meet, there always were. If your project is not mostly rented units, is not involved in a lawsuit, has an adequate budget for maintenance and repairs and has not been previously denied by HUD for cause, you may be best to hold off for a little while to see when the new condo procedures are announced.
Yes. Your husband would be considered what is called an “ineligible non-borrowing spouse” and since he is not living in the home you can take a reverse mortgage in your own name and we would base the proceeds on your age alone.
There is no waiver process and the benefit amounts and payouts are not flexible outside of the HUD prescribed availabilities. Unfortunately, there is no third tier to determine and price additional payout options/risks and so the maximum payouts are not negotiable outside of the already flexible parameters offered under the HUD programs.
As long as the first reverse mortgage is closed satisfactorily, yes, you can use the reverse mortgage over and over again, You can only have one at a time but there is no limit to the number of reverse mortgages you can obtain over-all as long as you meet the requirements and live in the home. HUD did implement the financial assessment (FA) guidelines in which all applicants must meet the income and credit requirements now. If you think you have any issues that may prevent you from being approved under the FA requirements, please don't hesitate to contact us an we will be happy to review your circumstances with you.
HUD requires 3 years for a purchase transaction and as long as the loans on which you had the two properties were not FHA-insured, they are not automatic declines. They are both over 24 months so they are not even automatic set asides to pay for taxes and insurance under HUD Financial Assessment guidelines, but a lot will depend on the reasons for the defaults. You will still have to fully explain the circumstances and document the things that were beyond your control that created the need for the short sales.
It will be the nature of the circumstances and the documentation that will determine what steps would then need to be taken to do the loan. All other credit including the payment of the mortgage (if any) and the taxes and insurance on your home should be on time for a minimum of the past 24 months.
As much as I would love to tell you my understanding and interpretation of this subject, there is no doubt that would constitute tax advice and I simply cannot do so due to the fact that I am not licensed to give tax or legal advice. However, I can very wholeheartedly suggest that you contact a tax attorney or your CPA and pose this question to him/her.
I don't know why the lender has said what they are saying and I know lenders typically won't give legal advice. Perhaps they are concerned about the title passing to the heir so that the heir can perform any steps needed to complete the plans to keep or sell the house? I can't say because I know nothing of the circumstances but it might be best to ask them "why" they believe so and then to check briefly with your friend's own legal counsel. It could just be that the lender is saving your friend from making a costly legal mistake - but I don't know and only a competent attorney in the area can tell you for sure!
You would owe the amount you actually borrowed plus any interest that accrued on it. The amortization schedule is printed at the beginning and does not take any of the following into consideration (if any):
A fixed rate loan would have no further draws and the interest would not change so if you made no early payments, then the amount shown as the loan balance would be the amount you would have to repay when you sold the home.
The answer is not a straight yes or no. You can do a loan for a borrower who is currently in foreclosure under the following circumstances:
1) The existing loan cannot be an FHA loan
2) The borrower still has to qualify under the Financial Assessment guidelines for income and credit
3) The borrower will receive a set-aside requirement to pay taxes and insurance
This means that the borrower's other credit must be over-all ok without any glaring issues or the borrower may not meet the credit criteria. They must meet the income guidelines established by HUD and so you would need to contact us to determine acceptance based on the borrowers' income and liabilities. The lender would set money aside out of the reverse mortgage to pay the borrower's taxes and insurance which means they would not receive as much money for loan payoff and other uses in the loan as even a comparable borrower who was not in default on their current mortgage. To determine the amount that they would receive, a lender would have to get all the information including the borrowers' monthly or annual taxes and insurance on the property and then they can determine the amount of money available to pay off the existing mortgage and for the borrwer for other expenses, if any.
That's funny, I don't remember ever getting a family member or possible heir to sign an agreement in advance that they will take on the financial responsibility for the property under these circumstances. You signed nothing with them and you have no obligation to them. If you are concerned about any possible further liabilities with any other entity (state, county, etc.), I would suggest you contact an attorney in your area but your mom had a property she used for collateral for a loan and the lender can only take those actions granted to them in the security agreements. Since you and your brother never signed anything that made you responsible for financial obligations to the lender or the property, I would suggest that maybe the lender should look to their own legal docs to see what rights they have to request you to do anything.
Having said that though, if you don't intend to keep the home, I myself would do whatever I could to move the title to the lender as soon as possible (deed in lieu of foreclosure, perhaps) but I would suggest a call to an attorney would probably be worth the time and limited expense for a one-time session. Especially if you have the legal docs from your mom's loan available, I think you'll like the outcome.
If your spouse is not on the reverse mortgage with you or she was not protected under the new non-borrowing spouse rules when the loan was made you will need to refinance now adding her as a borrower to the loan to protect her for her remaining lifetime as well. If not the loan will become due and payable upon your death and she will have either 6 months to refinance the loan into a loan of her own which may also include a reverse mortgage based on the amount available to her at that time or up to 12 months if she is making efforts to sell the home.
There's absolutely no issues with you taking on another second mortgage as long as the lending institution agrees to go behind the reverse mortgage which would actually be in third position since the reverse mortgage lender and HUD take both first and second positions against the property.
The home equity conversion mortgage program will allow for subordinate financing. Having said that you may want to double check on that offer I have never seen a bank or anyone offer an equity line of credit behind a reverse mortgage loan due to it negative amortization nature.
If your daughter is on title and you intend to keep her on title, then she would also have to be eligible for the reverse mortgage loan (62 years of age or older) and be living in the property. The Principal Limit or the amount of money you would receive, will be based on the age of the youngest borrower so her age would dictate a lower benefit or loan amount. So yes, having a child on title would make a difference on a reverse mortgage loan.
The 95% provision is usually reserved for heirs who want to pay off the loan themselves, not sell it to a third party. I can't speak for the lender, but I can see where they might be concerned that any "sale" from an heir who has not really inherited the property yet may cause issues at a later date when/if there are title concerns and the heir didn't really have the right to sell the property at that time. If the property has not been through probate, what if there are other heirs that pop up who also claim rights and title to the property? I can't blame Novad for not wanting to be involved with the sale transaction under those circumstances.
However, that does lead me to ask, if there is no equity left in the property, why bother being involved in the sale at all at this point? The loan is a non-recourse loan and that means the lender cannot seek repayment from any other assets of the original owner or any heirs. If there is no equity and you cannot sell the home at this point due to the probation requirements, you can simply walk away from the home with no consequences and let the lender worry about selling it once they receive title through foreclosure. In the meantime, you do not have to even worry about the sale and there are no financial consequences if there was no equity anyway.
There is a 3 day right of rescission that actually runs for 4 days or more since you cannot count the day you signed, Sundays or holidays that you can still cancel the transaction just by notifying the lender. If this is your intent, do not let the time pass though because they will fund the loan after the rescission period if you have not cancelled by then.
You cannot turn your home into a bed and breakfast or an Air B "n" B making it a full business, but you can rent out a portion of your home at your discretion to others. If you have questions regarding the usage, I would suggest you contact your servicer (Wells Fargo) and discuss the intended use with them before you begin. Chances are you are fine.
Absolutely can. You can pay off your current reverse mortgage loan by selling or refinancing at any time with no penalty.
There is never a prepayment penalty on a reverse mortgage so you can certainly pay the loan off in any timeframe you desire. The Payment amount required to pay a loan in the amount of $75,000 off in full would depend on the timeframe in which you wanted to be able to pay the loan off. Since I don't know your intended timeframe, I can't tell you how much you need to pay monthly.
But you can use just about any amortization schedule online and plug in different timeframes or payment amounts to make this determination. We also have an amortization schedule we have developed that requires your computer to have the Excel program to run.
Link to our free calculator: https://reverse.mortgage/amortization-calculator
Your question is very difficult to answer without more information. If your wife is on the current loan, she absolutely can. If she is an eligible non-borrowing spouse, that is, she was a non-borrowing spouse when you obtained your loan but she is eligible to remain in the home based on when you received the loan and the parameters in effect at the time, then yes she can remain in the house for as long as she lives, BUT she would not have access to the line of credit because she is not a borrower on the loan.
The final scenario is if you obtained the loan and your spouse is not a co-borrower or a qualified non-borrowing spouse and then the loan would become due and payable when you no longer occupy the home. At that time, your spouse would have to make arrangements to either refinance the house with a new reverse mortgage in her name (which if you have a small balance sounds like it would be a very viable option), with a standard or forward loan, with other funds available (such as insurance proceeds) or would have to sell the home at that time.
You cannot simply add a borrower to an existing loan. To add a spouse, or anyone for that matter, to an existing loan, you would have to refinance the loan and then you, the property and the new borrower would have to qualify under the current guidelines/parameters of the program. Since you have had the loan for almost 7 years now, depending on appreciation of the property, how much you borrowed and the interest you have accrued, the refinance may or may not be an option without having to bring cash in to close the loan. The only way to know for sure is to visit our website and run the numbers on our calculator or contact our office if your property is located in one of our approved states.
I'm sorry, we are not licensed to give tax or legal advice and I cannot weigh in on such matters. I would not be able to do so even if I had all the parameters of the purchase, sale, improvements, debt forgiveness, etc., because our licensing forbids it but I don't even have those items and so anything I even took a stab at would be totally unqualified and therefore inaccurate. I would advise that if you feel you are receiving bad information for your circumstances that you contact another, perhaps more senior tax accountant or attorney for a second opinion.
He can be out of the home for up to 12 months before the move is considered permanent so you have plenty of time, but if you are certain this is a permanent situation, there is no sense in waiting and letting the interest accrue if you know he will not be moving back to the property. He is allowed up to 12 months for a temporary absence before the lender can call the loan due and payable due to permanent move and then there is still some time even after the loan is called to settle things if needs be, but if you know this is the time to finalize things, I would advise you to do so as quickly as you are able to keep your costs as low as possible.
Aside from the interest that continues to accrue as long as the loan is open, if you let it go long enough and the lender has to begin foreclosure to protect their interest, then additional costs will accumulate and there just isn't any reason to let it happen if you know in advance where this is headed.
There is no requirement that there is an existing loan on a property in order to obtain a reverse mortgage, only that if there is a loan, it must be paid off first with the proceeds and then the borrowers can use the remaining reverse mortgage proceeds for any purpose they choose. If there is no current loan, there is nothing to pay off and borrowers have full use of all proceeds in accordance with HUD payout provisions.
To qualify for a reverse mortgage, all owners of the property must live in the home and be eligible for the loan (62 or older) or be a qualified eligible spouse and live in a state that allows a non-borrowing spouse.
Right now you have one of two options. Either convince your Association to submit to FHA for a full approval on the project which may take up to five weeks, or you can wait for new guidance from FHA on what is called the condo single unit approval.
Late last year FHA announced upcoming changes to the condo approval process which will soon enable lenders to do what is called a "single unit approval" where lenders do not have to approve the entire project for those seeking reverse mortgages. You can read about these upcoming changes here https://reverse.mortgage/condo-changes-spot-approval
I will also add your email address to our follow-up series once these guidelines are published.
We cannot do a loan for a non-borrowing spouse in Texas at this time. Both borrowers must live in the home and be eligible for the loan. The rights of heirs and spouses do not jive with the requirements of the HUD Home Equity Conversion Mortgage. But also, but to be clear, the minimum age is 62, not 65.
I'm sorry but I cannot answer this for you. This would be up to the lender and to HUD but typically when any lender is requested to do a partial reconveyance of land included as security in a loan, a proportional portion of the loan amount would have to be paid off. But I honestly do not know if that would work with the reverse mortgage, especially if the borrower has a line of credit that has a growth feature.
Lenders do not typically give up pieces of their security simply because the value has increased just as they do not contact the borrower and tell them to bring in more property at times when values fall. The borrower would have to contact their lender to make such a request and since the loan is insured by HUD, I am sure they would have to approve as well but I honestly have never heard of them doing so. I guess it couldn't hurt to ask though, the worst they can do is tell the owner no. If they did agree to it, I have no idea what costs might be associated with such a change.
I'm not sure how to answer this because I'm not really sure I understand your circumstances. Are you saying that you have a reverse mortgage now? And if you are making payments, to whom are those payments being made? The refinance is not your safety net because if you've been delinquent on taxes, HUD now requires a set aside to pay the taxes and insurance and if you're telling me you have no equity in the home, you would not qualify for the new reverse mortgage plus the Life Expectancy Set Aside (LESA). However, if you are paying the taxes and are on a bona fide repayment schedule, my advice would be to contact your servicer and make sure that HUD is also aware of the fact that you are bringing your taxes current by agreement. I don't know your circumstances and cannot speak for your lender or for HUD but I have seen borrowers enter into repayment agreements to catch up on the taxes in other circumstances in lieu of foreclosure and it just might work for you as well.
Since you numbered your questions, I will answer them in the same manner to keep it straight.
1) Interest only accrues on the portion of the line that you use. If you only borrow a portion of your line then you only pay interest on the outstanding balance, not the total amount available to you if that is higher (such as in your example). Learn more about the line of credit and interest charges here.
2) There is never a payment due but also never a prepayment penalty on a reverse mortgage so you can make a payment of any amount at any time, up to and including payment in full, without penalty. Since there is no payment due and no due date, anything you choose to pay may be paid at any time you choose. Any funds you repay may be re-borrowed at some point in the future if you desire but if at any time your balance reaches 0, unlike a home equity line of credit, your loan would be paid in full and closed.
3) Yes you can "technically" refinance your reverse mortgage loan any time after 18 months. I say technically because you have to meet a 5 times benefit to do so. In other words, you must be able to attain at least 5 times more benefit from the new Principal Limit than from the old Principal Limit (not the current balance) as it costs for the new loan. The costs are typically the third party costs in your area which include any state and local fees (this can be as low as $2500 for a property valued at $550,000 to as high as $5500 in some states). HUD will credit any Initial Mortgage Insurance Premium you paid on the first transaction so the additional cost would only be incurred if the property increased in value - but then again, a pretty substantial increase in value is usually the only way the 5 times benefit will happen. That's why I say that technically you can refinance the loan, but many borrowers find that the required increase in value does not allow them to do so in many cases except for during times of rapid appreciation. I advise borrowers not to plan on a refinance and then if it is possible later, it is a unexpected bonus.
4) HUD allows borrowers 100% usage of the line under 2 scenarios - when the funds are going to pay off current liens/mortgages on the home and for a purchase transaction. You would not have to wait for access to any funds and could receive 100% of your benefit amount to purchase a home on either the line of credit or the fixed rate reverse mortgage.
5) I would encourage you to contact our office for a proposal on the purchase. We do not require you to provide a lot of personal information and we do not hound you to complete the transaction - we are not a high pressure company. The reason being that on a purchase loan, some states have even higher purchase costs (such as mortgage taxes, intangible taxes, etc) and I do not know which state you are writing from. I would also like to send you a brochure we authored that gives potential purchase borrowers some additional information and you said you were considering a new construction home. There is an additional HUD requirement at this time that on new construction, we cannot even take a loan application until after the Certificate of Occupancy has been issued by the county or city where the property is located. Many builders will not accept this limitation as they want to close the loan right after the C of O is issued, not start the loan at that time. We are hoping that HUD may change this and other purchase requirements, but as of today, that is the rule under which we have to operate and there are other restrictions that all purchase borrowers should know as well. You are also welcome to use our reverse mortgage for purchase calculator to gather estimates anytime.
There are a number of factors that will determine whether or not having an oil tank will be acceptable. Sometimes they can be left alone and other times they have to be removed. HUD has a number of requirements that come into play when dealing with a storage tank. Appraisers have to assess their location, condition, impact on marketability and value, etc. and whether or not there has been any effect to the soil of the property or if there is any leaking or odors. The appraiser would also have to note whether or not the tank being there presents any issue with current local codes or ordinances. If the town or city no longer allows for a tank and the mere existence of the tank violates any regulations, that could require the removal of the tank in order to get the loan completed.
The size of the tank also can play a factor as HUD will not allow a property that is within 300 feet of a tank that can store 1,000 or more gallons of flammable liquid. Now this usually only applies to homes near gas stations, but the appraiser would have to address that as well. I wish I could give you a definitive yes or no answer, but there are simply too many factors to consider.
This is not a question of the reverse mortgage but rather one for an attorney. I'm sorry, I can't give you legal advice and I do not know what document you signed or what effect it had on your title. A "disclaimer" is merely something that serves as notification. I don't know any of the particulars about the loan itself or the title and you have both issues to consider. I don't even know if this is a first marriage for each of you and if there are other heirs involved. I'm sorry, this is a great question for an attorney in the state where the property is located but even he/she will need more information to be able to answer it.
If you are their heir and inherit the property, then you would own the property and would have the opportunity to choose whether you wanted to pay off the loan with another loan in your name or sell the property. If both parents pass though, the loan becomes due and payable at that time and you would have a decision to make. If there are other heirs as well, then you would have to work that out with your other heirs, possibly amongst yourselves or in accordance with your parents' final instructions or court order if they have no will.
I'm sorry, this would be information you would need to request from your accountant or trusted tax attorney. There may be provisions and "what if's" involved and we are not licensed to give tax or legal advice.
I'm sorry, I really don't know how to answer this question. They still own the home and the equity is still theirs and so a lot of their decision may will still be based not on whether or not they used their reverse mortgage proceeds but on how much the property has gone up in value (if at all), how much interest they have accrued and the marketplace in which the property is located. Most active markets have experienced a good deal of appreciation in the recent years and so there may be a lot of equity still in the home and it may be best for them to sell the home, pay off the balance and keep the proceeds. If they live in an area where values were hardest hit and their value went down substantially but has not rebounded, they can also be comforted in the knowledge that although they were able to live in the home payment free for a time and may have extracted some or a good deal of equity, they can never be made to pay back more on the loan than the property is worth, regardless of how much money they received or how long they lived there payment free. And the lender can never go after any other assets to repay the debts either.
Their first step would be to obtain a market evaluation from a realtor to see what the home is worth and what would its most probable sale price would be and then compare to the balance owed on the loan. From there you can start to make some decisions but at least you don't have to worry about the payments crushing them in the mean time because there are none and they can stay there as long as they like until you all devise the plan that works the best for them and their circumstances.
A reverse mortgage line of credit is very similar to a Home Equity Line of Credit (HELOC) in many ways but different in some very key areas. It is similar in that your limit is established based on the lending criteria and then you can draw on the line as you need the funds. You do not accrue interest on any funds you are not using and if you decide to sell the home and move, you only pay back the portion of the line that you actually used plus any interest that accrued (which could be a very small amount of the line or all of it depending on your needs and wants).
Those are the similarities, but there are some very big differences as well. The loan can never be closed at the whim of the lender if they should decide they are no longer in the business of originating credit line loans, they feel your value may have fallen or that your income may have changed as many people experienced when the credit market changed dramatically around 2010. Unlike the many borrowers who suddenly had their credit lines frozen or closed, the reverse mortgage line of credit is backed by the full faith and credit of the federal government and you never have to worry about losing your available line when you need it most.
There are no payments due with a reverse mortgage line of credit. Unlike a HELOC where your payment amount may increase, and sometimes sharply if you end an interest only period and begin the repayment period, the reverse mortgage line of credit has no payment due for as long as you live in your home. However, even though there is never a payment due, there is never a prepayment penalty and so you can choose to make a payment of any amount at any time up to and including payment in full at any time without penalty. This means that if you want to make a payment to keep your balance from growing, you can. It's entirely your choice though and so there is never a late charge or a concern about credit implications if you can't make a payment in any given month or you want to reduce the amount you like to pay because there is nothing due in the first place. This gives borrowers flexibility and freedom from credit concerns.
Another phenomenal feature of the reverse mortgage line of credit is the growth feature in the line. The reverse mortgage line grows on the unused portion so that each year you have remaining funds that you do not use, the line of credit available to you becomes larger. Instead of having your line cut or frozen by the bank, your line is growing every year on the unused portion of the line by an amount equal to the interest accrual rate plus the MIP accrual rate which is currently anywhere from approximately 5 - 6% per year. This is not interest anyone is paying to you, it is simply an increase in the line available and if you do end up borrowing it, you will accrue interest on it but on a $100,000 line of credit that is not used for 5 years, that would give the borrower a line of credit available of over $132,500 at current rates! Some borrowers with higher values start with lines at or above $375,000 and their lines with this same 5 years of growth can exceed $500,000 with even the slightest of interest rate increases. It's not hard to see how the reverse mortgage line of credit has become an extremely viable retirement tool, especially for younger borrowers who don't plan to utilize their line for 10 years or more.
The only other real difference is that you don't get a card or a checkbook and you request the funds from the line when you want them from your loan servicer. This is done to protect you as much as anyone else so that others may not "spend" on your account, it requires you to make a withdrawal from your line. Once you do though, the funds are wired to your chosen bank account and so you have them within a couple days and with a wire, you don't have to wait for the checks to come in the mail or for the checks to clear before you can use them, regardless of the amount. Now that HUD limits the amount borrowers can receive in the first 12 months based on the mandatory obligations to be paid (existing loans to be retired and costs to obtain the loan), the line of credit reverse mortgage has become by far the most popular option for reverse mortgage borrowers.
The reverse mortgage is a loan and just like any loan, the lender only has the rights that you give to them in the legal documents. I would suggest that you get a copy of the legal instruments that set the rules between you and the lender - the Note, the Deed of Trust or Mortgage and the Loan Agreement and then not only read them yourself but also have them reviewed by your legal advisor. There are specific sections that deal with the "Grounds for Acceleration of Debt" that address of the circumstances the lender can call the loan due and payable. Failure to pay the taxes and insurance and any other property charges are covered; one original borrower must still live in the home as their principal residence; the borrowers may not have sold or transferred all of their interest in the home without at least one original borrower still retaining their title; at least one borrower fails to reside in the home for a period of 12 consecutive months or more; the borrower may not commit waste or destroy damage or substantially change the property (turn it into a hotel for example) or allow the property to deteriorate beyond reasonable wear and tear.
All the terms are contained in the legal documents and are clear and pretty straight forward. And as I started out saying, no lender has any rights that you do not grant to them as the property owner so take the time to review the legal documents in advance to make sure you are comfortable with the promises you will have to make in order to procure the loan.
As long as the surviving spouse is also on the reverse mortgage or is an eligible non-borrowing spouse, they can live in the home for life without making a mortgage payment. They still are bound by the same rules, must occupy the home, pay the taxes and insurance and maintain the home in reasonable shape. Otherwise, there is no time limit on either spouse.
You can put your son on title after the reverse mortgage is done but not before. All borrowers on title when you get the loan must occupy the property and meet the minimum age requirement of 62. Putting him on title would allow him to avoid probation in the event something happens to you and your husband, he would own the home, but the loan would still come due and payable and he would have to either refinance the loan at that time or sell the home if he was unable to do so and therefore it may not be the solution you were seeking.
Many people use the reverse mortgage to do exactly what you ask - pay off their existing loans and become payment free. Some people do use the loan so that they have access to additional cash, but for many, eliminating the mortgage payment they have been paying month in an month out gives them access to the additional cash they need just by the virtue of having that money available to them to use instead.
HUD has a rule that they do not allow "bare wood" contact with the home for decks, fences, or other wood to prevent damage to the home. This means that most decks and fences that come in contact with the home must be painted or stained in order to comply and most often Redwood decks are "sealed" which protects the wood and preserves the beauty of the wood (and meets HUD's requirement).
But now the important distinction is whether or not the deck is connected to the home. We also see some decks that are stand alone, that are not connected to the home in any way in another location in the yard. Decks that have no contact with the home are not required to be sealed, stained or otherwise treated.
Let's start with your last question. Costs and fees are dependent on market conditions and subject to change. The only way to know that for sure at any given point in time is to contact us and request a proposal on your specific circumstances.
The condominium must be on HUD's approved list that can be found on their website here. Simply put in your zip code on the first page and all the projects that have been submitted to HUD for consideration in that zip code will appear. Don't forget to look to the right to see the current status as the list includes projects that are approved, were approved but expired and were rejected. Only approved projects are eligible. HUD is currently reviewing a process to allow individual units in some projects that are not currently approved that used to be known as their "spot approval" program. If an when they reinstitute this program or one like it, they will have another way to do loans on some units that are not on this approved list but we do not have the parameters of that program at this time as it is no yet in effect.
I hate to defer, but "some credit issues" is much too vague to comment on here. There are some credit issues that can be easily resolved with a letter of explanation and supporting documentation, some that would require us to set funds aside to pay taxes and insurance and some that might prohibit us to do the loan. If they are old and minor enough, we may not even have to address them. At any rate, I am afraid to answer this question with any degree of accuracy we would need to have you contact us to discuss the individual issues, dates when they occurred, final outcomes and the overall creditworthiness of the borrower.
You are not responsible for the repayment of the loan in any way if you did not sign the legal documents promising to make the payments. In addition, the reverse mortgage is a non-recourse loan. This means that the lender can only look to the property to secure repayment on the debt they cannot seek repayment form individuals. Having said that, if you are the heir who will inherit the property if he passes, you may want to check your equity position to determine if it is in your best interest to dispose of the property and keep the equity if the result of the required repayment is that your husband has passed. Your best alternative if you are not certain would be to seek competant legal counsel in the the area where the property is located.
As long as one of the original borrowers remains living in the property as their primary residence, you meet the requirements of the reverse mortgage. So if you are also on the Michigan reverse mortgage and you maintain this home as your principal residence, you live in the home at least 6 months or more each year and you do not leave for more than 12 months at a single time, you are meeting the requirements of the loan.
If your spouse is not on the original loan, the loan would become due and payable upon your permanently leaving the property. You determine who your heir is and if you leave the home to your new spouse, she can stay in the home, but would have to make arrangements to pay off the loan with either a new loan or with other funds available to her if she intends to stay there. If property values were to drop or for any reason your property was not valued as highly as the amount owed on the reverse mortgage, she would have the option to pay off the current loan at the balance owed, or 95% of the current market value whichever is less so that would enable her to obtain financing but she would still have to be able to qualify for the new loan.
First and foremost, remember that the way lenders can offer 0 closing costs to borrowers is by paying those costs on the borrower's behalf. There are no loans available that don't have any closing costs associated with the loan, it's just a matter of whether or not the lender is able to recoup the costs they pay on your behalf and close the loan with you paying none of the costs. So it is 0 costs to you, but someone does have to pay those costs.
Knowing that, you need to remember that there are usually minimum loan amounts at which the lender can pay your costs. If the lender cannot recoup all of the costs and still pay their staff, then a no closing cost loan is not feasible in all cases. It is also not advisable to take funds that you do not want or need just to try to get a 0 closing cost loan. You need to balance your desire for no closing costs with the interest rates and determine which scenario works best for you. This loan is all about you and your needs so make sure the combination of rates and fees you choose are the best for your circumstances/plans.
Finally, no, you never have to sign a Quit Claim Deed to the lender to obtain a reverse mortgage! The home is yours and belongs to you. If any lender is asking you to sign a Quit claim Deed to them at closing to do a no cost loan, there is something wrong and you should question that transaction.
I am afraid that is not accurate. HUD Mortgagee Letter 2014-07 states that with Case Numbers assigned on or after August 4, 2014, borrowers with eligible non-borrowing spouses would have the birthdates of the non-borrowing spouse also taken into consideration when the loan amount or Principal Limit was determined and then those non-borrowing spouses (with certain conditions) would be able to also stay in the home for their lives as well without having to make a payment on the loan. It only pertained to Case Numbers assigned on or after that date though and did not retroactively affect the loans originated and closed prior to that time.
You can find a copy of HUD's Mortgagee Letter here.
HUD will allow a reverse mortgage when one spouse is over the age of 62 even if the other is not. This is called a non-borrowing spouse and requires the under-aged spouse to come off title to do the loan. You can read about non-borrowing spouses here (put in link to NBS). You need to read the parameters and make sure this is the right decision for you.
Some states, like Texas, however, do not allow one spouse to come off title to do the loan though. Not knowing where you are located, I cannot comment on whether or not your state allows this practice. The amount you owe and the value would certainly not be a problem as long as all other loan requirements are met.
HUD does allow for this under certain circumstances. The only way to know for sure is if you send your current statement, the age(s) of the borrower(s) to us and let us pull some sales from your area to determine if the refinance will work for you. HUD requires that the benefit of doing the new loan is great enough when compared to the costs and the only way we can tell you for sure is by having all the information which also includes the new appraisal but we can usually get a pretty good idea just by looking at the recent sales in your area.
If you would like us to check, you can always scan and email the current statement, fax it to us at (800) 565-1968 or give us a call and we will take the information over the phone. Any way you choose, we are not a high-pressure lender, if we can do it we can usually do them at drastically reduced fees and if it works out for you great but if not or if you change your mind, we won't be pressing you to do the loan anyway!
If you leave while still on the reverse mortgage, the only thing you have to worry about is that you cannot quality for another reverse mortgage on another property while still on the first one. If he stays until he passes, the lender can only look to the property for repayment of the loan due to the fact that the loan is a non-recourse loan. They cannot make either of you or your heirs pay back the loan with any other assets.
I am afraid I cannot help you with any of your legal questions regarding rights of heirs, but I can tell you that you can search on line to determine what loan(s) was/were on your father's home and it will be easy to determine whether or not he had a reverse mortgage just by looking at the Deed that was recorded. If you are not sure how to accomplish this, a title company can assist you with this search as well and most real estate sales people in your area can also pull copies of Deeds so if you have any acquaintances in any of these professions, they can do a quick internet search for you as well. The recorded Deed is a public record and so it is not usually very difficult to obtain.
If you refinance your reverse mortgage with another reverse mortgage, you will get a credit for the entire portion of the initial mortgage insurance premium that you paid and it will go toward the new loan. For example, if you paid $5,000 initial premium on your first reverse mortgage and the second reverse mortgage would be $6,000 under the normal premium guidelines, you would receive a $5,000 credit of the amount already paid and your premium on the new loan would be just $1,000. If however the new premium amount is less than the old amount you originally paid, then there is no additional credit but you would not have to pay the initial premium a second time.
We see this very seldom and the few times it has come up, the addition of the unpermitted bathroom/toilet in the garage violated the local zoning laws and the bathroom did have to come out in order to complete a reverse mortgage. I can't tell you that yours absolutely would have to though. If the local ordinances and zoning allowed for it, it was done in a workmanlike manner and the appraiser found no issues with it, it is possible that it would not be required to be removed but this has not been the case on any we have seen yet.
You appraisal is good for 120 days before the appraisal becomes expired. If your home was appraised in September, the appraisal is either expired by now or is about to become expired at which time the case number has to be cancelled and a new loan must be started at that time. Only the lender who ordered the Case Number with HUD can cancel it so if you transfer it now, the new lender would need the cooperation of the existing lender to cancel the old Case Number (either now or as soon as the appraisal expired) so that the new lender could proceed with the loan.
We have taken many Case Transfers from borrowers who just decided it was time to move, but unlike some originators who encourage borrowers to move just because they want the loan, we think you should not do anything unless it makes the most sense for you! I have to believe if the loan has taken this long, there is something that is impeding the progress and you really should find out what that is. That last thing you want to do is to order another appraisal, wait for weeks or months again only to find out that there is some issue that the lender cannot resolve that might be an issue for any new lender as well.
If your loan officer is not communicating with you, I would suggest a call to the manager or higher until you get your answers. We would be happy to help you, but I would never suggest that you do anything that would make it even tougher for you and it just could be that communication with someone may let you know what the holdup has been. It does not take that long to close a reverse mortgage so it would be really beneficial to know why it has been delayed before you incur additional costs and delays. If that still doesn't work, give us a call!
The home is always yours and does not revert to the lender upon your death. If you will it to a relative and they choose not to step in and either sell the home or pay the outstanding balance with other funds available (as would be the case with a refinance of the loan into their own name) in order to keep it, then they can choose to simply walk away and the lender would have to foreclose on the loan to obtain title to sell the house. But there is no provision under which they would automatically obtain the title to your home when you pass.
You are not eligible for another FHA insured loan until more than 3 years have passed since the date the FHA claim for loss on your last home was finalized through the FHA system. So you may be eligible in 2018 and you may not depending on when the whole loss was finalized through the HUD system. That is not just when the property was foreclosed or sold through a short sale but when all the final claims were submitted to and paid by HUD to all interested parties. This can sometimes take a few months and we have sometimes seen this take over a year to complete.
The HUD system is known as the CAIVRS system (Credit Alert Verification Reporting System - yes I know, there is no "I" word as in the acronym but CAIVRS stood for a different but similar name at one time before HUD changed it and they never changed the acronym). Lenders must look up all borrowers to determine that they are not disallowed an FHA loan before they can proceed and if it has not been 3 years or more since the date HUD finalized the claim on your home, you would not yet be eligible. When you are ready to get serious about looking for a home, check with us or any FHA lender and we can check the status to see if you are cleared to purchase and if not, we can request the timeframe as to when you will be.
Borrowers may apply for and receive a reverse mortgage if you have a current mortgage that needs to be paid off, multiple mortgages or no mortgages at all. Your benefit amount or reverse mortgage loan amount is determined by your age (or the age of the youngest spouse or borrower to be on the loan), the value of the home or HUD's maximum lending limit of $636,150 (whichever is less) and interest rates in effect at the time. They all go into the HUD calculator and the benefit amount is determined based on this criteria. From the loan amount or what is referred to as the Principal Limit, all fees and existing loans/liens must be paid and then the remaining funds are yours to use at your discretion, just like a forward refinance loan. If you have no loans on the home, you may use the money for any purpose you choose.
Texas will not allow you to close a loan until she is 62 years of age and the HUD rules allow you to start an application no more than 60 days before her 62nd birthday. So the answer is you may begin the process by starting your application and completing the required counseling, etc. 60 days before her 62nd birthday, but you must wait for that birthday to close the loan. Unfortunately, rates and fees have been in a state of flux since the November elections and any quotes you receive between now and then may not be accurate by the time you are ready to proceed.
I'm confused. If you just signed a Quit Claim Deed, you just further relinquished your possible interest to the property. If you were being added to the property, it would not have been done with a Quit Claim Deed as this form of Deed just forever relinquishes any ownership in a property, it does not grant ownership to an individual. For that action, you would use a Grant Deed. I would suggest that you consult an attorney regarding the ownership rights because one person can add others to title by Granting ownership to themselves and any others they desire but a Quit Claim Deed is meant just to relinquish any ownership claims to a property and does not add additional owners. I am not an attorney and cannot advise you regarding ownership laws or rights and you really should seek the advice of an attorney for which Deed to use for each purpose.
With regard to the reverse mortgage, if your soon to be spouse obtained the loan before you were married and you were not an owner living in the property at the time and on the loan, then the loan would become due and payable if something happened to her while you were still living in the home. The payments would cease as soon as the lender became aware of her passing and they would be looking for the plans for the repayment of the loan, whether that was by a new loan or by the sale of the property and satisfaction of the debt. If you are relying on a Quit Claim Deed to grant you ownership to be able to sell the home to repay the obligation, I do suggest you contact competent legal counsel as soon as possible though because I believe you may have chosen the wrong instrument to convey title (if I am understanding correctly from the comments provided). I wish you the best.
There is no requirement on the reverse mortgage program that you sell your existing home. There are some issues that you may run into if you do not plan to sell the existing home, but most can be overcome with planning.
Firstly, if your current home has a reverse mortgage on it, you cannot have two reverse mortgages at the same time. This is one of the toughest issues to overcome as the first reverse mortgage does have to be satisfactorily closed before you can close on the new sale. If you do not have a reverse mortgage on your existing home, this is a moot point.
You must be able to qualify with both houses if you have not sold your existing home. Even before HUD enacted Financial Assessment Guidelines in 2014, they required borrowers using the reverse mortgage for purchase program to meet qualification criteria. If you retain a home, you must be able to qualify with both homes and that means you also have to have the down payment requirement for the new home without the sale of the existing available to you, the funds cannot be borrowed.
You must occupy the new property as your primary residence. All of underwriting is based on history and likelihood of continuance. Since you are not selling the existing home, the underwriter has to look at the transaction and the totality of the circumstances and make sure they all make sense. If there is any question that the home you are purchasing will be your primary residence, there may be additional requirements before the loan can close and there are always occupancy inspections on purchase reverse mortgages after the closing to ensure borrowers have moved into the property.
So if you qualify with both homes and do intend to occupy the property as your primary residence as soon as the sale closes, there should be no issues with closing a reverse mortgage purchase, even if you want to retain your existing home and sell it later, rent it out or let family live in it!
I'm sorry but this is a question for a competent legal counselor, and possibly ultimately the courts but not a reverse mortgage specialist. The loan does not affect wills and how heirs will divide an inheritance. You may want to question the attorney about your nephew's use of the home, the interest that accrued during his occupancy, and costs to rehabilitate the home due to their lack of maintenance and its ultimate effect on the value, but I certainly cannot tell you how that would be decided. I wish you the best.
We really don't have a minimum credit score requirement but we will be looking at your last 24 month credit history to make sure that there aren't any serious delinquencies such as late payments on your property taxes, credit card debts or mortgage obligations. If there are those problems present we would present you with an updated proposal including what's called a LESA - (Life expectancy set aside). This is an account we use to maintain your property taxes and homeowners insurance should you not meet the minimum credit standards for the program. As far as income you will be required to meet a minimum residual income requirements set forth by the FHA. It's not a full debt to income ratio type qualification but more of an ability to maintain taxes and insurance for your expected lifetime. You can learn more about the residual income requirements here.
Hi Carmen, We service all of Florida and 15 other states, in fact we are one of the highest rated reverse mortgage lenders in all of Florida. We are able to pass a significant savings along to our customers by working with you from our headquarters in Southern. I assure you our pricing is the best and service to match.
When you apply we overnight the application with a prepaid UPS envelope for return. We will then send out a local FHA qualified appraiser who knows and understands your market so that you receive a fair appraisal and when it's time for your closing we send a traveling notary to your homes you don't have to go anywhere. If you'd like to compare our offer to any company I think you will find that you will get more money from your equity. You can request your quote here and I would be happy to email you back complete analysis by email.
A reverse mortgage is a loan just like any other loan. If you pay real estate taxes, your loan does not affect your ability to claim the real estate taxes that you pay. Interest is also deductible but there is one caveat, it is deductible when you pay it. So if you choose not to make any payments on the loan, I would bet that your accountant will tell you that you cannot claim interest that you did not pay yet. However, I am not licensed to give accounting advice so you really need to contact a CPA or tax professional for that consult.
I'm sorry but I cannot answer this question for you. This is a legal question having to do with the rights of heirs and not a question regarding the reverse mortgage itself. The program allows for the borrower's heirs to either walk away without having to pay a dime or to pay off the existing loan for the balance owed or 95% of the current market value whichever is less (and in this case, current value would definitely be less) but it would not be up to the lender to determine who that legal heir would be.
You could always approach your step-mother and step-sister if they do not intend to keep the home anyway to see if they would be willing to let you act as the heir in this instance since you would have to come in with 5% to keep the home. If you wait for the lender to foreclose, you could then buy it at that time (foreclosure sale) but you would also run the risk of having to bid against other bidders at the foreclosure sale and those sales are typically all cash transactions. The lender can't sell you anything it does not own and it does not own the home until and unless it goes through a foreclosure sale and no one bids higher than the lender's opening bid (which is what is owed the lender - the lender cannot raise its bid later). After the sale, if the lender's opening bid holds and the lender owns the home, it is free to sell the home to anyone at whatever price it can get.
I would strongly suggest that you obtain legal representation in the area prior to that time to determine your actual rights in the matter. Some states have stronger laws regarding rights of heirs than others and I can't begin to advise you on the matter.
I'm afraid you have not given me much information. You are not yet old enough to be on a reverse mortgage (all borrowers must be 62 years of age or older) and so you would have to come off of the title and your husband would have to do the loan in just his name. You would be determined to be a non-borrowing spouse. You could be added back to title the very next day to ensure your title rights and HUD now protects non-borrowing spouses but there is another consideration that might make this a bad idea for you at this time.
You would have no access to the reverse mortgage proceeds if anything should happen to your husband. If he passed and there were still funds available in the loan, since you are not a borrower on the loan, you could not access those funds. If you had to use the entire loan just to pay off your current mortgage, this might not be a negative for you. Under HUD's rules now, you can stay in the home for your life as well as an eligible non-borrowing spouse, but you have the same obligations as the borrower (taxes and insurance must be paid on time and you must reasonably maintain the home). You have a limited time to put the home into your name after your spouse passes and that is why we recommend that you change the title back to both you and your spouse as soon as possible after the loan closes. DON'T WAIT. Some folks do thinking they will get around to it and then something happens and they forget, then something else happens and now there are other issues that arise. Sometimes it's family members (especially in families with spouses that have been remarried and children are involved), it could be probate issues or anything that makes you miss the HUD timing requirement. You just need to make sure that you do the transfer back to both names immediately so that there are no issues later.
And so if the access to reverse mortgage proceeds later are not a concern and you can transfer the title back to both of you immediately (and make sure you get help from an experienced title company or attorney in your area so that the transfer is done correctly and does not create a taxable event), then you just need to look at the loan itself and see if it meets your goals desires. Reverse mortgages are not for everyone but when they work, they work well!
Hi Nancy, You can have a non-borrowing spouse under the age of 62 with a reverse mortgage who can stay in the home for life as well if something happens to the eligible spouse, however, this provision will only work with a spouse. Because you have been very specific to say co-owner and "person who lives with you" and have not stated "spouse", I have to assume that you are not married. If this is a correct assumption, the only way you could get a reverse mortgage would be if you were on title solely at the time and you took the loan out in just your name.
You can add this individual back to title the day after the loan closes but I caution you that this is probably not the best option based on what you have told me. If you were to choose this route, the title would be fine and he would be able to retain ownership without any issues after you passed, but the loan would become due and payable if you ever leave the home as your primary residence (including upon death). The end result would be that he owned the home, but would have to be able to refinance the loan into his own name or he would still have to sell it to pay off the reverse mortgage when it became due. When you lose a loved one it's a very difficult time to also realize that you have to sell your home and move. I do not advise it unless he has a plan in place in advance such as the absolute ability to refinance later, has another home to move to that is currently a rental, planned to sell the house and move anyway to be with family, had an insurance policy to pay off the reverse mortgage at that time or some other such plan so that when the time comes, he is covered.
The quick answer is no, and the loan can now be called due and payable requiring wife to pay the loan off with a new reverse mortgage of her own, with other funds available to her or a different mortgage or sell the property. The longer answer gets complicated. The spouse should check her options as soon as possible to see what is available to her based on her age, the current balance on the mortgage and the value of the home.
There are some provisions that HUD allows lenders the ability to allow non-borrowing spouses to remain in the home but due to the fact that the loans are sold into mortgage backed securities and the lenders may have obligations to the bond holders, they may not even have a choice. I have not spoken with a borrower yet who was able to utilize the HUD forbearance provision and while I am not saying that it does not happen, I have not seen it.
When you say that "at the direction and advice of the reverse mortgage representative...", I'm not sure how to read that. Did the husband and wife do this because the proceeds were higher for the husband alone, did they do it because the wife was not yet 62 and this was the only way they could get the loan, or what? The only reason I ask is because I personally made it a point of telling all borrowers with non-eligible spouses how they could do the loan, but also that I didn't recommend that they do it. I laid out a series of possible circumstances that might make a call provision a moot point (such as insurance great enough to pay off the loan; a second home that the couple owned that the spouse intended to occupy if the borrowing spouse passed or plans to sell the home and move to be with family elsewhere anyway) but we always recommended against the removal of a younger spouse to get the loan otherwise if it wasn't absolutely necessary and felt that borrowers should know all the consequences before doing so. So I don't know if the "direction and advise" of the loan officer with whom these borrowers dealt was based on his response to a directive from the borrowers to get the loan regardless of an under aged borrower or to obtain a higher loan amount than would have been available keeping the younger spouse on title (if for example that would not have given them enough proceeds to meet their needs).
HUD has changed the rules now and so there is no longer any benefit to taking a younger married borrower off title just to try to get a bigger loan amount. And if the younger spouse is under age 62, the younger spouse can now stay in the home for life as well, but the loan proceeds are also determined by the age of the younger non-borrowing spouse.
Yes, you most certainly can sell your home if you have a reverse mortgage and it works just like any other loan. You own the home at all times and just like a borrower with a forward or traditional loan, you can sell your home at any time. There are no special requirements and the payoff is handled through the escrow, just like any other transaction. The escrow/title officer/attorney (whoever is handling the closing of the transaction) will contact your current lender and obtain a Beneficiary's Demand for Pay Off from which the loan can be paid in full at closing.
You receive a monthly statement so although that is not a payoff statement (just like forward loans, there are always some additional fees at payoff and interest that accrues after the time of the statement) but this will give you an idea of the amount owed on the home for calculation purposes. It may not be as accurate as the Demand that the closing agent receives, but it will give you a general idea of the amount that will be required to pay the loan off and therefore you can determine how much you will have left over after you pay any real estate fees/commissions and other costs to sell the home so you can determine how much cash you will have at the close of the transaction at any given sale price. Your real estate agent can probably help you with this as well.
What you are asking about is called a reverse mortgage refinance where you can at times take advantage of a higher appraised value. We would pay off the old reverse with a new one if there is a present benefit.
Feel free to use our online reverse mortgage refinance calculator or message us your current payoff amount and address.
Your situation is not uncommon as many homeowners who took reverse mortgages later in life decide that they need a lower maintenance or single level home to age in place. You are welcome to sell your home at any time without penalty and use a new reverse mortgage to purchase another property.
We can do this concurrently.
You would first make sure you're qualified for the new reverse mortgage for purchase program by completing our online intake in the top right side of our website where it says “apply today”.
We would then run your credit and check to make sure that you meet the minimum residual income requirements of the program.
You can then list your home and accept offers only contingent on you finding a new home. Or you can sell your house and accept only offers it would allow you to leaseback while you are on the hunt for your new home.
The new reverse mortgage for home purchase would require you to make a down payment anywhere from 30 to 50% down depending on your age and the down payment requirements can be met from the proceeds of your existing home sale, or combination of those proceeds and your own assets.
Unfortunately, Mobile Homes in a Mobile Home Park where you pay space rent are not an eligible property type for an FHA loan which includes the Reverse Mortgage. For a Manufactured Home property to be eligible, it must have been manufactured through the HUD program and be installed on a permanent foundation on a parcel of land that you own. There are other requirements as well, but that is the bare minimum.
The purchase calculator gives the results of the amount you would have to bring in to complete the transaction and what your initial loan balance would be. There are additional fees, the calculator results include everything of which we are aware.
But now having said this, there are a couple things you need to know. Firstly, you and the seller choose the service providers on a purchase so we don't know those charges and can only estimate the charges. We don't have any additional charges built in for additional inspections or home warranties that you may or may not want to order. And finally, the calculator does not add one year of insurance you will be required to obtain because this cost can vary greatly depending on where the property is located and which insurer you choose and the level of insurance you carry.
Your best bet is to request a free, no obligation proposal for your circumstances. It may be right in line with the one you already received or it may be a little different based on the factors I list above, but it would give you a detailed listing of the costs (as best we know them) and the total amount you would need to close the loan.
Hello Brian, There is never a prepayment penalty on a reverse mortgage loan. It is like any other mortgage in the respect that you may pay it off at any time and you will always receive a monthly mortgage statement they will outline your monthly interest charges in current outstanding loan balance.
There are no disability provisos in the reverse mortgage program, all borrowers must be 62 years of age or older to be eligible. However, as the spouse of a qualifying individual, your spouse can be an eligible non-borrowing spouse that allows him to remain in the home for life as well, even if something should happen to you. Since he is not a borrower on the loan, if you should pass and there is still money left on the line of credit, he would not have access to the remaining funds though so you need to keep this in mind when you determine whether or not the program is right for you.
There are requirements he has to meet - he has to live in the home, he has to obtain title within a short time after you pass (and we suggest that you do this as soon as the loan closes so that there is no delay later) and he is bound by the same requirements under the loan that you are (the taxes and insurance must be paid in a timely manner and he must reasonably maintain the property). Other than that though, he can live in the home for the rest of his life as well without having to make a mortgage payment.
Once you sell your current home and pay off the reverse mortgage that you have now, you can get another reverse mortgage on another property. The amount that you will qualify for will be the same percentages that borrowers refinancing receive, the only difference will be that you will have access to 100% of the Principal Limit or loan amount to use for the purchase. However, that Principal limit will be about 61.4% of the purchase price of the home or the appraised value based on the ages you supplied, whichever is less and then there will also be the costs of the purchase and loan. So yes you can get the loan, but it will not be for 80% of the purchase price.
If this still sounds like something you think you might want to explore, my suggestion is to obtain a proposal based specifically on your circumstances and the costs in your area and then determine if it makes sense for you.
Good Afternoon Helen,
There are some trusts that would not be acceptable but by and large, most trusts do meet the HUD parameters and therefore do allow borrowers to place the reverse mortgage on those properties. However, if you are concerned that the trust in which your property is included does not meet HUD guidelines, we would be happy to go over it with you at your convenience.
I am not an attorney and cannot advise you on this matter. I can tell you that the loan is a non-recourse loan and that the lender cannot look to anything other than the property for repayment of the obligation. However, I do not know about the rights of others and could not legally advise you even if I felt I did know the correct answer. You really should contact an attorney located in the area of the property and I suspect you will be happy with the findings, but again, you should check to protect your rights.
Hello Mr. Reinhart,
Physically our corporate office is located in Southern California but we are licensed in multiple states (over 15 and growing).
Locality really means nothing these days as technology allows lenders operate nationally we are able to overnight you and application and once returned we send out a local qualified FHA approved appraiser that knows your market. When it is time to close your loan we will send out a traveling notary to your home with your final loan documents.
Our process is streamlined and the cost savings to you is worth your while comparing with any local broker or loan officer.
Request a formal quote here https://reverse.mortgage/quote or feel free to call our experts at 1-800-565-1722.
They cannot just drop a borrower. You need to get a copy of the legal documents and those documents will tell you everything. There were documents that spouses had to sign when husbands and wives chose not to put both on the reverse mortgage (such as when one spouse was not yet 62 or if one spouse was much older and they wanted to receive the higher benefit that dropping the younger spouse from title and from the loan at that time allowed them to do). You need to either get mom's copy of the loan documents or have the lender send you a complete copy of the documents to see what they did at the time.
But the lender cannot just drop a borrower from a loan. The loan is a contract between all the parties involved and the legal documents spell out the terms of the contract. Once you review those documents, you can see what they did and did not do and if you are not sure, an attorney will be able to tell you.
All owners of the property must be living in the home and must be eligible to get a reverse mortgage loan - and that is because they very well could exhaust the equity depending on the funds they draw, interest rates, future property values, etc. There is no way to do a reverse mortgage on a fraction of the ownership.
The only way to be 100% sure the loan is not called if something happens to you is to have your new wife on the loan and the only way to do that is to refinance the loan.
This is a legal question and not a reverse mortgage question. I would suggest that you contact a family attorney.
2014 is not that long ago and there may well be equity still in the property. If there is equity in the home, I would suggest that you make arrangements with a local realtor to sell the home and keep the funds before you just give it back to the lender. However, the loan is a non-recourse loan and if your sister leaves, the lender will foreclose and take the property back and there will be no other money owed to the lender.
The reverse mortgage benefit amount starts at around 52% for a 62 year old borrower, not counting any costs to obtain the loan. That would be about $143,000 so even if we can get you into a loan with very little in the way of up-front costs, you are still going to have to come in with over $42,000 just to lower your loan balance. This is not a fee and goes directly to your balance but it doesn't make the amount any less.
Because the loan requires you to pay no mortgage payments for the rest of your life, the older you are, the higher the benefit you receive. 62 is the minimum age to receive a reverse mortgage so the benefit is the lowest possible at that age. I'm sorry, unless you are willing to bring in cash to lower the amount you owe, this may not be the loan for you.
At this time, the spot approval is not offered by HUD. They have indicated that they are considering offering it once again (they did several years back), but we have not gotten the details regarding when or under what parameters. Until the HUD announces that they have re-implemented the spot approval process for condominiums and those guidelines/rules, I honestly can't tell you when or under what restrictions you can expect this to take place. We will be making the announcement as soon as we have anything from HUD but until they do, it is strictly speculation as to what those requirements will be and at this time, we cannot take a loan application for a borrower whose condominium unit is not located in a HUD-approved project. I wish I could be more exact, but I just don't have the information yet.
No you will not be forced to move. If you have a line of credit with funds available, that line will be frozen until the servicer receives notification that it is OK to again advance funds from the court but even then, you will still be able to stay in your home.
If you are in a tax deferral program, all taxes would have to be brought current and then the full amount due would have to be paid from this point forward. In addition, please forgive me but I am not 100% sure of the circumstances of your situation so I do need to just make one other clarification. If you were paying just 20% of your owed taxes but 100% of the amount required of you and on time, that would not adversely impact your ability to get the loan or the amount you would receive (other than paying all amounts due). However, If you were enrolled into the program as a result of non or late payment of taxes due, you would be required to receive a Life Expectancy Set Aside (LESA) for payment of the taxes and insurance and that would affect the amount you would receive.
A LESA is not a fee, it is just money from the loan that is set aside and used to pay the taxes and insurance as they become due. The funds in the LESA are not considered borrowed and you do not accrue interest on them until the money is actually used to pay the expense. Many borrowers like the LESA due to the fact that they never have to pay for the taxes and insurance on the home again and they only accrue interest on the funds as borrowed funds as they are paid out so the effect on the interest borrowers accrue on the debt is very minimal in most cases.
That's a really tough question to answer blind. Borrowers in the midst of a lawsuit or with a judgement entered against them are all looked at on a case-by-case basis. For example, if it was a case of a simple judgement resulting from the fact that you bought a product that you feel was misrepresented, etc., went to court and they prevailed, it would not prevent you from getting the loan but the judgement would have to be paid off as there can be no prior liens on title. If the ultimate liability of the lawsuit and judgement were unknown, it might delay your ability to close a loan until you could determine what your circumstances would be as could be the case with a personal injury case in which the insurance may or may not pay the claim but then may or may not cancel their insurance as a result (i.e. with a dog bite).
If the circumstances revolved around your willingness or ability to pay obligations as might be the case if the lawsuit was the result of non-payment of debts, that would have to be completely explained and evaluated. But unfortunately, I can't give you a one-size fits all answer for this question. The civil suit might not have any effect at all other than to make sure that the lien was paid if you owed one or it could delay the loan or even stop it if the liability amount on the judgement was higher than the borrower's ability to repay since there can be no prior liens with a reverse mortgage. If you have specifics for your case, I would invite you to contact us and let us review your circumstances to see what can be done.
It is true that borrowers who have used the reverse mortgage program do only pay their taxes and insurance and the maintenance and upkeep on their homes, they have no monthly mortgage payments. However, to get the loan in the first place, you have to have a strong equity position in the home because you are allowed to stay there for the rest of your life without making any payments.
So while the loan does allow you to make no more payments for as long as you live in the home, you would not be able to pay off existing liens that exceeded the value of the home. You can see exactly what amount for which you would qualify based on the value of the home and the ages of the borrowers by visiting our mortgage calculator at https://reverse.mortgage/calculator.
HUD has some very specific requirements in order to do what is called a HECM to HECM refinance (in other words, a refinance of your current HUD Home Equity Conversion Mortgage or HECM with a new HECM loan). To be able to determine whether or not you would meet these parameters, we would need to see your most recent statement on the existing loan and from there, we can see if a HECM to HECM is possible. Can you send us a copy either by scan and email, fax or even a picture with a smart phone?
There is no requirement of a reverse mortgage that states that the loan the reverse mortgage retires was made to the current owner of the property. As long as you own the property, occupy it as your primary residence and qualify for the loan under HUD's other parameters, it makes no difference that the lien being paid off was made to another individual from whom you inherited the property.
I honestly cannot answer that question without more information. If I had the name of the project and the address, I could check the hUD website online here and see if the project was once approved, had been submitted for approval and was declined and if it was submitted and declined, for what reason(s). But without know that information, I can't tell you if your project is not on the HUD list because it simply has never been submitted for approval, if it was once approved and the approval has expired or if it has been submitted and was rejected for some reason. Perhaps you'd like to click on the link above and check to see if your project is listed in one of those categories to see if you can determine why it is not currently approved?
There may or may not be things you can do if your project is not now approved. It may just need someone to request the approval and be willing to push the HOA to submit the necessary information for approval. It may have been declined in the past for a condition that no longer exists (i.e. inadequate reserves, at one time the project was owned by too many investors and is now primarily occupied by unit owners or the project was involved in litigation, etc). It could just be that no one ever sought FHA financing in the past and therefore no one ever applied for the HUD approval. You never know until you look into it and many time you can find out by asking your HOA.
Finally. You may even have good news coming soon. HUD has announced that they may reinstitute their "spot approval" process whereby condo unit owners were allowed to obtain FHA loans (including reverse) for individual units and not have to get the entire project approved. If you are looking to move on a reverse mortgage in the very near future, fining out whether or not your project can be approved might be the quickest way to go but if you are still in the fact gathering stage, I would also advise that you keep your eyes and ears open for the HUD updates about the approval process as well.
A Refinance of your current Reverse Mortgage is possible. In order to Refinance your existing Reverse Mortgage to a new Reverse Mortgage, the new loan would have to provide a significant financial benefit to you according to the HUD guidelines. We have written articles on this previously. Please see the following link below and if you want to go over your specific scenario please give our office a call to go over the numbers with your most recent mortgage statement available to reference.
What was the company's response when you asked them this question? We're not attorneys here and as such, I can't give you any legal advice or tell you if any "rights have been violated". I can tell you the reverse mortgage process though, usually what is happening in a situation or what to work toward but there is still a lot of information I don't have in order to be much help here. You say that they told you that you had 6 months to sell the home and there was no other contact until the notice of foreclosure sale? Most often when I talk to folks they tell of much more contact with the lender. Did you receive or did the lender ask for any kind of updates during the 6 months?
The loan becomes due and payable when the last borrower leaves the home and if there was no additional contact between you and the lender for 4 months and the property was still not even listed during this time, they may have thought the property was abandoned and that it was not going to be sold. Did the lender have good contact information for you during this time and/or did you contact them at all? I always counsel heirs to contact the lender and keep the line of communication open because if they were unable to determine for over 4 months that the property would be sold, they may have made the determination that they had to take steps to protect their security for the loan. My advice would still be to contact the servicer and discuss the steps you have taken to sell the home and anticipated timeframes for doing so. But if you are looking to determine your rights under the law, you really need to seek competent legal representation.
Is now okay to take a reverse mortgage with a spouse under the age of 62 and have her protected. Several years ago AARP won a lawsuit against HUD to allow for non-borrowing spouses to remain in their homes. We will base the available reverse mortgage proceeds on your wife's age and should you pass before her she can stay in the home for her lifetime.
The amount of the benefit you receive on the purchase is based on the purchase price or the HUD lending limit, whichever is less. The HUD lending limit is currently at $625,500 so the amount of the loan you receive will be based on this amount and your total benefit would then depend on the age of the youngest borrower to be on the loan.
To out this into perspective, a 62 year old borrower would receive a Principal Limit or benefit amount of $327,762.00 toward the purchase of the home. Fees and closing costs vary around the country but this could leave you with anywhere from about $491,000 (with no lender origination fee and minimal state costs as in a location such as CA) to as much as $513,700 that you have to bring in to close the purchase in a state like Florida with high state costs and a lender origination fee of $6,000 (which is another reason why it really pays to shop around). The money that you don't have to use for the purchase would absolutely be yours to do with as you please and the equity in the home is absolutely yours, but you would not be able to draw more of that equity out of the home with the reverse mortgage as that avenue would already be maxed out for your availability. The reverse mortgage does not prohibit any secondary financing, but most institutional lenders are not willing to lend behind the loan with no payments required.
Please request your purchase quote here: https://reverse.mortgage/purchase-calculator
There is a jumbo non-FHA reverse mortgage program that works for condominiums with property values over $500,000 but to be honest with you the interest rate is so high and the available proceeds are so low in comparison with the federally insured home equity conversion mortgage (HECM loan) I would personally recommend waiting for what is called a spot approval. This method was available for many years which allowed lenders to look at a condominium project and give a spot approval rather than having the entire project seek for FHA approval.
FHA has recently proposed new rules which will allow us lenders to again offer spot approvals. We are currently in a comment waiting period and I expect this to pass early part of 2017. You can read more about these developments here.
What you can also do is start by requesting your formal quote on our website at https://reverse.mortgage/quote
I can only answer questions about those pertaining to the reverse mortgage. For instance, I can tell you that the loan is a non-recourse loan and that the lender can never seek repayment from any other assets and can only look to the property for repayment of the loan. I can tell you that until you leave the home, you are not in violation of your reverse mortgage terms so while I suggest that you contact your lender and discuss your proposed actions with them as soon as you know what you need to do, there is no requirement that you give them any advance notice of future plans.
I cannot make any assertions however about rights of HOA's, utility companies, municipalities, etc. I'm not an attorney and I cannot give you legal advice. I would suggest that you contact a local attorney to discuss these issues as they pertain to your plans to be certain that your planned actions not only protect you with regard to the reverse mortgage but also as the legal property owner in all the areas you just listed.
If the home has a lien on it now, that lien would have to be removed in order to close the reverse mortgage, otherwise it would have to be paid in full with the reverse mortgage proceeds. That leads you to another issue. If you have a current loan on the property, HUD allows you to take up to 100% of the benefits to which you are entitled if you are paying off existing liens or other "mandatory obligations" (I won't get into the entire HUD calculation here) but if you have no liens on the property, HUD will only allow you up to 60% of the Principal Limit or your benefit amount of the reverse mortgage at closing or in the first 12 months of the loan.
To better understand the amounts available to you and when, you should request a proposal and you will see what you can expect to receive based on your age, property value and existing liens and the timing of the payouts. It may or may not work for you if you want to buy other property with the proceeds or you may have to wait for 12 months before you have access to adequate funds to do what you are seeking.
I can read this question one of two ways, 1) "Can I use a reverse mortgage (on my existing my home) to purchase a second home" or 2) "Can I use a reverse purchase mortgage on the purchase of a second home". The first one would be a yes, you can use the proceeds of the reverse mortgage you take out on your primary home to purchase a second home as long as that home remains your primary residence. The answer to the second way the question can be read would be that unfortunately, there are no programs available at this time that will do a reverse mortgage on the second home itself.
So the answer depends on how you meant the question.
Yes this is what is called a reverse mortgage refinance. If there is enough benefit to you in a larger reverse mortgage with enough new home appreciation what we can do is pay off the old reverse with a new one using the current appraisal and hopefully even get you a lower interest rate at no closing costs.
If you would like a quote please complete this form and be sure to add in the notes that you have a reverse mortgage balance to payoff.
You should contact a realtor in your area to determine the value of your home. If your home is worth more than is owed on it, you can sell it and the proceeds belong to you. If the balance on the reverse mortgage is greater than the current value of the home but you must leave the home for your medical reasons at this time, you just need to make your plans to move and then contact the lender after you have completed your move and make arrangements to give them a Deed in Lieu of foreclosure. The loan is non-recourse which means that they can never seek repayment by going after you or any other assets you may have.
If there is any equity in the home, I would suggest that you sell the home and keep the equity. If not, the mortgage company will eventually foreclose and you would have to move if you cannot make the taxes and insurance payments. However, I would suggest you check with family, see about taking in a tenant or other options before I let that happen if I were you. I would think that the cost of even rental housing would be more expensive than your existing taxes and insurance depending on where you live. You will always have water, electric, etc. no matter where you go and I guess it all depends on how expensive your maintenance is on the home.
At this time, you would have to wait for the HUD approval before you can even fill out an application. BUT, there is hope on the horizon. HUD has announced that they will soon go back to the spot loan approval process for condos. What this means is that if your project is not approved and has not been rejected prior to the time HUD begins to allow the spot approval process, lenders will again be able to take condominium loans in those projects. We have to wait for HUD to make the announcement to know the parameters, but this is good news!
The minimum age requirement is 62 so you are eligible. The first thing you should do is determine the home's value and your Principal Limit or benefit amount to determine if the new reverse mortgage will give you adequate funds to pay off the old loan. That can be done quickly just by looking at sales of similar homes in the area and then requesting a proposal from the current lender or another lender once you know the approximate value and the amount owed.
All borrowers have to be owners of the property and 62 years of age or older. You can have a parent and a child on a reverse mortgage so long as they both are on title to the property and meet the minimum age requirement. Because the loan allows borrowers to stay in the home for the rest of their lives without making a payment, the loan does not allow for multi-generational borrowers in the same family who are not at least 62 years of age because being a loan, the funds do have to be repaid. This is the difference between a loan and a grant or gift that you are describing. The funds for the loan are made available by investors, people just like you and me, who buy the government insured bonds in expectation that they will be repaid at some point in the future. Left outstanding indefinitely with no repayments, no investors would invest in such bonds and the reverse mortgage would not be available. Whether or not it is the government's responsibility to give everyone free housing (or whether or not the "government" even does it when the funds have to come from taxpayers in the first place) is a discussion for another time and place.
The interest that accrues depends on the type of loan that you take, whether all funds are taken at one time or whether you take funds as you go, interest rates in effect at the time, and whether or not you choose to make any payments on the loan (payments are not required on a reverse mortgage but there is never a prepayment penalty and some borrowers choose to make payments monthly, quarterly or annually to limit growing balances. The best thing you can do in this area if you would like to compare different scenarios is to request a free, no obligation proposal that will be geared to your requirements and the parameters in effect at the time.
Finally, a reverse mortgage loan is a "non-recourse" loan. In other words, the borrower(s) can remain living in the home for the rest of their lives and it makes no difference what the value of the property does. If the values plummet, the borrowers and their heirs are protected. When the borrower's pass, heirs can opt to keep the home and pay off the existing loan at the balance owed or 95% of the current market value, whichever is less, or they can choose to walk away from the property with no consequences. The lender can seek repayment of the loan from no other assets of the borrowers - only the house. So if the heirs know that the home is worth less than the amount owed on the mortgage (as was the case with many forward and reverse mortgage loans taken out up to 2009 that paid off up to 2012 before homes began to appreciate again), the heirs can simply package up their loved ones' belongings and let the lender handle the sale of the property and even if the borrowers had cash assets in the bank, the lender cannot seek repayment from those assets.
Because this is an option that HUD is extending to Mortgagees (lenders) who hold the paper at that time, but it is not required. I haven't read the ML for a while but as I remember it, it states right in it that the ML does not interfere with the Mortgagee's original rights as outlined in the loan documents. Yes, there is a chance that the Mortgagee might use this alternative but the Mortgagee may not even have this choice if for instance they sold the loan into a mortgage backed security and are required to do certain things under the terms of the security (based on the fact that investors bought the security based on the legal terms of the security documents among other things).
These is always the chance that the loan holder may use this option because it is allowed by HUD, but I certainly would not want to bet the farm on the fact that it will happen because that is not the terms that are laid out in the security documents and the chances are better that the loan is part of the pool of mortgages that form a security and the terms of that MBS won't allow it.
We really have no concern into what type of mortgage we are paying off as long as you have made on-time payments in the last 24 months. Also note that any refinance you take where you receive more than $500 in cash from the program you must wait 12 months prior to applying for a new reverse mortgage.
As long as you are manufactured home was constructed after 1990 and there are other manufactured home sales within your area you shouldn't have much of a problem getting a reverse mortgage. For a complete set of guidelines for manufactured homes visit our qualification page here:
The benefit amount that borrowers receive is determined by a number of things. Borrowers' ages, interest rates, HUD Lending Limits and new qualification guidelines that require some borrowers to set money aside to pay taxes and insurance make this question one that is impossible to give a generic answer. The best thing for anyone to do is to go to our website and request a quote that is specific to your circumstances. There is no obligation and no cost to obtain a quote but be sure to let us know if you have had any credit problems in the past with special attention to your current mortgage/rent and taxes and insurance on your home.
Feel free to use our online calculator which will estimate how much you're eligible for: https://reverse.mortgage/calculator or call us (800) 565-1722
No funds are available to heirs or anyone else once the last borrower permanently leaves the home. Your brothers cannot request funds from the reverse mortgage after your mom passes.
I'm not sure what you mean by a non-borrower program in Michigan. All borrowers of a reverse mortgage loan must be a minimum of 62 years of age. One of the practices that we have never condoned that many borrowers participated in prior to HUD's recent changes, was to remove one borrower from title when that borrower was under the age of 62 and just do the loan in the older borrower's name. We had always caution bars against this course of action because if anything happened to the older spouse the younger spouse was left looking for a place to live when the loan was called due and payable.
A few years ago HUD change the program and they now take the age of the non-borrowing spouse into consideration and with certain restrictions, allow the non-borrowing spouse to continue to remain in the property even after the passing of the borrowing spouse. However, this was not the case in 2010. If your mother signed a quit claim deed and the loan was done solely in your father's name, and now he no longer lives in the property, that loan can be called due and payable.
The first thing that I would check is to see what the current value of the property is. Many properties have experienced a lot of appreciation since 2010. Depending on how much interest your mother and father accrued on the last loan and what the current value is on the property, there is a possibility that your mom can now get a reverse mortgage in her own name (assuming that she is over the age of 62 at this time).
The next thing I would do is compare that value to the statement that your mother and father have been receiving to see what the equity position in the property is. This is the information you will need to know to determine whether or not mom now qualifies for reverse mortgage on her own. With any luck, she will have enough equity in the property to where she can do a reverse mortgage on her own and not have to bring any cash into the transaction. Since she's probably younger than your father was, her benefit amount will be lower and they have accrued interest on the old loan so there has to be a good amount of appreciation for this to work. I don't know what the possibility of you and your brothers assisting her if she does have to bring in cash.
I would not wait until after the lender contacts you about the loan being due and payable before you look into a reverse mortgage for your mother though. My advice would be for you to find out what your options are before you are contacted by the lender which may not give you a lot of time.
I'm sorry to hear that you're having such problems but one of the biggest areas in which we see issues is between family members when communication breaks down. I do not know in which state the property is located so I can't comment on the foreclosure laws of that particular state but in every state I am familiar with it takes longer than just a month or two to foreclose on the property. I suspect that there has been much more communication than you're being led to believe.
I cannot speculate whether or not there was just no equity in the property and the reverse mortgage balance far exceeded the value of the home or what the situation may have been. I cannot believe however, that if there was equity in the home, that your half-sister would not have taken steps to sell the home and keep the equity for the family. There are also provisions in the reverse mortgage that allow family members to keep the home and pay off the existing mortgage at 95% of the outstanding balance if they wish to do so when the remaining balance of the loan exceeds the value of the property. That does not mean that it would allow you to sell it to a third-party at 95% of the existing balance.
If lenders have an opportunity to sell a property prior to foreclosure they are usually only too happy to do so. So the entire scenario doesn't make a whole lot of sense based on the way it is presented. The facts that you did not want them to do the reverse mortgage, your half-sister is not communicating with you now and it seems that nobody did with you at the time, leads me to believe that there may be more to the story and unfortunately I just can't comment without knowing all the other pieces. Have you tried contacting the attorney that handled the foreclosure with the bank for your half-sister? I don't know if he'll speak with you but I think that may go a long ways toward resolving your questions. He might be able to fill in a lot of the blanks and he might not be able to tell you anything at all. Other than that, you may have to engage the services of an attorney of your own. The attorney can verify through recorded documents how much the property sold for at auction what the lender's starting bid was and can verify what the value of the property was.
I'm sorry I can't be of a lot of assistance, there are just too many unknowns and anything that I tried to suggest would just be the result of the guess. I do wish you the best and I hope that you and your half-sister can resolve the communication issue so that everything can be finalized to everyone's satisfaction.
We never recommend someone come off title with only 2 months until their 62nd birthday as it just does not make any sense. Now that the damage is done though, the only way for you to get a Reverse Mortgage of your own or with both of you on it now is to qualify under current program parameters.
The lender did you a huge disservice by advising you to come off title with only 2 months remaining until your 62nd birthday and telling you that they would allow you to be added on to the Reverse Mortgage once you turn 62 because it simply cannot be done that way and it never has been the case.
As far as your assertion that the fees went up $20,000 more than were originally disclosed to you, that also is not allowed by law. So my advice to you is to find your original paperwork, emails, notes, etc. from the time of the original Reverse Mortgage and see if you have the lenders original disclosures to you or assertions that they would be able to add you to the loan upon turning 62.
Remember, you can be added to title at any time after a Reverse Mortgage is done, but being added to the loan is something entirely different and simply being added to title does not give you any rights under the loan.
You need to find out what it is that they did and didn’t tell you because there is a big difference between title and added to the loan. If the numbers, you were quoted initially are in fact $20,000 lower than what you ultimately paid at time of closing you probably want to obtain legal counsel.
There are a number of factors that can affect your loan proceeds such as an appraisal coming in at a lower value than initially estimated. I recommend that you double check all your numbers and paperwork because the fees cannot go up $20,000 after disclosure.
Yes you may apply for what is called a reverse mortgage refinance providing that you still have enough equity in your home to qualify and that the new reverse mortgage offers you better terms than your current reverse mortgage loan. You can request your quote by completing the form below and please make sure you indicate in the notes that you have a reverse mortgage currently.
You are the only reverse mortgage borrower and I caution you that you may be the only legal owner as well but let's start with the reverse mortgage. As the only borrower on the original loan, if something were to happen to you, the loan would become due and payable at that time. If you want to be sure that the loan will also stay on the home for as long as your new spouse also lives in the property, then you must refinance the loan at this time in both of your names.
The second issue that I alluded to was the title to the property. You said that you had your wife "included on the property tax files as owner". I don't know how this was done but you may want to check with an attorney I have seen some county tax assessors that will allow you to change a name on the tax rolls or add a responsible party so that an additional individual may inquire about or pay taxes, but that does not change legal ownership of the property. I believe it would take Deed from you to you and your new spouse for the ownership of the property to pass to both of you at this time. I would suggest that you contact a real estate attorney in your area to make sure that your wishes are carried out in the event anything happens to you. Whether that will require a change in ownership, a will or a trust is something about which the attorney can best advise you.
As long as you pay off your reverse mortgage in full you would be eligible to take on another FHA loan the reason for this is a FHA insures both regular home purchase loans as well as the federally insured HECM home equity conversion mortgage. Both of these programs are intended to be utilized for your primary residence only and because of such you may only have one of these loans at a single time.
Reverse mortgage loans are for your primary residence only. It is possible that your non-borrowing spouse could take a reverse mortgage in her own name on another property that she is living in as her primary residence providing that she can fully document
proof of occupancy. Typically we will ask for a full month cycle of utility bills, bank statements and check that the driver’s license addresses pointed to the subject property. You certainly don't want to get in a situation where occupancy becomes an issue later on as this is a mature event of the loan agreement.
Yes you will always own your home providing that you are living in this house is your primary residence and maintaining the property taxes and homeowners insurance. The reverse mortgage is nothing more than a loan against your home equity that must be repaid at a later date. You are welcome to make any type of interest repayment back if you would like or choose to defer the interest until the loan is paid off later through either sale or a refinance.
You are still responsible for maintaining the property taxes and homeowners insurance. Your heirs will receive your home however you have your estate set up and they would be required to refinance within six months or have up to 12 months by filing extensions to sell the home after your death.
You can read more about how the reverse mortgage works in plain English here: https://reverse.mortgage/what-is-a-reverse-mortgage/
Be sure to request your quote here https://reverse.mortgage/quote or call our offices toll-free 1-800-565-1722
We are not qualified to give tax advice but I can say that you are perfectly allowed to rent a room and that would not be any problem with the reverse mortgage loan. I would suggest you ask your tax professional what type of deductions you might be able to claim under your circumstances.
You may take out another reverse mortgage only after the current reverse mortgage you have is paid off in full. You can never have two simultaneous reverse mortgages as the reverse requires that you own or occupy the property you are taking it on. This is one of the three maturity events that you agreed to.
If you would like to list your home for sale and use the reverse mortgage to purchase a new home we can close these transactions concurrently for you utilizing the HECM for purchase program.
To learn more try out our reverse for purchase calculator https://reverse.mortgage/purchase-calculator or call us toll-free 1-800-565-1722
We have moved many of our customers across state lines using the reverse mortgage for home purchase and would typically start by issuing you a preapproval after completing our online request you can find here https://reverse.mortgage/apply/
Just make sure that when you are selecting the program that you are applying for to use the drop-down option “for a new home purchase”
We will then run your credit and check your minimum residual income requirements and if all is good we will issue you a preapproval letter which you may present with any offers you wright.
We are licensed in both Colorado, Arizona & many other states. We are experts in dealing with all aspects of the reverse mortgage for home purchase so if you would like to put us in touch with your buyer’s agent we would be happy to discuss both your eligibility and specifics we are looking for in the purchase contract.
We will also return you a written quote which will illustrate the required down payment and all interest rate and closing costs associated with your reverse mortgage purchase loan.
Thank you kindly and we look forward to working with you!
If you are at the point now that you have only 24 hours to vacate, this is pretty far along in the process and I would really advise that you contact an attorney or possibly a legal rights advocate for your area immediately. We strongly urge borrowers to be proactive and to seek out legal counsel and learn their options before it gets to this point. Foreclosure generally takes many months to consummate and the sooner you begin to formulate your strategy the better off you will be.
Hello Mr. Schipper,
That's a great question and fortunately for you a reverse mortgage would not become due and payable should one person leave to a nursing home. It would require both applicants to leave the home permanently for the reverse mortgage to become due and payable so as long as one of you is still living in the home is your primary residence you would not have to worry about any maturity events.
Click here to download a helpful .pdf brochure written by our servicing company Celink in regards to occupancy requirements.
I am not aware of a reverse mortgage program at this time that allows for a second home. There have been programs in the past that did allow for an owner occupied residence or a bona fide second residence (not a rental) but those programs all disappeared in about 2009/2010 with the collapse of the secondary mortgage market. There may be a time when they are once again allowed, but have you tried to work with a condo approval company to see if there is any way to have your primary location approved? You may have better luck obtaining approval on your primary residence than waiting for a program that may or may not ever be reinstituted.
The Reverse Mortgage will not be the deciding factor as to whether or not there is a court approval required for you to sell the property. A reverse mortgage is a loan, just like any other loan. You should speak with an attorney to see how the title is vested and what the law and a title company will require in order to pass insurable title and thus sell the home at this time.
That is correct. The federally inssred reverse mortgage is an FHA program and FHA requires that all condominium associations submit for approval. We can facilitate this process for you if your condominium project meets the minimum requirements https://reverse.mortgage/condominiums-shocking-truth/ and your board of directors / association agrees to become FHA approved.
In order to protect your spouse in the event of you passing away before her you will need to refinance your reverse mortgage adding her to the reverse mortgage loan since the loan only becomes due and payable after the last surviving borrower should pass. I would recommend requesting a quote from our website here https://reverse.mortgage/quote and please indicate in the notes that you have a current reverse mortgage that requires refinancing. We will be happy to return you a HECM Refinance quote.
Hello Mr. Womack,
Yes we can still help you. Any time you have had tax or mortgage late payments in the last 24 months FHA will still allow us to complete your reverse mortgage as long as you agree to us maintaining your property taxes and homeowners insurance through what is called a reverse mortgage LESA, tax and insurance set aside.
Current guidelines require that you have a payment arrangement on any delinquent federal debt. Once you have made a payment arrangement and can demonstrate three months on time payments we can then complete your reverse mortgage request.
You need to seek the advice of a tax professional. We are a mortgage lender and do not have the legal right to give personal tax advice. You may also get more specifics by contacting your servicing company and their phone number will be on your monthly statement.
As long as the loan which you took that resulted in default was not an FHA mortgage and your past 24 month credit history has been clean including any mortgages, credit cards, automobile loans, taxes and insurance, you will qualify now.
If you are using a reverse mortgage to purchase a new home it is a requirement that you take occupancy within 60 days of the closing.
Per HUD “HECM mortgagors must occupy the property within 60 days from the date of closing. Lenders are required to ensure all outstanding or unpaid obligations incurred by the prospective mortgagor, in connection with the HECM transaction, are satisfied at closing.”
When applying for a reverse mortgage loan we must look at your last 24 month credit history. If you have had any serious late payments such as mortgage or tax insurance etc. we can still approve your loan but only with what is called a LESA. This is a special tax and insurance set aside which would allow for us to make sure that your property taxes and homeowners insurance are kept current for your expected lifetime.
The set aside gets in the way of the amount of money available to you from the reverse mortgage loan so you must have enough equity in your property for us to account for this amount. We have put a couple examples together on our blog post titled Reverse Mortgage Set-Aside (LESA) Offers Peace of Mind. Feel free to request a quote and we will return your analysis with the required set-aside information.
The HECM line of credit growth rate will always match your total interest rate charges to your outstanding loan balance. You will need add the note rate plus the 1.25% insurance rate to determine the monthly charges to your balance as well as the growth rate for that given month.
If another lender is quoting you a 4% monthly growth which also must include the 1.25 insurance they would likely be quoting you a monthly adjustable loan which also comes with a very high lifetime cap (10% over the current interest rate).
If you are looking to a cumulate interest right now at the lowest rate possible the monthly adjustable might accomplish that but if you are looking for the largest line of credit growth currently available today might take a look at our annual adjustable rate plan with a minimum monthly growth rate at a current 6.27%
If you would like a direct comparison just request a quote and we would be happy to return you line of credit analysis.
I've also written an article around this topic you may find helpful here https://reverse.mortgage/line-of-credit/
There must be a working heating source but having a central air conditioning system is actually not a requirement of any FHA mortgage program including the reverse mortgage.
All Chapter 7 Bankruptcies would have to be completely discharged prior to the reverse mortgage, you would not be able to use the reverse mortgage proceeds to complete the Bankruptcy. In addition, unless there are some verifiable extenuating circumstances for the Bankruptcy that would prove that it was centralized around one specific time period and due to something out of your control (i.e. a death in the immediate family, extreme illness, loss of job, etc), you would be required to take the Life Expectancy Set Aside (LESA) under the HUD Financial Assessment Guidelines. A LESA puts money aside from your reverse mortgage to pay for your taxes and insurance while you live in the home. There is no 2 year period that you would have to wait for a refinance of a home that you already own, that restriction is when you are looking to buy a new home with a reverse mortgage.
HUD will allow borrowers to refinance out of a Chapter 13 Bankruptcy but only if they have made at least 12 months of timely payments on the bankruptcy plan/agreement and then also obtain Court Approval. That is the Court Approval that you read about but that is not the same situation as the Chapter 7 Bankruptcy that must be fully discharged prior to the loan being completed.
Hello Mr. Muller,
You are welcome to close in your revocable trust. We must request a full copy and have it reviewed with our title companies trust attorney as a condition of your loan approval.
It's a misconception that you must have a free and clear home to get this type of loan . As long as there is sufficient equity in your home for us to pay off the mortgage in place you would be able to obtain a reverse mortgage. The amount of funds available are based on your age and the property value. Feel free to request your quote here and we would be happy to return your qualifications.
Any proceeds that you receive as a result from the reverse mortgage is not considered income and would not be taxable.
You may only enter into a reverse mortgage while in bankruptcy if you have approval from the courts. Having said that there are also credit requirements to be approved for a reverse mortgage and you will need to discuss your eligibility with one of our licensed loan officers.
Each month you will receive a statement of activity on your reverse mortgage interest and it will outline the charges to your outstanding loan balance. It's entirely up to you whether or not you decide to make a repayment back to that interest or allow it to defer to your outstanding loan balance. You can at any time voluntarily make an interest repayment but there is no mandatory repayment due until the maturity event takes place which is either a sale of the home, failure to maintain property taxes and homeowners insurance, or you leave the home for a period longer than 12 months’ time.
There is never a prepayment penalty on a reverse mortgage loan and you are welcome to repay the interest monthly or in full by selling or refinancing. (It's treated like any other mortgage in that respect) We will send you a monthly statement so you always know what is going on activity wise on your reverse mortgage balance and it's entirely up to you whether you decide to repay the interest or allow it to defer.
The line of credit will not be set up as a monthly payment to you but you can certainly draw from your line of credit any amount available as often as you would like without any servicing fees. We would wire the funds requested typically within 24 to 48 hours of your withdrawal request. Depending on your situation the line of credit may be a better option than the Tenure payment plan given its automatic growth rate and flexible payment withdrawals. You can learn more about the differences between LOC and Tenure here or feel free to call us toll-free 1-800-565-1722.
No, the lease does not have to be paid off but there are specific steps that have to be taken. Firstly, because the panels are leased and not owned, the appraiser cannot give them value. The lender must get a copy of the lease to determine that there are no objectionable terms (most are fine). There has to be a UCC Termination that the company leasing the panels has to do until the reverse mortgage has closed and then they can re-file afterwards. It's actually a fairly easy process and most go very smoothly.
An appraisal would be performed on the property and the lender will use the value of the appraisal. An appraisal is a snap-shot in time. The appraiser determines the value of the home at that time based on comparing the property to other similar homes in similar condition. Just as the appraiser would not look at a home in excellent condition and compare to properties in poor condition and lower the value to take into consideration the value drop if the home were to fall into disrepair, the appraiser will not look at the possible future value of a home if alterations of upgrades are made later. The appraiser has no way to know what the future of the home will bring and so his or her evaluation must be based on that moment in time.
As long as you still have money remaining in your line of credit, you may access it at any time, for any reason, as long as you still live in the property and you are meeting the program requirements. You should read your legal documents as a new bankruptcy, tax default, or failure to pay the insurance on the property could result in an interruption in the access to available funds.
The HUD rules are very explicit on the refi of an existing reverse mortgage and you would have to request a proposal from us to see if your mom would even benefit from a refinance at this time based on what she obtained, what she owes and what the new benefits would be based on current program parameters. With a balance of $400,000+, I would not lie to you, not many borrowers will qualify for a refinance at this time.
Also, we can discuss the legal requirements to be able to do the loan and it would depend on whether or not mom had a power of attorney to you prior to the onset of the illness. If not, it would take a court appointed conservatorship to proceed and for that, you probably would want to seek the assistance of competent legal counsel.
Appraisals vary by location, property characteristics and scope of the project. Most FHA appraisals for single family properties in areas that are considered urban or suburban are typically between $500 - and $650, depending on where you live. If the property is located in a rural area and appraisers must travel great distances just to get to the property and the comparable sales, it could be higher and we do not know that amount until the company tells us what the assignment would cost.
A reverse mortgage is a loan, just like any other loan. If a borrower dies intestate, their heirs would have to follow the same procedures as with any other individual who passed without a will to obtain their property. Since the loan would still be on the property and would be due and payable at that time, the heirs would have to make arrangements to retire the debt.
Just as with property that goes into foreclosure due to non-payment after the death of an owner, most state and local laws allow for procedures for heirs to halt any foreclosure proceedings until after the courts have determined ownership but for that advice you would have to seek counsel of an attorney located in the area of the property.
We don't participate in this type of marketing because we don't agree with it but it is not a scam. If your property goes up enough in value so that even with the changes to the HUD program over the years, you meet the HUD and industry parameters for a refinance loan and you wish to refinance and access more equity in your home, it is allowed. There are several restrictions such as the loan must be at least 18 months old (but if the marketer is worth their weight in salt, they have already prescreened the list to which they send the advertisements and your loan should be over 18 months old already), you now have to meet the HUD financial assessment criteria that were not in effect 18 months ago and there are two different benefit tests that the new loan must give you or the lender cannot do another loan for you at this time.
Although this severely limits the number of people who can actually get the refinance transaction, none of this criteria makes this a scam and they are telling you that you may be eligible for additional cash benefits. I guess I would caution borrowers of two things. Firstly, if one company can do the loan, so can any other HUD-approved lender. In other words, get quotes from a few companies and don't settle on the first one. If you have several companies telling you they don't think you have the equity to meet all the requirements but one company is telling you that they think you can and you want to proceed, do so cautiously. Have them pay for your appraisal if they are so sure the value will support the new loan. Even if you have to pay it at closing, do so with the agreement that you will pay the lender back at closing if the value is supported and the loan closes but if the value does not come in, you are not left with a large appraisal bill for nothing.
Finally, look at what you are receiving and the real cost of the new loan. Look at the dollar costs to get the new loan as well as compare your old terms. Compare your MIP renewal rate (many are just .50% of the balance and the new loans are 1.25% of the balance) as well as the current interest rate and margin versus the one being offered. Maybe the additional money is your primary concern and not the cost of the funds but be smart about it and go in well-educated with your eyes wide open.
Can one of the borrower's on the loan apply for a reverse mortgage without the other borrower's permission / signature?
HUD treats a deed in lieu of foreclose the same way they do as actual foreclosure. Borrowers who have a good, verifiable explanation for the circumstances that occurred, have had 24 months pass without other credit issues and otherwise qualify for the loan are eligible for a reverse mortgage.
There is never a prepayment penalty on a reverse mortgage and you may elect to prepay any amount up to and including payment in full of all outstanding amounts at any time you choose without penalty. Many borrowers do make prepayments to keep the balance from rising or to allow the line of credit to grow and to ensure a higher available balance later. This it certainly allowed and completely up to your discretion.
If you are referring to the purchase program or to a borrower having to bring cash in to close, HUD does require the same seasoning and source of funds verification as they do for any other loan. We would need to have 3 months' bank statements with the funds in the account and no large deposits or the deposits would have to be sourced (sale of a property, etc).
Currently, reverse mortgages are available only on primary residences. In the past, there were some proprietary programs that did allow bona fide second homes (not rentals) but those programs disappeared when the secondary market took such a turn for the worse in 2009 - 2010. To date, nothing has come out to replace the programs that allowed a second home to participate and I honestly have not heard of one on the horizon...but you never know! I would advise you to continue to watch the internet for news of changes in this area, I'm sure if a product does emerge there will be an announcement.
At this time though, there are very few proprietary programs even for owner-occupied, primary residences and so I would expect that the market would have to fill up with willing investors before they will begin to expand their product offerings to things like loans on second homes and to borrowers down to 60 years of age instead of 62 once again.
We have answered many different versions of this question but the bottom line is that your new spouse cannot be added to the existing loan, you would have to refinance the loan adding her to the title and loan at this time.
We don't deal with any financial products other than the actual mortgage. I would typically recommend utilizing the line of credit growth to ensure funds are available for future needs but without knowing the borrower(s)' age(s), the property value and potential long term care needs, I really can't say how much money the loan would supply and what would be available in relation to what the borrower(s)' needs are. I would definitely advise to consider the line of credit option where the line grows on the unused portion and interest does not accrue on any funds you do not borrow thus leaving the most possible money for heirs as opposed to the single draw, lump sum option that leaves no funds to grow in the line of credit and begins to accrue interest on the entire amount from the beginning. To be certain though, I would recommend you seek counsel from a financial planner who can run all the different scenarios for you.
At a value above the HUD maximum lending limit of $625,500 there are jumbo products but the only program available is a single draw, fixed rate that gives borrowers so much less money in relation to the value of the home and while they do not require HUD approval, they do have to approve the project also.
Have you approached the board and other owners to show them the added benefits of HUD approval? I have seen this reluctance in the past and also have seen some owners sway the board when they present the facts to the homeowners that the approval not only allowed senior owners access to the reverse mortgage product, but also other owners to a much larger purchaser base and not only didn't hurt the project from "those kinds of buyers" being able to buy, but gave current owners a greater market when they did decide to sell their units. The type of buyers in the $850,000 price range are not those who would typically be worrisome to the HOA in that they can typically afford to pay their HOA dues on time, etc. Other than that, they are only preventing qualified buyers from purchasing and seniors from obtaining the reverse mortgages they desire.
No one can be added to an existing reverse mortgage. If your mom is over the age of 62, they can refinance and add her on the loan as another borrower but if she is not, they will now consider her a "qualified non-borrowing spouse". This is good and potential bad in this. The good is that a qualified non-borrowing spouse does not have to leave the home if something happens to the borrower. The potential bad is that they will also take her age into consideration now since she can live there for the rest of her life as well and the amount available under the loan will be far less for a borrower who is not yet 62 than it was previously for a borrower over the age of 62. If your dad took out the maximum amount of cash and has accrued interest on the loan, chances are good that unless the values have increased dramatically and still remain under the HUD maximum lending limit of $625,500, there will not be enough benefit in the refinance proceeds to pay off the existing mortgage.
The only way to know for certain is to request a no-obligation proposal based all of the current information at reverse.mortgage.
Your parents signed an agreement with the lender, you signed nothing! The loan is a non-recourse loan meaning the lender cannot seek repayment from any other assets. If the lender is forced to take title to the property to repay the obligation, they cannot look to you to repay them for any other costs as a result of doing so.
Very possibly, but the only way to know for sure is to look at the full picture which would include verifying the benefits you received on the first loan compared to what you would receive with a refinance. All you need to do is send us a copy of your current statement, your birth date (or birthdates if more than one borrower) and let us see if the numbers work out for you.
It doesn't cost anything to run the numbers and it is a no pressure, no obligation inquiry. We would be happy to let you know what you can expect with a refinance of your current reverse mortgage.
The benefit amount on the purchase will be determined on the purchase price or appraised value, whichever is less, just as is the case on a forward or traditional loan. Therefore, if the purchase price is $124,500 and the property appraises for this amount or more, everything, including the amount you bring in for down payment, will be based on this number. I don't know all your closing costs and some areas of the country are more expensive than others, but I would estimate the amount you need for closing closer to $68,000 - $71,000 or thereabout state and local fees.
Also, you can use a reverse mortgage to purchase the home or use it to refinance the property after you move in. If you wait for 12 months and then apply, the lender does not have to consider the purchase price and would use just the current appraised value whereas any time in the first 12 months would necessitate them using the purchase price or current appraised value, whichever was less in most instances
I am sorry but I really can't advise you on such matters. Each trust is a bit different and I don't know how your mom set hers up, nor could I give legal advice on the title even if I did have a copy. I would suggest you contact the attorney your mom used to establish the trust if you don't have legal representation of your own you can ask questions of and I am sure they can tell you what steps you should take to ensure the title is as it should be.
All Line of Credit loans are variable interest rates, HUD and GNMA ("Ginnie Mae" which is the Government National Mortgage Association which is the agency that issues the bonds backed by government loans of which the FHA-insured reverse mortgage is one) will not allow any lender to do a fixed rate line of credit loan. At one point, a few lenders did try to introduce them but they were very short-lived. Because the line of credit grows on the unused portion over time, the fixed rate would present too great a risk at later dates if rates were to rise suddenly and borrowers chose to try to borrow at rates against credit lines that were well-below current funds available. HUD and GNMA moved swiftly to eliminate the possibility for fixed rate lines of credit and therefore, no lender offers them.
And with regard to your open request for rates, I would encourage you to contact our office for a free, no-obligation rate quote. Rates change weekly at a minimum and there are often different options available for borrowers that change the best program for them. A higher margin will accrue more interest on borrowed funds, but will also have a higher growth rate on the unborrowed line. There are also times when borrowers prefer to have lower fees that can often be structured with different margin options. And blog questions such as these stay on a website indefinitely and rates available today may not be indicative of those in the future. Please feel free to contact our office or request a quote here.
The equity line would have to be paid in full and closed with the reverse mortgage proceeds and there are restrictions about the seasoning of the loan and when the last draws can be taken, but the answer is yes, you can pay off an equity line with a reverse mortgage under most circumstances but the line must be closed after it is paid in full.
Yes you can. You are still occupying the home as your primary residence and the fact that you have family members move in with you at some point, paying rent or not, does not violate the terms of your agreement on the loan. As long as you meet the terms of the Note, the Deed of Trust and the Security Agreement (live there, pay the taxes and insurance on time and reasonably maintain the property), you are complying with those documents and that is your agreement with the lender.
At this point, the answer would be yes but I would tell you that you should continue to keep up to date on current program parameters since a lot can happen in 4 years. Interest rates and HUD changes may change that answer, but for now, the answer is yes you can.
As long as you live in a state that allows for non-borrowing spouses, HUD will allow you to get the reverse mortgage and will even protect the non-borrowing spouse now provided she meets the requirements. I would urge you to read the previous blogs we've written about non-borrowing spouses though because there are conditions and still some concerns you need to be sure are acceptable to you and your wife's circumstances. You can find that information here (link to one of the blogs we've written about NBS)
Your grandparents' loan will be due and payable when your grandfather is no longer living in the property so if you want to keep the home, you should begin looking at various financing options to see which best works for you. If you are 62 and over (you said you are on social security and I do not know if it is age related), you could apply for your own reverse mortgage at that time as well but being far younger than your grandparents, you may not qualify for as large an amount depending on the loan limits when they acquired their loan, the value of the home at that time versus the value now and interest rates in effect at the time you apply.
My suggestion would be to check out your qualification based on your age, the current value of the home and use the balance that your grandfather still owes on his mortgage to see if this is a possibility. Once you know what your benefits are in relation to what he currently owes, you will know if the reverse mortgage is a possibility based on your circumstances and finances. If a new reverse mortgage is not possible, you and your fiancé may still be able to refinance the home with a standard or forward loan at that time. You will be able to pay off the existing balance of the reverse mortgage or 95% of the current market value, whichever is less so even if your grandfather owes more than the home is worth (he borrowed all the available funds, accrued interest and the value dropped), you still can keep the home for less than the current market value if that is your desire. I wish you the best.
Your answer is live at:
Thank you, - All Reverse
Currently, only one reverse mortgage is allowed per borrower and it must be done on the borrower's primary residence. There were programs available many years ago for bona fide second homes, but they were offered by private lenders and not HUD. Those programs are not currently available.
To be able to answer this question, we really need a bit more information. For example, closing costs in some parts of the country are higher than others. We are also able to tailor programs to your individual needs, but to do so we do need a minimal amount of information such as the items below:
1) Month and year of birth of each borrower (don't even need the exact date, but if you are within 6 months of your next birthday, you will receive the higher benefit).
2) Zip Code where the property is located (don't even need the exact address - we can tell the closing costs for the area with just the zip code).
3) Approximate Value of the Property (If you want us to look up sales in your area, we need the full address but if you know an approximate value, we can work with that. Many of the costs will be dependent upon the property value.
4) And finally, amount of existing mortgages to be paid off at closing and any the amount of the initial draw you would like to take, if any, from the line of credit (this gives us an idea of where we may or may not be earning other income on the loan and may be able to waive or even pay costs on your behalf. We can't always do it, but we will when we can!)
When you request a quote on our website, we also can sent you a proposal with different programs, different draw amounts (if you would like to compare amortization schedules) or whatever information you would like to see. You may want to give the quote request online a try, it is easy, there is no obligation and we do not require a lot of personal information just to answer your questions.
You are now able to do a reverse mortgage at age 62 with a younger spouse and we are required by the FHA to protect both you and your younger spouse for both of your lifetimes in the home. If you were to pass away before your spouse, your spouse can stay in the home for the rest of their life as well.
HUD has requirements that must be met in order to be able to refinance the loan meant to protect borrowers from refinance churning that might result in equity stripping of the home on repetitive fees on multiple refinances, etc. but as long as you meet the parameters, yes, you can refinance a reverse mortgage with another reverse mortgage (and you can always refinance with a standard or forward loan at any time without prepayment penalties if your circumstances changes and you decide that is a better way for you to go as well).
Borrowers can live in their home mortgage payment free, regardless of what property values and equity positions do. If your equity runs out or the values drop, you can still live in the home and you still have access to all the funds guaranteed in your line of credit under the program as long as you continue to meet the program requirements (at least one original borrower still lives in the home as their permanent residence, you pay your taxes and insurance in a timely manner and you maintain the property).
Good Afternoon, To add your wife now would require a refinance of the loan. You can find out quickly and easily if you can qualify for a new reverse mortgage and usually all we need is a copy of your current statement and both of your birthdates to run the numbers. If you meet HUD's requirements, more often than not, we can do the loan with very little expense (usually $500 or less) so if you can, please send us your current statement and ages and let us see what we can do for you.
Have you contacted the lender yet to inform them that you cannot remain in the property? If you leave, the loan will become due and payable and they would eventually initiate a foreclosure proceeding even if you just left the home. The loan is non-recourse and so the lender has only the property to look to for repayment.
You would not be eligible for another HUD loan since you chose to move away from this house and a loss would be suffered unless you chose to pay the loss on the loan but I would suspect that you do not plan to purchase another home and use another FHA/HUD loan so this is probably not an issue for you.
HUD does have specific requirements for manufactured homes that must be met, but yes, they will allow them under the proper circumstances. We have their information on our website at: https://reverse.mortgage/manufactured-homes/
A short sale is when a lender settles for less than is owed on a property at the sale, usually due to the fact that they realize that the property is not valued high enough to pay off the entire lien. This perplexes me though. Is the loan you applied for an FHA loan? I am not aware of any forward rules that a borrower cannot apply for an FHA loan on a property that resulted in a loss for another borrower with FHA, but I do not originate forward loans so I am not the best person to ask about that.
The individual(s) who suffered a loss on the previous loan was not you. Therefore, you should not be prevented from getting any type of loan at this time. I would suggest that you consult another lender and ask them about all available loan types if they give you the same answer about an FHA loan. YOU did not have a short payoff of the loan on the home, your father did due to death and HUD allows for heirs to pay off the loan at 95% of the current value or the outstanding balance, whichever is less. It would be lunacy for HUD not to allow the financing for a qualified buyer as to do so would mean they would be locking in a bigger loss for themselves.
Check with other lenders, this is completely strange to me and I just checked with one forward lender I know and they said they have never heard of such a thing.
The fact that you have a tax lien does not eliminate your eligibility but you cannot get the reverse mortgage while the tax lien is still in effect. In other words, you must satisfy the liens first and then you are able to obtain the reverse mortgage. The fact that you have the lien does not automatically disqualify you from the loan but you have to satisfy the lien before the loan can be closed so it may become a "catch 22" if you need the funds from the reverse mortgage to pay the liens because that is not allowed.
I assume that the property is still in your mother's name, correct? If so, then you are not liable for anything. I would suggest that you contact a property rights attorney in the area to determine the city or county's possible repercussions but I would be surprised if they can do anything to anyone other than the property owner, and she has passed. If they place any liens on the home, they will stay there until paid when the house is sold and that will be done eventually by the new owner...the lender when they finally foreclose and take title to the property.
I cannot give you legal advice but a quick call to an attorney would confirm what liability, if any, you have. You have none on the loan but I can't speak for the municipalities and you should find out for your own peace of mind.
There are tests or restrictions that must be met but you can refinance a reverse mortgage if you do meet the requirements. The new loan must provide the borrower adequate benefits. Those benefits can vary based on circumstances though so you really need to check with a lender to determine whether or not your loan would be eligible.
HUD grants longer extensions when the property or market is such that the heirs need a longer period of time to sell the home. When the market was really bad in different parts of the United States, it was not uncommon for heirs to receive 24 months or longer to sell the homes because HUD knew it would take them just as long.
I don't know your location or your circumstances, why it has taken over a year so far to sell the property, but in most parts of the country, even if they begin the foreclosure as they have stated, it will take a minimum of another 5 or 6 months to complete at this point leaving the lender and HUD 18 months or more out from the time the loan became due and payable as it is. The best time for heirs to begin making sure they don't run up against a wall on this timeframe is in the early stages, not at the 12 month mark.
If the property is still not sold and it is because you live in an area in which sales are just still that depressed, then I would suggest that you contact HUD directly and plead your case. If you show them that you have been making a good faith effort to sell the home all along and the delay is market driven, not because you have not been actively trying to pay off the loan through sale or new financing, you may have a chance for more extensions. You have to remember that the loan agreement or "contract" for the terms of the loan was with your mother and the guarantee was that she could live in the home for the rest of her life, it does not extend for the life of heirs as well.
I wish you the best.
Yes there is John and there are also limitations on the types of repairs for which funds may be set aside to complete and those that must be completed prior to loan closing. The repairs cannot be for items deemed health and safety issues if not completed. Lenders use a "repair set aside" which is to be calculated at 150% of the work to be completed so if the cost of the needed work is $10,000, then the set aside would be for $15,000. The dollar amount may be limited by the total Principal Limit available to the borrower or other issues as well so I'm not comfortable giving you a dollar figure and the guidelines don't quote a dollar figure, it's always a percentage of something else. If you contact us with the particulars, we would be happy to review your circumstances and give you an answer.
I cannot comment on ownership and rights of heirs, that is a legal question. I can tell you that the bank does not own the home, your father does and when he passes, the home will go to his heirs according to his directions. I guess the real question is whether or not dad has a will or a trust and has he directed the ownership of the property to pass to specific heirs? It would probably be best to speak with an estate attorney in the state in which dad lives and probably not a bad idea to ask dad!
After the last borrower on the reverse mortgage permanently leaves the home, whether by moving or by death, the loan becomes due and payable. Lenders and HUD work with heirs from the point to allow them to either obtain other financing or sell the home and the target moves based on market conditions. When real estate sales in some markets were absolutely abysmal, HUD put out a chart giving heirs up to 24 months in some areas. Now that sales are strong in most markets, they would be looking to see the efforts to sell the home and some results much more quickly.
You have to remember that even if the lender were to exercise its right to foreclose immediately, the process would still take close to 6 months in most areas and longer in many others. While lenders and HUD do not want to own property, if it has been some months since the passing of the borrower(s), at some point they have to make the decision of protecting the asset. Most of the time we hear that homes are typically sold within the first 12 months and there are no issues but then, we also occasionally hear of family members who have not even put a house on the market after more than 9 months and those often do end up with a foreclosure at least started.
I do not know where the property is located, what the city rights are there and could not advise you legally but I can tell you that YOU did not sign anything with the lender and therefore you have no obligation to the lender for the reverse mortgage loan. The reverse mortgage loan is a non-recourse loan and they cannot seek repayment from any other assets.
My advice to you is to contact a property rights attorney in the area where the home is located to determine what the city can and cannot do. Then you can make your decisions accordingly. The lender cannot do anything if you turn off the utilities, remove your relatives belongings and simply stop doing anything on the home except foreclose on the Deed that the original borrower(s) signed and that leaves you in no worse position than you are in now. That would alleviate your necessity to make any further investments into the property and it might just speed up the lender.
I think you will find after talking to the attorney that the only thing the city can do is levy liens after doing an abatement of some sort if they need to for weed abatement, etc. and if you never transferred ownership of the property to your names, those liens are against the old property owner who is now deceased and soon to be new owner - the lender who refuses to complete the Deed in Lieu of foreclosure but will be forced to incur additional expenses through an actual foreclosure. But don't go on my hunch, talk to an attorney to be sure.
This is a legal question and one that would depend upon foreclosure laws. If mom has been out of the home for over 12 months, then by the terms of the reverse mortgage, they can call the loan due and payable at this time. Once they do that, if you do not pay off the balance within the timeframe they give you, they have to begin foreclosure proceedings.
We are not licensed in Michigan and I am not familiar with the foreclosure laws in that state. Even if I were, I would advise you to seek the services of an attorney because there are often ways to contest a foreclosure and he/she would be able to discuss that with you in depth.
Let's start with the needed documentation because you have hit it right on the head! The benefit statements and award letters will do nicely for the income.
Keeping in mind that some areas of the country have a longer lag time, require a greater lead time for ordering appraisals and that is a busy time for appraisers, it would be best to be sure that everything is ready to go well in advance and then we can order the appraisal with instructions to hold off until your timeframe. If have not done the counseling, you need to be sure that is also completed well in advance since California and other states impose their own waiting periods before we can start the loan (CA requires us to wait for 7 days after the counseling is done before we can order any services whatsoever).
It sounds like you are under the same misconception a lot of people believe about reverse mortgages. The lender does not buy your house they give you a loan based on your ages and the value of your property and you do not have to make any payments on that loan for as long as you live in the property. And yes, you can live in the property for the rest of your lives.
Because you still own the property, the equity in the home is always yours and you are responsible to pay the taxes and insurance and maintain the home. I would be more than happy to give you a proposal based on your own individual information. If you would like to go to our website at reverse.mortgage and request a no obligation proposal, we will send you all of the different programs for which you qualify, the amount you would receive and what options you have the receipt of your funds. There is no obligation and we are not a high-pressure company. I hope to receive your request soon.
Good afternoon Ignacio,
This could go a number of ways. I think the best thing I can tell you here is that you should ask for proposal and take a look at the option that best suits your needs. When you get a proposal you get an amortization schedule that tells you in writing what your balance will be throughout the life of the loan on a yearly basis.
It may sound like I'm hedging and I might be a little bit, the problem is with just knowing the information you gave me I don't know if you're asking me if you want the loan amount to be $70,000 inclusive or exclusive of any costs, I don't know where in the country you and the property are located so I don't know what those costs will be and some states are much more expensive to take out a mortgage loan if your $70,000 does not include costs, I don't know if you want a fixed rate or an adjustable-rate loan, or if you choose the adjustable-rate loan, what future rates will do because if the rates go up or down, that would affect the balance of the payoff.
If you going to websites such as ours and ask for the proposal, you can receive all of this information as it relates to your area and the current interest rates depending on the program that you choose. There is no obligation, no high-pressure and you sure to get an amortization schedule that will reflect the information that you really want to see.
If you are building a home there are a couple of considerations that the lender must make based on HUD's guidelines. Firstly, the lender cannot take an application until the completion certificate has been filed with the county where the property is located. The property must be appraised by an FHA approved appraiser and the amount will be determined based on the cost to build the home plus the land acquisition cost or the appraised value whichever is less for the first 12 months after completion. After that time, it would just be the appraised value.
As far as the loan process, you must make certain that you take the required reverse mortgage counseling and then the processing the loan can begin assuming the time frames above. Reverse mortgages are like most other loans if there are no appraisal, title, or credit issues that the lender has to contend with, the loan can be completed and you can receive your money in about 35 to 40 days. If however, third-party service providers such as appraisers are extremely busy or if you're located in an area where they're hard to find in the appraisal process takes longer or if there is any kind of a cloud on title this process can take longer. The appraiser may also indicate that there is work to be completed on the property. If that happens it also depends on how long it takes you to complete the required work.
I would love to tell you that all loans are done in "XX" amount of time, but unfortunately there are just so many things that are out of our hands. If the appraiser determines that there is work to be completed on the property before he can issue a clear report that can sometimes take weeks. Old liens can sometimes create challenges if lenders or individuals are no longer available to remove them. We can complete everything required of us on the loan fairly quickly but we are dependent on all of the other pieces and in some parts of the country some of the other services take longer than in others.
This is not quite as cut and dried a question as it may sound. There is no set period of time that you must occupy a property in order to apply for reverse mortgage loan but there are other considerations. For example, the reverse mortgage lender must be certain that you do occupy the property as your primary residence. If this is a home that you have owned and have not occupied in the past (in other words, there is no history of occupancy even though you've owned the property) but now you do occupy the property after recent move, the lender may want to see verification that this home is now your primary residence.
If you have just sold your primary residence, you moved into a new home and you don't own another home, then occupancy is not typically an issue. Under the circumstances all of your documentation would indicate that you do own and occupy the property in occupancy would not be a question. Just like with forward mortgages, it's really a question of common sense in most instances. The lender will look at the totality of the information and if there are questions that need to be answered they will ask those questions.
You absolutely can! In fact, you have the right to cancel the transaction all the way up until the time the loan closes. But there is no reason you should go to the expense of ordering an appraisal if you know you don't want to proceed. The lender cannot charge you a cancellation fee if you know this is not the right loan for you I would recommend that you cancel this point in time. Good luck with whatever you decide to do.
I'm not 100% sure I understand your question. I would hope that you had a home inspection and home warranty that would take care of any issues that you're now finding on the home. The property requirements would be the same for every other reverse mortgage borrower. The lender would conduct an appraisal and the appraiser would note any deficiencies. Some repairs can be completed after the close of the loan with a repair set aside but that would depend on the scope of the repair and your lender.
One of the documents contained in the FHA loan package advises borrowers to obtain a home inspection. We always advise borrowers to also look into home warranties on new purchases. Unfortunately, there's just no way to know what may or may not be working or what issues may arise with just a visual inspection of a property. I wish you the best with your new home.
Let's start by answering your last question. I don't know what you mean by saying that the "buyer" can't be family and must be a third-party to get the 95% option. Who was saying that? The heirs absolutely do have the option to pay off the loan at 95% of the current market value or the amount owed on the loan, whichever is less. This option is not forfeited if the heir is a family member. Now you're using another term when you say "buyer". Heirs don't have to buy the property. They become the owners due to the passing of the original owner. As the new owner of the property in the heir to the estate they have the option keep the home and pay off the existing reverse mortgage at the amount owed or 95% of the current market value whichever is less. If you are attempting to sell the property and not retain the property as the heir, that may be where you and the servicer are miscommunicating.
With regard to how many appraisals can they do, it's a very good question. I don't know what state you're located in but if you are the heir and you now own the home, you should probably check with an attorney in your area as many states have legal requirements that a lender must give a copy of any appraisals done on a property to the owner. This would be a good question for the attorney as well. If the appraiser did a good job on the first appraisal, any subsequent appraisals should show the same or similar value. Any large differences should give you the opportunity to contest the value if you believe the lower appraisal is more accurate. You might also want to talk to a local real estate professional and obtain a broker price opinion. This is not an appraisal but it would give you a good idea of the value of the home as well from a knowledgeable professional selling similar properties in the area. At any rate a local attorney will be to tell you your legal rights.
I'm sorry, I'm not licensed to give tax advice and quite honestly I would not know how to answer a question about what a caregiver can or cannot claim on their taxes anyway. With regard to the reverse mortgage loan, how your mother's caregiver files her taxes will have no effect on your mother's loan. As long as your mom lives in the property as her primary residence and abides by the other requirements of the loan (pays the taxes, keeps the property insured, maintains the home in a reasonable manner) in your mom's loan is fine.
I am not a foreclosure specialist and you really should seek legal advice to determine your rights at this point. I honestly can't advise you but I would tell you that as long as the property is still in your father's name your mother, as the individual who listed the property, has the right to tell the realtor what you will and will not do with regard to a lockbox.
Of course the realtor will do anything and everything that he or she can do in order to sell the home and try to make it as easy on him or her as possible.
As long as your family still owns the property though the ultimate decision as to whether or not you want to comply with the realtors requests for lockbox, rests with you. The situation will change however if the lender has to go through a foreclosure and takes ownership of the property or if your mother signed a deed in lieu of foreclosure granting title back to the lender.
Without knowing what has and hasn't taken place really don't know what to tell you at this point except you should find out what the status of the ownership of property at this time. There are many legal aid attorneys available and I believe it will be well worth your while to seek counsel.
I must admit this is a brand-new one for me and I'm not exactly certain how to answer your question. I cannot give you any legal advice and I don't know if it's legal to squat in any property that you don't own. What I can tell you though is that a reverse mortgage is a loan just like any other loan. The loan is secured by real property in the legal documents give the lender the right to call the loan due and payable, or in other words foreclose on the property if the borrower defaults on the terms of the loan. A reverse mortgage lender has the same legal rights as any other lender to secure the property and those rights change somewhat from state to state. Not knowing where you're located I don't know if there are any "squatter's rights" in vacant homes going through the process of foreclosure in your area. I would imagine that the law would be the same for a foreclosure on a property that was encumbered by a reverse mortgage as by a traditional or forward mortgage, but I can't even tell you that for certain.
The length of time for the entire foreclosure to be completed also depends on a number of different factors and this is something I also can't answer for you. It depends on whether or not the foreclosure is just a straight foreclosure, whether or not there's been any legal filings that require the lender to go through court to clear up any matters of title, where the property is located and whether or not it is a judicial foreclosure or trustees deed upon sale among the myriad of other possible issues. When you consider all those factors, the foreclosure may be nearing the end of its process and may be completed very quickly or it could take a substantial amount of time. There is no one answer that would be accurate in every circumstance.
As long as your mom is still living in the property there is no restriction about who can and cannot live with her. She can have one or all of her kids living with her and that is completely up to her. The only restriction on reverse mortgage is that the borrower still maintains the property as their primary residence so as long as that is the case there is no problem at all having a caregiver with her, family or not.
This is not really a reverse mortgage issue. This is simply an issue of foreclosure and property laws in your state. You should be able to check public records to see who owns the property and find out whether or not the bank has obtained ownership through foreclosure at this time. The bank cannot do anything with the property until they actually own it. So if you're interested in buying property checking public records will tell you whether or not the bank even owns it yet.
If the bank does own it, you can make an offer directly to the bank to purchase the property. However, if the bank does not own it yet, there may still be time for you to buy it from the heirs before goes foreclosure sale. My advice to you is to make sure that you have competent representation when negotiating a purchase such as this because if this property is currently in the foreclosure process there will be costs and deadlines about which you have to be very careful and you need somebody who is familiar with the foreclosure laws and the timing of events to keep you from making a mistake in finding yourself in a bad spot.
I'm sorry but this is one I would have to see the deed and have a review completed to give you a solid answer. I suspect what you're telling me means there is a restriction on the title which would prevent us from being able to do the reverse mortgage but I don't know that for sure. I would have to see the deed and have it reviewed to determine the effect of the right of first refusal. For example, if that verbiage in some way restricts the lender's ability to foreclose on the property in the event of a default then we would not be able to place a reverse mortgage on that piece of property. If it in any way restricted the lender's ability to sell the property it might have the same effect. The only way to know for sure though would be to have the title reviewed.
The reverse mortgage loan is a nonrecourse loan. This means is that the only recourse the lender has is to foreclose on the mortgage. So given the circumstances that you've outlined, if you know that the homeowner has no intention to return to the property nor do they intend to try to sell the home, I would suggest that you contact the lender and make arrangements to just sign a deed in lieu of foreclosure. Otherwise they would initiate a foreclosure and take the property back that way.
Either way, you and other heirs can rest assured that there is no recourse against you or them and the lender will not go after any other assets of the borrower.
As long as the preceding reverse mortgage has been paid in full with no losses on that loan, you can absolutely get another reverse mortgage loan. In fact, there is no limit to the number of reverse mortgage loans you get as long as you get them one at a time after the previous loan has been paid in full. I wish you the best on your new home let us know if we can help!
Yes you do qualify for reverse mortgage because the only real qualification based on what you told me so far is your age (other qualification criteria include property type, credit and income). The problem that I think you're going to run into in the real question that you're concerned with is the benefit amount that you will receive the reverse mortgage and whether or not it would pay off your existing liens.
With the amount of your total liens that would have to be paid you would not receive enough money from the reverse mortgage to pay off the existing liens. Therefore you could obtain a reverse mortgage but it would require you to bring in a fairly large amount of cash to close the transaction. Any money you brought in would be to buy down your existing mortgage balances and therefore we go to your equity but the question is whether or not that's feasible or advisable for your circumstances. Pending on where you live and what the costs are for reverse mortgage in your area this amount can change by several thousand dollars (some states such as Texas and Florida have much higher state costs for things like title insurance, mortgage taxes, and intangible taxes).
Your best bet would be to go on to our website and put your information into our calculator for free no obligation quote to see where you're at. That way you would know exactly how much money you could receive in the program, how short that would leave you of being able to pay off your existing liens and whether or not this would work for you.
Good Afternoon Phil,
You have to remember that although borrowers don't have to make a payment and there are a few other differences, a reverse mortgage is just a loan. And when the borrower passes, under the terms of a reverse mortgage, that loan becomes due and payable. Rights of others to step in and assume ownership of the property would be limited by the same property rights laws as if the borrower had a standard or forward mortgage.
I am not an attorney and therefore cannot give you legal advice but I am not aware of any situation where a friend or acquaintance can step in and assume ownership of a property with no legal deed to convey title. I'm sure the lender would be only too happy to receive payoff of the loan but the deceased borrower's acquaintance would still not have title to the property.
You may want to check with an attorney to see if there is some way in which the acquaintance or girlfriend can petition the court during the probation since there are no living heirs and she has a relationship and has been occupying the property but I have no idea if this is possible or how it would work. I wish you the best.
Credit scores are not used with reverse mortgages. There are certain credit criteria that HUD now follows since they have implemented the financial assessment guidelines in April 2015. The lender should have known when they pulled your credit whether or not there would be issues before they even went to the expense of ordering an appraisal. When we see these issues we bring them up to the bar at that point in time and not wait until after we have incurred expenses on the borrower's behalf.
Without knowing how long it's actually been in the underwriting department, it's hard to say whether or not this is a stalling tactic or if the broker is just unwilling to tell you they run into a big problem. Either way, they should have known as soon as they pulled your credit if there was a problem and he could have told you then. I would suggest that you have a serious conversation with them ask them regarding what the specific problem is, and find out if this is something that's going to prevent you from being able to receive your reverse mortgage.
The HUD guidelines give lenders room to look for ways to make the loan work and so sometimes it does take a little bit of extra work to approve a loan that has some negative information. However, this would all be known by now and they would be able to tell you what roadblocks they were running into. If it's been more than three days in underwriting it's more than just waiting for an answer. Typically underwriting happens in just a day or two at the longest but every once in a while people do get behind. If it's been more than three it's time to have a frank and honest conversation.
You can read more about the credit requirements here or call us toll free (800) 5651722
Reverse mortgages do not use credit scores for qualification criteria. HUD and no lender that I'm aware of has established a credit score criteria to determine a borrower's ability to take a one-time distribution of funds.
The program allows borrowers to draw funds in accordance with the amount available to them which is the borrowers principle limit, minus the costs the borrower has to pay to receive the loan, the amount of money owed against the property which HUD refers to as mandatory obligations. Depending on the amount of the mandatory obligations, borrowers are either limited to 60% of the total funds available under the reverse mortgage program, the amount of the mandatory obligations +10% if those mandatory obligations plus the 10% would exceed the 60%, or up to 100% of all the funds available if those funds are being used solely to pay for the cost of the loan plus any existing mandatory obligations.
It becomes a bit confusing but the basic idea is that if you need the funds to pay off an existing loan or if you are using the funds to purchase a new home, you can have access to up to 100% of your reverse mortgage proceeds. Otherwise you are limited to the amount you can take in the first year but you do have access to the remaining funds at the end of 12 months and can take a lump sum draw of the remaining funds at that time if you choose to.
If your credit is strong enough to approve you for the loan you have no restrictions on any of the funds that you take. You can take the same draws as anyone else. If you have had significant credit problems over your life or problems paying your mortgage taxes and insurance in the past 24 months, you can typically still be approved for reverse mortgage but you may be required to obtain what HUD calls Life Expectancy Set Aside (LESA) wherein HUD sets aside some of the proceeds that you would normally receive to pay for your taxes and insurance as they become due. If this is the case, this is not a fee and it doesn't cost you any more than any other reverse mortgage. These are just funds that are not available to you in the servicer will use these funds to pay taxes and insurance as they become due. They are not considered borrow until they are actually used to pay those taxes and insurance. They do begin to accrue interest as borrowed funds once they are used to pay those charges.
Reverse mortgages are currently only available on owner-occupied properties that meet the property requirements. Even when there were more proprietary programs available and some did allow for bona fide second homes, I'm not aware of any programs that have ever allowed for rental properties.
The rules of the reverse mortgage state that you have to live in the main home as your primary residence. As long as the guest home is a legal unit HUD has no issues with you renting it out and in fact you can even rent out rooms in your home. However the terms of the loan state that you are supposed to occupy the main residence on the property.
At this time we cannot do a loan in Texas with a non-borrowing spouse under the age of 62. The reverse mortgage requires all borrowers to be age 62 and above and in other states the non-borrowing spouse is removed from title in order to complete the transaction. This used to be a very risky proposition but HUD now has protections for the non-borrowing spouse that keep them from having to be removed from the property upon the death of the borrowing spouse.
Texas property rights laws don't allow for this at this time. There has been a lot of discussion and I understand that this is a topic in the Texas state legislature at this time. There is a possible there may be some changes to the current laws at some point in the future so that property owners with spouses under the age of 62 can take advantage of the reverse mortgage program but this has not been approved yet. Keep watching blogs as this could change in the near future.
Credit card zero balances have no effect on your reverse mortgage qualification. Lenders do not have to add any kind of a payment amount on accounts where you don't owe any money. Therefore, the $700 per month that you owe on the credit card debt that you have will be taken into consideration for qualification purposes, but any credit cards with zero balances will have no impact whatsoever.
There are several factors that determine how much money you can receive from a reverse mortgage. Your age, property value, and interest rates will determine how much you will receive as a percentage of the property. HUD has also changed the program in recent years to limit the amount borrowers can take in the first 12 months if they are not paying off an existing mortgage.
The minimum age a borrower must be to obtain a reverse mortgage is 62 years of age. The amount that a borrower receives in benefit at 62 years of age is approximately 52% when interest rates are at or below 5% (which they are now). Then depending on where you are in the country any cost to get the loan would be deducted from that benefit amount. Some areas of the country the costs are higher because the state these such as intangible tax, other mortgage taxes and the title fees run higher than other parts of the country. It also pays to compare lender costs from one lender to another.
So when you say half the principal is half paid, if you are telling me that you owe $150,000 on a home valued at $300,000, the chances are very good that you will be able to get a reverse mortgage without having to come out of pocket to pay fees if you live in an area of the country where the fees are not too high and if you are older than 62 years of age. If you just turned 62, and you live in one of the areas where the costs are the highest, you can still get the loan but it may be tougher to do so without having to put a little bit of cash into the transaction to close.
Your best bet is to go onto a website such as ours and obtain a free quote. There is no obligation, we do not require you to give us a lot of personal information, and we will not hit you with a lot of high pressure sales just to find out.
If yo9u would like a quick estimate feel free to use our online calculator or call us Toll Free (800) 565-1722
The reverse mortgage is known as a non-recourse loan. This means that the lender can do nothing but go back to the property to seek repayment of the loan if the original borrower defaults. Since your mother has passed, the only asset the lender can look to for paying off the loan is the property that secured the reverse mortgage. If there is remaining equity in the property, then you and your mom's other heirs would benefit the most by either selling the property or by your sister obtaining her loan and paying off the reverse mortgage before the lender has to take any action such as foreclosure.
If there is no equity remaining in the property, then your sister may be paying off the existing loan at just the balance owed or possibly at 95% of the current market value if that is less than the amount owed, but in this case it would be no equity to split with the rest of the family. Either way, you are not responsible for payment of the reverse mortgage. Even if the property or any portion thereof was left to you in a will, the choice as to whether or not to pay off the loan is entirely yours. If you chose to simply walk away from the property the lender cannot seek repayment from you and there is no negative credit implication since you signed no promissory note to repay any loan.
All of the conditions of the loan responsibilities of the borrower or the "rules" that the borrower has to follow as well as the reasons for acceleration of the loan are contained within the Note, the Deed of Trust or Mortgage, and the Security Agreement. If somebody were to obtain a lien against you and file it against your property, that would not normally cause the lender to initiate foreclosure of your home nor would the reverse mortgage prevent any legal avenues that the lienholder had based on state and local laws. Assuming that lien wasn't for taxes or a mechanics lien or some other lien that took precedence or priority position over the mortgage of record, it would not affect your reverse mortgage. If it was for something like property taxes, then there are methods written into the documents to remedy this situation and yes, foreclosure is one of them.
If you are referring to some other type of lien and you are concerned about whether or not that lien has the ability to force a sale of the property, I'm sorry I cannot help you with that information. You really should seek legal advice on that type of a subject.
In order for you to be protected as the spouse on a reverse mortgage, you have to have been included in that original reverse mortgage. You cannot simply be added to the existing reverse mortgage at this time. At this point you basically have two options. You can both do a refinance of her existing reverse mortgage adding your name to title and to the new loan and then the reverse mortgage would have both your names on it and you would be protected in the event something happened to either one of you. This would require you to qualify under the current guidelines, to pay the costs of a new loan, and you would receive reverse mortgage benefits based on today's program parameters.
The second option would be to make other arrangements with the proceeds from the sale of your home now so that if and when you passed before her, you would still have the funds available along with the sale of her home to arrange for other housing. You just have to remember that if you keep the existing loan you will have to do something if she passes before you. Whether do you do it now or later is up to you but at least you recognize that you have to keep this in mind and if there are other heirs involved it could get sticky later if you both are there at the time to make sure that all of her wishes are not communicated. Dealing with family can be very trying at times and it's best if everybody knows in advance exactly what your plans and wishes are.
As long as one original borrower remains in the home, there is no problem with one borrower vacating the residence. As soon as there is no longer at least one original borrower remaining in the home, then the loan becomes due and payable.
Unfortunately there are so many variables that pertain to this situation that I cannot answer your question fully without knowing more information. HUD now protects Non Borrowing Spouses that were part of the equation at the time the loan was obtained but that wasn’t always the case and I don’t know when your loan was obtained. But even knowing that, HUD has a provision for Loan Servicers to follow and that depends on what type of security the loan has been sold into.
Regardless of when the loan was taken out, the borrower and the borrowers heir(s) always own the property and it is the payoff of the loan that needs to be resolved, not necessarily them automatically moving out. If they don’t have the protection for a Non Borrowing Spouse under the current revised guidelines, then they still have the option to refinance the loan with another loan and keep the property or sell the property and keep the proceeds. The Veteran status doesn’t impact any of these options. The loan also allows for payoff of the balance for less than the amount owed if there is no equity in the property and if you would like to discuss that or anything else please give us a call at 800-565-1722
The only way I can advise you on this is to have an attorney review the title and the loan paperwork from the reverse mortgage. Your mom could stay in the home if both she and your dad were on the loan and on title but if they were, I don't think it would have gone into probate with the notice you describe - but I am not an attorney and you need to seek the advice of one. If they took her off title to do the loan, the lender could call the loan due and payable and you need to know that sooner rather than later.
If you acquired your home through a traditional purchase transaction or inherited it from a family member, there is no set timeframe for how long you have to own the property in order to apply for a Reverse Mortgage. You do however have to be able to show evidence that the property is your primary residence which can take anywhere from 30 to 90 days in order to establish. If you were deeded the property from another party then you would be looking at 12 months being the requirement for seasoning.
You absolutely can make payments on a Reverse Mortgage Loan. There is no prepayment penalty on a reverse mortgage so you can make payments of any amount, up to payment in full, without penalty at any time you wish. This would also include your right to refinance the loan and pay it off at any time you desire.
HUD does now allow the qualified spouses of reverse mortgage borrowers who are not yet 62 to be considered "non-borrowing spouses" which grants them protection when you pass allowing them to stay in the home for as long as they live as well. To be a qualifying spouse, they have to be over 18, live in the home at the time the loan is obtained and stay there continuously and then they have to change the title to their name shortly after you pass (if you do not add them before which is what we recommend since as long as you remain on title with her, adding a spouse does not create a call event for the Note and Deed).
The only other things you have to remember is that HUD is going to consider her age in the calculator results and with an age of 50 in the calculation, the benefit amount will be less than it was before so the program will not give you as much money as it did for a borrower over 62. Also, if you opted for the line of credit and still had money available remaining in the loan and something happened to you, as the non-borrowing spouse she would be able to stay in the home but would not have access to any remaining funds.
You would have to refinance your existing Reverse Mortgage loan in order to accomplish adding your Spouse as an Eligible Non Borrowing Spouse. HUD has specific requirements for a HECM to HECM refinance which we would need to discuss in detail with you in order to determine your eligibility. Please feel free to give us a call at your convenience if you would like to discuss this further.
The only way for Mom to get a reverse mortgage at this time would be if you were willing to come off of title long enough for the loan to record, and then she can deed the title back to both of you shortly after the loan closes. This would protect your title interests but it does not protect you against the loan being called due and payable if something happens to mom so you need to consider this action carefully to be sure it is what you want to do and you are ready for the ramifications.
If mom passes or no longer permanently lives in the home (has to move to a nursing facility), then the loan would become due and payable at that time. You would be on title so you would have the rights of an owner, but there could be issues with your ability to refinance the house with mom still on title and then there is the manner of title to be concerned with if you have to sell with another owner on title if mom's interest does not revert to you or if she is still living but is incapacitated. I would encourage you to seek legal advice to be certain that if you choose to go this route, that you have all your ducks in a row so that you are protected in the event something happens to mom and you have to sell or refinance the home.
The lien would have to be recorded and then there would be a one-year waiting period in order to be able to pay it off with HECM proceeds.
If you mean is there a limit on the credits a lender can give you, they cannot pay for the HUD-mandated counseling nor can they give you more credits than the actual costs. Other than that, the limit is basically what makes sound financial sense based on the value of the loan in the secondary market.
You have to remember that on a reverse mortgage, the only fee you pay that goes to the lender is the processing fee. Every other fee is a bona-fide third party fee and if the lender has a cost of $31.25 in there for a credit report, that is what the charge actually was and they cannot pad that fee by even a nickel! They have to have a receipt in your file for third party charges and they have to match exactly what you paid or the lender can be fined or worse at audit time by state and other regulators.
Any third party fees that the lender agrees to pay on your behalf means a check that they are actually writing to that entity. It's not just income that they won't make, it is a hard expense for a service for which they paid on your behalf. So aside from the basic HUD limitation that credits cannot exceed actual costs and lenders are forbidden to pay for the borrowers' counseling, any other credits would depend on the economics of the transaction. That's why it is best to shop around. For some companies it makes more economic sense to pay more of these costs and charge less than for others.
All HUD or FHA-Insured reverse mortgages do require the mortgage insurance. There are very few proprietary or private programs that do not require the insurance, but if you compare the programs, in most instances the borrower is still better off with the HUD insurance.
The benefits to the HUD program are that they offer more programs (line of credit as well as lump sum fixed rates), the interest rates are much lower (the rate plus the mortgage insurance renewal of 1.25% is typically still lower than the proprietary loan rates which are about 7.49%), and the proprietary programs are not as available in all states and areas. Because one of the things in a reverse mortgage that determines how much money you receive is the interest rate and the rate on the proprietary program is 2.5% or more higher than what is available on the HUD program, the amount as expressed as a percentage of the value of the home is also much less. A 62 year old borrower on the HECM program can expect a benefit of about 52% of the value of the property, the proprietary program might give that same borrower a benefit of 21% of less of the property value.
For this reason, the proprietary programs really make more sense for borrowers with property values over $1.5 million. If you are just looking to avoid the mortgage insurance and your property value is anything below one million dollars, you will pay more in the long run for fewer lending options with this type of loan.
To be eligible for a reverse mortgage, all owners must be 62 or over. Any owners not 62 can come off of title and then be re-added after closing but there are risks to this because the loan becomes due and payable when the last borrower on the loan permanently leaves the home. HUD has provisions in the loan now to protect qualifying under-aged spouses of reverse mortgage borrowers who were non-borrowing spouses at the time the loan was originated, but if the older borrower you reference is not a spouse, these protections are not there.
We do not recommend this action if you are depending on being able to live in the home after the passing of the older spouse and you do not have the wherewithal to refinance the loan into a new loan in your name if you are not the non-borrowing spouse. Remember, none of us like to think bad thoughts but if something unexpected were to happen suddenly and in the near future, you need to be certain that you have plans in place to be protected. If you can refinance the loan or plan to sell the property anyway, this might not be a concern but you need to make sure you understand the consequences before you find yourself in a position that you need to make a decision and are not ready for the choices.
The program is meant to allow you to live in your home, payment free for the rest of your life. The equity in the property is always yours. So while you are allowed 60% now, the other 40% that remains in the equity is yours as well. You can sell the home anytime you wish and that equity would be yours.
HUD is not buying your home. The reverse mortgage is a loan. Just like any other loan, you borrow money and accrue interest on the funds you borrow. The difference is that you never have to make a payment with a reverse mortgage so the balance goes up instead of down. With any other loan, if you borrowed money, you would make a monthly payment that would go toward principal and interest or interest only. Since you have no payment to make, the amount you owe will rise over time. If you were to borrow the 60% and stay in the home for many years, you will accrue interest on that loan and the balance will be substantially higher than when you took the loan out.
Some people are a little shocked at seeing the balance rise but when you compare it to a regular loan, it's not really that different, only when you make the payment. On a standard or forward loan, you're making monthly payments and so if you look at a Good Faith Estimate of a 30 year fixed rate loan and you see that amount of the total payments you paid over that period, it adds up to quite a bit more than you borrowed. The reverse mortgage is the same way but the loan balance is rising rather than you making all those payments for the next 30 years giving you funds to live on or use however you choose instead of paying them to the lender.
And because there is never a prepayment penalty with a reverse mortgage, borrowers who wish to make payments monthly, quarterly, annually or just whenever they wish can do so at any time up to and including payment in full with no penalty. But because most people choose not to make any payments (after all, that's why most people choose the reverse mortgage, so they don't have to make a payment), no one knows how long you will stay in the home, how much you will borrow or how much interest you will accrue. For this reason, borrowers are only given access to a portion of their equity in the loan proceeds. But as I stated, any and all equity remaining in the property still belongs to you or your heirs.
If you are not on title to the property, then the home would go to the owner's heirs upon his passing. If his wishes are for you to own the property at that time, there are a number of things he can do but you should check with a local attorney since some states have strong rights of heirship for relatives. It could be just as simple as him recording a deed into both your names now so that when we passes, you would still own the property.
However, that does not resolve the loan. If you want to remain in the home, you would have to refinance the loan into a loan in your name at that time. If you decided not to stay, you could also sell the home at that time if you were the owner. The timeframe is not specifically spelled out in the documents. The loan becomes due and payable when the last borrower on the loan permanently leaves the property. Typically the lender will work with you while they see that you are in the process of the sale or the financing but if there is no progress, sooner or later, they have to begin the foreclosure process as that can take up to a year or more to complete in and of itself.
They would much rather you dispose of the property or obtain your financing and pay off the loan, but if they wait a year to see what you intend to do and then start the process, it could be two years or more before they could secure the property. Unfortunately, sometimes lenders have to deal with people who have no intention of selling the home and do everything possible just to stretch things out before having to leave the property. During this time, the property is often left in disrepair or stripped of all appliances and anything that can possibly be removed. Sometimes it is from heirs, sometimes vandals or thieves. But the lender and HUD do have to protect the asset against which they made the loan and so the timeframe often depends on you and the progress they see.
I have written all kinds of related articles you can find in this catagory here: https://reverse.mortgage/news-category/heirs-loan-maturity/
If you paid the loan off and there was no loss to the lender (and HUD), then you are eligible for another reverse mortgage and you're in luck, you would not have to use the entire $100,000 on a $150,000 purchase price! Use our hecm for purchase calculator to estimate your required down payment.
With late taxes and no insurance, you can still get a reverse mortgage but you would have to get insurance and the lender would require a Life Expectancy Set Aside (LESA) for payment of the taxes and insurance in the future. It will mean less money available to you in the loan, but it will also mean that your taxes and insurance will always be paid on time in the future as the lender uses this money to make those payments.
The funds are only considered "borrowed" when the lender actually uses them to make payment so you don't accrue any interest on the funds in the LESA until they are used to pay for your expenses. Many borrowers actually like the arrangement as they no longer have to worry about the payment of their taxes or insurance either and so their only home expenses are for utilities and maintenance.
One person cannot solely apply for and place a reverse mortgage on a home that is owned by multiple individuals, regardless of the manner in which title is held.
Your mom has the same rights with a reverse mortgage that she would with any other loan. There are very few home improvements that would be considered ineligible under the documents she signed for the reverse mortgage but if the proposed addition were to alter the use of the property (turn it into a commercial property), if it was done against county zoning or as substandard work causing health and safety issues, that could present some issues. If there is any question at all with the use or the permits, she can always contact her lender in advance to let them know of her intentions to be certain that her plans do not alter the home in a manner inconsistent with her legal documents.
But if you are talking about adding a room such as a living room, bathroom, bedroom, etc and are planning on obtaining permits, there would be no problems as the work would also be approved when the permit was finalized upon inspection.
The home you live in 5 months a year is considered a secondary residence and is not eligible for a reverse mortgage.
I'm not an attorney and can't answer this. The full answer will depend on what state you live in and the property rights of heirs in that state, Then it will depend on whether your mom and dad put the home into a non-revocable trust because if they held title as joint tenants in most states, dad had right of survivorship and can do whatever he wants with the home as the sole owner.
My suggestion is to talk to an attorney in the state where the property is located to determine your rights as an heir. With regard to the loan, she would not be able to continue to live in the property after your father passed and the loan would become due and payable at that time.
Who the property would go to as the rightful heir would depend on state laws, steps your mom and dad took before her passing and subsequent steps your dad took afterward but before his passing and I simply can't give you an answer.
We do a full qualification with credit and income on every borrower before we order any appraisal. It doesn't take long and it makes no sense to run up your costs if there are potential problems.
If the appraisal is not to your liking, we have to wait for 6 months before we can order a new appraisal. HUD does not allow borrowers or lenders to engage in appraisal shopping by allowing them to merely cancel one case number and appraisal and order another.
Unfortunately, your mom can't just add someone to an existing loan. In order for you to be able to be on a reverse mortgage and to benefit from the terms of the financing, you and your mom would have to do a refinance and you would have to qualify based on the new terms available considering the property value and your age as the youngest borrower.
The benefits on a reverse mortgage are determined based on a number of things but one of them is the age of the borrower. If you were to be able to just keep adding relatives on to the loan as they became 62, the loan would never mature and the program would not pencil out since the loan balance would just keep growing and never be repaid.
There are a number of requirements that HUD has for manufactured homes and sometimes the most difficult comes with the appraisal and finding the required sales comparables but yes, we do lend on manufactured homes that meet the HUD criteria. I would invite you to contact us with your information and we would be happy to take a look at your circumstances to see if you meet the parameters.
The normal way is for the borrower to pay their own taxes and insurance EXCEPT if you do not meet the residual income or credit requirements of the program. And then, instead of an automatic declination if your income or credit does not meet the requirements like a typical loan, then there is a second opportunity with a Life Expectancy Set Aside (LESA) wherein the funds are set aside to pay the taxes and insurance from the loan proceeds and you can still get the loan.
Now, before you think that a LESA is a really bad thing, let me explain it a bit further and then you might see why a number of borrower actually request it after they get all the facts. The funds that are set aside do limit the amount of money available to you by that much to use for other purposes, that is true. So if you planned on using every bit of your reverse mortgage for other purposes and you need the LESA to qualify, then the loan may not be for you with that requirement. But if you were going to use the funds for living expenses anyway, this enables you to truly eliminate all household expenses (with the exception of your utilities and maintenance). Because the lender would take over the payment of your taxes and property insurance, you no longer have a mortgage payment, property tax payment or insurance payments to pay.
The funds are not considered borrowed until the lender actually uses them to pay your payments. So only those funds that are used to pay that installment of taxes or insurance are added to the balance and the other LESA funds remaining are not funds you have borrowed yet and you do not accrue interest on funds you have not borrowed. There is no fee to have your taxes and insurance paid for you and they are paid on time for as long as you own your home (at some point in time servicing fees may reappear on loans with LESA's but that is not the case at this time).
The bottom line is that you don't have to have a LESA if you meet the income and credit criteria of the program but if not, take a good look at the program with it, you might find out that it still meets your desired goals (and you might actually like it).
That's a loaded question if ever I have heard one! Just like "beauty being in the eye of the beholder", "better" is dependent on your wants and needs and what you consider a better deal. Reverse Mortgages can be refinanced, whether or not it's a better deal that what you currently have would depend on in what area you were trying to better your circumstances. HUD will not even let us refinance an existing reverse mortgage unless it meets a number of tests that benefit the borrower. Whether or not you would meet those tests will depend on when you closed, what the value was at the time and what it is now and also what the HUD maximum lending limit was at that time.
Then you have to look at the rates that you received then versus the market today (including the HUD mortgage insurance renewal premium if that has changed) and make the determination of whether or not it is a better deal for your circumstances with regards to rates. Or maybe for you, better is just being able to access more funds or a higher monthly payment. Or perhaps better is allowing a previously non-borrowing spouse who was too young to be able to get on the loan. There are a number of circumstances that could make it "better" for you at this time.
The bottom line is that HUD does allow the loan to be refinanced under certain circumstances but you have to put in a request for a proposal to see whether or not you meet the HUD requirements and whether those terms and circumstances are better for you based on your desired goals. It doesn't cost a dime and if you choose a company like ours that is not high pressure and is only looking to be certain your needs are taken care of, we'll be happy to tell you what we can and cannot do from the start and you can make an educated decision.
Yes, you can refinance an existing reverse mortgage loan but there are other considerations that you and the lender must keep in mind other than just the increase in value. The biggest things to remember are that the new loan cannot be started within 18 months of the close of the old loan and there are certain tests that the loan will have to meet to be certain that the benefits are great enough for the borrower. Your lender can run the numbers for you quickly but to do so, they will need you to have your current reverse mortgage statement available. If the loan meets the required tests in order to be originated, they can let you know very quickly.
Not all guidelines are the same in the same states let alone from state to state. There are more than one reverse mortgage programs available but the main program being originated today is the HUD Home Equity Conversion Mortgage (HECM or "Heck-um"). The HECM accounts for the vast majority of all the reverse mortgages originated at this time and there are just a few proprietary or private loan programs that have completely different guidelines and are not government insured.
Even so, HUD only establishes the minimum standards for the HECM program and then it is up to the lenders to originate the loans, setting their lending policies to meet the minimum standards as set forth in the HUD guidelines. HUD does not state that lenders cannot request additional or different documentation to meet these minimum standards in all instances. And HUD themselves are not consistent with their answers in all cases. If you contact the Home Ownership Center (HOC) in Santa Ana, CA you will often get a completely different answer to the same question that you ask of the Denver or Atlanta HOC offices. HUD administers the insurance out of the office where the property is located so it behooves the lender to be sure to contact the correct HOC office when they have questions on technicalities.
It is also up to the lender to determine if there are any special steps that need to be taken in any area they service due to regional issues they face. Extreme weather, economic conditions, and other circumstances may require a lender to institute different policies in different states or even different counties of the same state.
So the bottom line is that you first have to determine if the programs you are comparing are both the HUD HECM program. Private or proprietary programs will definitely have different guidelines/parameters. And even if you are talking strictly about the HUD HECM program, the program has the same general guidelines throughout the nation, but every lender has to determine how best to implement those guidelines in their company and in the areas they serve to achieve the stated goals of the program. So even with one manual that serves to implement the loan program for the entire nation, you will see differences from lender to lender and from area to area at times.
I assume the question is can you purchase using a reverse mortgage in the Bahamas and I have to tell you that I honestly do not know. You cannot do so with a HUD Home Equity Conversion Mortgage because the Bahamas are not part of the United States and HUD does not insure loans in foreign countries. I honestly do not know though and so I cannot say definitively if there are any similar products available through other private or banking entities in the Bahamas.
Thank you for your question. I have answered you in a new blog post you can find here.
Hello Mary Jean,
Great question and I've gone ahead and answered you in a new blog post: Reverse Mortgages w/Spouse Under 62 Now Carry Protections
The reverse mortgage requires no signatures from heirs for her to sell the property. Anything I guessed at that she requires your signature on now would be just that, a guess. I would guess that any paperwork requiring an heir's signature would be a result of state or local laws and rights of heirship but it is not a requirement of the loan (and as I said, that is solely a guess).
As long as there is no loss to HUD on the first reverse mortgage and the previous loan is paid in full, there is no limit on the number of reverse mortgages a borrower can get. You can only have one at a time and it has to be on your principal residence, but HUD will allow you to pay one off and obtain another and there is no time limit required between the two by rule. But, by practicality and the way the loans work, you may need a couple of days between the two in order for the HUD system to be able to verify the successful payoff of the first loan.
I'm sorry but the two issues are not connected. One deals with a loan that was placed on the home and the other with the rights of survivorship after a spouse has passed. Different states have different rights of heirship and I don't know what other heirs your husband had, how the title was vested, if there was a will involved and quite frankly, could not render an opinion on such an issue even if I had this information since I am not licensed to give legal property advice.
I can give you a little advice though and that is that I would suggest that you contact a property rights attorney in your state as soon as is you can. If you do not feel you can afford their services, look into a free legal aid in your area, but do talk to someone who is knowledgeable about your rights and your obligations to protect those rights sooner rather than later. I know this has no specific information regarding your circumstances, but I hope this helps.
Such a great question! Please read my full response in a new blog post pusblishd here: How We Deliver a No Closing Cost Reverse Mortgage
I wish I could explain, but from the information that you have presented, I cannot. There are no monthly payments due on the reverse mortgage and therefore, I cannot begin to guess what anyone would be threatening foreclosure at this point for non-payment of payments. Can you get a copy of the monthly statement from your mom? If so, I would suggest that the two of your get on a conference call together and call the lender to request status of the loan to find out any outstanding issues, if any, and resolve them.
And yes, there is always a definite amount owed and it is sent to the borrower every month in the monthly statement. Your mother should be receiving a monthly statement from the lender that outlines the amount that she owes and how much is added to that each month that she does not make a payment. I would get a copy of that statement from her immediately to review and compare with her checking account statement to verify that payments are going to that lender and then find out from them what is happening to her payments if it does not show on the statement.
Finally, I am concerned about your comment of a "broker" threatening foreclosure. Why is your mother receiving any contact from a broker? Your mother has a loan with a lender and there should be no broker involved. I would be very concerned that your mom is paying payments to someone who is not even affiliated with the loan and your review of the monthly statements and your mom's bank account will show if there are any irregularities there. If someone has talked your mom into making payments to a party to whom she should not be paying, you need to find that out as soon as possible and report that to the local authorities.
There are a number of ways to choose to receive your reverse mortgage proceeds and a monthly check is one of those ways. Borrowers can choose to take a lump sum of cash, a line of credit that they can access when they choose, a monthly payment for a specified amount and time period (known as a term payment), a guaranteed payment for life (known as a tenure payment) or a combination of the above. In other words, a borrower could use a portion of the proceeds as a lump sum payment to be taken at closing, set aside a portion of the proceeds to be used as a line of credit when needed and have the remainder of the funds used to send them monthly payments.
It's entirely their decision and as long as there are still funds available to the borrower, the decision can be changed at any time with the remainder of the funds. For example, a borrower can go for 5 years with the funds being used as a line of credit and suddenly decide that the monthly payment option would work better in his case. With a very small change fee, as long as he still has funds available, he can contact the servicer and change the way he receives the remaining payments so that he receives a monthly payment for the rest of his life. So even if they are not now receiving a monthly payment, they could elect to receive one at a later date.
I've answered yoru question in a new blog post titled "Do Heirs Have Any Recourse to a Reverse Mortgage?"
HUD does not allow any services to be performed in conjunction with a reverse mortgage until after a borrower has been counseled, an application has been taken by a lender and a Case Number has been assigned by HUD. Any appraisal that you had completed would not be valid for the purpose of the reverse mortgage. And since market data changes and the appraised value is an opinion of value based on the current sales data, a new appraiser could uncover more recent sales that indicated a higher or lower value that would render a previous opinion of value worthless anyway. An appraisal is a snapshot in time and paying for a second appraisal is not the best way to go since it does not insure anything.
However, no one should ever feel "trapped" after the appraisal phase of the loan. There is no cancellation fee for a reverse mortgage and if you are planning on paying for an appraisal anyway, why pay for two? You can always cancel the transaction with no charge to you other than the appraisal and any counseling costs you paid (usually $125 or less but I've never seen it higher than $150 for counseling). If your plan was to pay for an appraisal that you can't use anyway and then a second appraisal with the loan, it is much more cost effective to begin the loan and cancel the transaction if you do not wish to proceed.
Hello Mr. Miller,
We have no indication at this time that HUD will raise the limit to anything higher than the $625,500 which is itself a "temporary" increase over the statutory nationwide limit of $417,000.
Hi Cathy and Dan,
Yes we are a family owned company with our senior management having almost 40 years' experience in the mortgage banking industry. We believe in the reverse mortgage program, so much so that the first loan we originated nearly 10 years ago was for a family member! Our team was part of the company that developed and introduced the first fixed rate jumbo reverse mortgage to the market in 2008.
We have quite a bit of information available including copyrighted calculators and amortization schedules that we developed to allow borrowers to run their own scenarios which allows them to take charge of their reverse mortgage circumstances as they best suit their needs. We would love to send you something that would address your individual questions and concerns and will do so without requiring you to make a commitment or give us all your personal information just to get a few questions answered.
We will not hound you day and night to push you to make a move, even if you aren't ready as some folks have found when they contact some companies. We believe that this is a great loan product, but it's not right for everyone and only you can make that decision and you don't need us badgering you to do something that doesn't feel right. We will do everything we can to give you the information you need to make an informed decision and then allow you the space to make that decision.
If you would like us to send you generic information on the program itself, we would be happy to do so. If you would like a no hassle, no pressure proposal showing you what options you would have based on your circumstances, we will gladly do that for you as well and then give you the opportunity to digest the information. We are here to assist and to educate our customers, not to sell them something at all costs. We believe we have the most favorable reverse mortgage terms and service and we don't need to pressure people to sign quickly before they get a chance to compare.
Hi Lynn, You do not have to remarry your ex-husband, but to be eligible to be able to remain in the home even after you pass, he would have to also be on the title to the property and on the loan. To be eligible to do that, he would have to be living in the property and be at least 62 years of age. If he is living in the property with you, is on title and on the loan, then if you pass before him, he can remain in the property even after your passing.
This is a tough question for me to answer. There are just too many unknowns to give you a straight answer. I have to assume that mom has not passed since you are using the present tense (she has a house not had a house), so is she selling you the property outright? If so, the fact that she has a reverse mortgage on the home does not affect the price at which she sells the home to you other than she would have to get at least enough to pay off the current mortgage. If the house is worth more than the $550,000 she owes, it is up to her as to for how much over the current indebtedness she wishes to sell it to you. If the home is worth less than the $550,000, then the question would be why would she be selling at this time when she can still remain in the home with no payments whatsoever on the mortgage if it meant she had to live elsewhere at a cost?
The reverse mortgage is a non-recourse debt and if mom owes more on the loan than the property is worth when she passes, the heirs have a couple of choices. They can choose to just let the lender take the property and dispose of it if they do not want to hassle with it or if they want to keep the home, they can pay off the existing mortgage by paying the existing balance or 95% of the current market value, whichever is less. So in this case, if your mom has passed and I am making a bad assumption on her still living, you are her heir and the property is only worth $500,000, then you don't have to "buy it", as her heir, you already own it. You can retire the debt by paying 95% of the current market value of $500,000 or $475,000 and not the entire balance owed of $550,000.
I hope this helps but if I did not hit your circumstances, please don't hesitate to contact us at (800) 565-1722
HUD's minimum number of units that must be in the project is 2 so the answer to your question is yes you can get a reverse mortgage in a project containing fewer than 10 units, BUT the project still has to be approved by HUD. You can check to see if the project is already approved by HUD but looking on their approved project list at https://entp.hud.gov/idapp/html/condlook.cfm. If the project is currently approved, the lender still has to get a current HOA questionnaire to be certain nothing has changed since HUD approved the project and that it still meets their requirements. If it was previously rejected or is not on the list at all, it can still be submitted to HUD for approval if the circumstances that caused the previous rejection have been corrected or for initial approval.
There should be no fee payable to the lender for a cancellation of the loan. There are often third party charges that you agreed to pay at the onset that the lender collected for in advance and for which you would not be reimbursed for if those services were in fact performed such as appraisals, credit reports, third party inspections or work completion, etc., but there is no fee if you decide the reverse mortgage is not for you.
I would think that whether or not you have the utilities turned on would depend on your plans and goals. If you are trying to sell the home, then it may be best to have the utilities on and depending on where the property is located, so that pipes don't freeze, etc. However, if you do not plan to keep the home or sell it yourself, I would certainly contact the lender, let them know that you are not going to continue to pay for the utilities and plan to turn them off. They may wish to work out a deal with you to take over payment or they may not have any issues with that plan.
The only other thing I can think of off of the top of my head that you may want to consider would depend on whose name the title is in at this time. For example, if the title to the property passed to you as a result of a will, etc., then there may be some sort of legal liability if you now own the home and something happened that created a hazard as a result of your actions. I am not an attorney though and cannot give legal advice so for that aspect, I would definitely suggest you speak with a property attorney in the area before you take any action that might leave you open to liability.
Getting back to your plans though, if you are not planning on selling the home (that is, there is not sufficient equity in the home to make it worth your while to keep the home maintained until you can sell it), I would suggest that you contact the lender as soon as possible and make arrangements to do a deed in lieu of foreclosure. There is no personal liability to you or any other heirs on a reverse mortgage and if you do not plan to keep or sell the home anyway and just plan to let it go back to the lender, why not facilitate a quick transfer of the property and end all further expense and work? This is also something I would suggest that you discuss with a local attorney if you are not 100% certain of the procedures or the benefits.
All the maximum amounts are determined by HUD in accordance with the program parameters, property value, borrowers' ages and interest rates. YOU decide how much you take out up to the maximum but there is no minimum other than the original costs of the loan - the loan cannot be started with a zero balance unlike a Home Equity Line of Credit. Feel free to calculate your loan here or call us at (800) 565-1722
The answer is simple and I don't know why they would not tell you on the phone when you called. The people who send out all those cards and letters are just doing a mass-mailing and they do not know who does and who does not qualify when they go out, they just pull your name and address from public records and know that you have a reverse mortgage from the Deed or Mortgage that recorded with the loan.
The same ad goes to all the borrowers in a given area and like a fishing expedition, they keep throwing their line in the water and hope they get a bite!
To let you know if you qualify, you have to have had your current loan for 18 months or longer and have enough equity in the property so that the new loan will get you a certain amount of money based on the cost to do the loan. If the equity is not there or the cost is too great to do the loan, then lenders cannot do a new loan and they can tell you that within a few minutes.
Learn more about refinancing your reverse mortgage here: https://reverse.mortgage/you-can-refinance-reverse-mortgage or call us at (800) 565-1722
As long as she is your non-borrowing spouse at the time you take out the reverse mortgage and meets the HUD requirements at the time of your passing (resides in the home and has continuously, transfers the title to include her name if you do not do so before then, continues to pay the taxes and insurance), then yes, she can also stay in the home for the rest of her life as well.
HUD now takes the non-borrowing spouse's age into consideration when determining benefits for the reverse mortgage loan. Non-borrowing spouses cannot access additional funds since they are not borrowers on the loan so if there are still funds available in the line of credit, she would not have access to those funds so that is something that you need to consider if you have a large line of credit but she can remain in the home.
I can't give you a definitive answer without knowing how they held title or what state they lived in. What we see most often is that husbands and wives hold title as Joint Tenants which gives rights of survivorship to the remaining spouse. If that is how they held title and they did not live in a state with specific heirship issues, then it would be easy for mom as she would just have to get an affidavit of death for her husband as the surviving spouse and could then obtain a reverse mortgage.
However, some spouses do choose to take title specifically as Tenants in Common where there is no specific right of survivorship and each owner can will their interest to whomever they wish. While this is not anywhere near as prevalent, it does happen.
So what is the bottom line? I would suggest that you have the title to your mom's home reviewed to see how the title was vested as well as the state restrictions, if any, to see if she needs any further work to do the reverse mortgage if that is her goal. I'm not an attorney and cannot give legal advice so if there is any question at all about mom's ability to encumber the property at this time with any particular form of financing, it may not be a bad investment to make a quick call to a licensed attorney in the state in which the property is located and make a quick inquiry. This is something that can be researched and answered very quickly and probably at a very small cost but may save a lot of heartache later.
The reverse mortgage for purchase is just like other FHA loans for purchase transactions. Just as on a refinance, you have the benefit or mortgage amount based on your age and property value, the loan brings that much money to the closing table and you bring in the balance to complete the transaction. You can determine the amount for which you will qualify in advance and would know how much you will need for closing long before you ever make an offer on a home.
There are a few things that you really need to watch on the reverse mortgage purchase program that are just a bit different and we outline them on our reverse mortgage purchase information on our website here. There are a few things you need to remember that are different that relate to condominiums, manufactured homes, new construction, payment of fees and included personal property. If you review this information in advance and keep it in mind as you progress through your purchase transaction, a reverse mortgage purchase is most often every bit as smooth as with any other loan!
I have to make sure I answer this specifically so that I don't lead you astray so let me set up the parameters of my response. If both of you are on the reverse mortgage now and one of you leaves the home, it does not affect the loan at all. As long as one of the original borrowers still lives in the home, then the loan remains valid. This would also be true if one spouse was a non-borrowing spouse at the time the loan was taken out, and the non-borrowing spouse was the one who left the home because the borrower on the loan would still be occupying the home.
On the other hand, if the loan was done with a non-borrowing spouse but the borrower left the home, that is, it was no longer the borrower's primary residence, then under the terms of the reverse mortgage, the loan would become due and payable. The loan is only valid as long as one of the original borrowers on the loan continues to occupy the property or if the loan was originated with an eligible non-borrowing spouse and the original borrower passes, but not just if he/she leaves the home for other reasons.
Before you call anything off, I would suggest you contact the lender and give them the option of accepting the sale and paying off the reverse mortgage with the available proceeds. You are not responsible for any shortfall on the property and the loan is a non-recourse loan which means that the lender cannot seek repayment from any of mom's other assets either. If the lender and HUD know that you have a buyer right now, they may be willing to settle for their offer knowing that if they have to take the property, market it again and pay those costs, the chances are very good that they will end up losing even more money than they would with your buyer. As long as your offer is a bona fide current market offer (not well below the actual current value), the lender would be crazy not to just let the transaction proceed and accept the short payoff and put their claim into HUD for the loss.
As I said, you do not have to pay for anything. You are not on the loan and you did not sign a mortgage agreeing to cover any expenses. My suggestion is that you contact the lender as soon as possible and tell them that you are giving them back the house but have a potential buyer and ask them if they want to continue the transaction and let them decide whether or not they want to proceed with the sale.
Learn more about Reverse Mortgages & Non-Recourse
My advice is that your family has a quick meeting of the minds to decide what you want to do before making that notification. I can't tell you whose responsibility it is to notify the lender that your aunt is no longer living in the property, but I can tell you that when they do make this discovery, there will be a decision to make and if you are prepared before the bank begins to put time limits on you, you will be ahead of the game.
For example, the family will need to decide if they are going to keep the home of sell it. Either way, you should contact a local realtor and find out the current value of the home. If the balance of the reverse mortgage is lower than the current value, then you can sell the home and keep the equity or refinance the loan with a new loan in one or more of the heir's name(s). If the balance is higher than the current value, you can choose to pay off the current loan at the balance owing on the current mortgage or 95% of the current market value, whichever is less (the lender and HUD will have to agree on the value but that will be determined by appraisal). If you do not wish to try to sell the home because the balance owed is higher than the current value and no one wants to keep it, then you also have the option to walk away from the house with no recourse to any of the heirs or your aunt's other assets.
But you really should know what your plans are before you contact the lender because you may need to remove your aunt's personal belongings from the home, you may need to begin a loan application for the heir that wishes to keep the property or you may need to just have the knowledge to know what's best for you and your family. Once you know what you want to do, someone needs to contact the lender and let them know of the circumstances so that you can make a plan of action that may include a payoff of the loan through a sale or refinance or possibly a deed in lieu of foreclosure with you deeding the property back to the lender in order to relieve yourself of the hassle. In any event, there is no responsibility that the lender can assign to any particular family member to say that they should have notified the bank and anyone in the family can notify the lender.
You need to do a few things. Firstly, get a copy of your mom's closing statement. I know you are going on the assumption that mom had paid for her home in full and that she did not owe other money before she got her reverse mortgage, but many times we see that families are in the dark about the borrowing habits or the true financial picture of other family members. It would not even have to be an existing mortgage that she paid off with the reverse mortgage. She may have had to use the funds to pay off other debts when the loan closed. The closing statement would show what obligations, if any, (and that could include taxes, other debts, etc) were paid off with the reverse mortgage proceeds at closing.
Next, you could ask the lender for a loan history and ask them if they will confirm to which account your mom's deposits were made (if she had direct deposit). This would tell you each time she requested funds, how much she received and if she had those funds directly deposited into an account. Unfortunately though, I know of no way to "track" how she spent her money. No lender tracks the borrowers' spending of their loan proceeds for any loan that I am aware of, for forward or reverse loans. But once you have a loan history, you should be able to verify through your mom's receipt of the funds through her accounts with corresponding deposits (provided that she did not use all the funds in the beginning to pay off other liens). I wish you the best. Depending on how long ago all of this transpired, it may not be easy to track now after the fact if she did not keep good records and it's not clear.
There is never a prepayment penalty so you can pay any amount you wish up to and including payment in full at any time you wish without penalty. So you can make a small payment, a partial pre-payment or payment in full at any time, whether you sell the home, refinance the loan with other financing or whatever and there will be penalty for paying the loan off early.
All Reverse Mortgage borrowers under the HUD Home Equity Conversion Mortgage (HECM or "Heck-um") reverse mortgage program must be a minimum of 62 years of age. There have been proprietary or private programs in the past that have gone down lower in the past (I was involved in creating the first fixed rate program and it went down to the age of 60) but I am not aware of such a program at this time. HUD does have provisions for spouses when one spouse is 62 or older but the other is not, but even then the spouse who is not yet 62 is not on the reverse mortgage loan and is considered a "non-borrowing spouse" with conditional rights to remain in the home if something happens to the older spouse. The non-borrowing spouse is not on the loan though and cannot access any of the loan proceeds, even if funds would have still been available in the line of credit to the older spouse.
Disability is not a waiver for the age requirement. Again, if you say that "one of the owners is under the 62 year old requirement" if the other owner is the spouse and over 62, the older spouse still can still get the reverse mortgage but I urge you to make sure it is the right move for you. With the new safeguards the younger spouse would not have to leave the home if something happened to the older spouse, but there are still considerations to make before proceeding with this option.
With regard to the last part of your question, I'm sorry, I am not sure what you mean by using consideration of a pending law suit to help secure payment so I do not know how to answer the question. I would be happy to answer your question, if I can, if you would like to contact us with a bit more information but I just don't think I have enough information at this point to give you a valid answer.
HUD does set a maximum that lenders can charge for the loan, but that is the only involvement or limitation on the pricing that they have. Each lender sets their own pricing based on the cost of their funds, their operation, required profit margins, etc. It is always prudent to compare and shop between different companies to see the best possible pricing you can get. I also recommend that you do a simple internet search once you are considering a few different lenders. Just the phrase "... lender complaints" with the lender's name at the front may tell you volumes about the companies with whom you are considering working.
Not all lenders are created equal, even if they are offering the same FHA-insured loan! If one lender can save you thousands of dollars and maybe a lot of grief as well, it might be worth 5 minutes of research in the beginning. We would love to have you compare our rates and fees to anyone.
I'm not familiar with the particular program which you reference and all their rules but I can answer the following. All liens must be paid in order to get a reverse mortgage. That would include the first and subordinate liens showing on the property at this time.
Also, many housing and finance programs contain provisions which dictate to whom the property may be sold and some of the selling terms (maximum income, selling price, etc). If this program places limitations that remain with the property that would affect future sales of the home, it would not be eligible for a reverse mortgage. Again though, I cannot say whether or not your property has such provisions without an examination of the title restrictions on the property but that is also something to keep in mind.
Yes you can but you have to remember two things. You must pay off and close the loan with the proceeds of the reverse mortgage, you cannot keep the loan open after it is paid to a zero balance.
Also, HUD recently changed some of the rules of the reverse mortgage program and one of them is that you cannot pay off a loan that was obtained within the last 12 months with reverse mortgage proceeds if that loan was used to withdraw equity from the property and that includes Home Equity Lines of Credit. In other words, if the loan was not a purchase money loan (it was a refinance or an equity line that was not used to purchase the home) and you drew more than $500 from the home with the loan, you cannot use the reverse mortgage to pay off the loan if it is less than 12 months old. Borrowers who refinanced a loan but took no money out of the transaction will not be affected by this rule, but if you took out the equity line within the last 12 months and your cumulative draws in that 12 month period exceed $500, the reverse mortgage could not be used to pay the loan off.
HUD has different requirements for the purchase program and someone who is doing a loan on their existing property. If your desire is to utilize the reverse mortgage for purchase program, you cannot have a bankruptcy for the previous 24 months prior to the loan.
If you are looking at doing a loan on your existing property, you can do a reverse mortgage, even if you are still in the Chapter 13 Bankruptcy but there are things you need to know. Firstly, you must have been making on time payments under the plan established by the court for a minimum of 12 months. The court has to issue an approval for you to obtain the loan. Finally, there is a good possibility that you may be required to have a full or partial Life Expectancy Set Aside (LESA) for your taxes and insurance depending on the issues surrounding the BK and your other credit profile.
If you are required to have the LESA, the lender is required to set aside funds from the reverse mortgage proceeds to pay your future taxes and insurance. The amount required to be set aside for borrowers is dependent on whether it must be a full or partial LESA, the borrowers' ages and the amount of your taxes and insurance. The LESA is not a fee, but rather funds that are set aside and not made available to you to use for other purposes, the servicer will use them to pay taxes and insurance as they come due just like an impound account on a forward loan but because you make no payments on a reverse mortgage, the funds are set aside from the beginning for the future payments.
The funds are not considered "borrowed" until they are actually used or sent to the taxing authority or insurance company by the servicer and that is when that portion is added to your loan amount. We have had borrowers actually request LESA's even when not required of them because they liked the idea of not having to pay their taxes and insurance anymore both from the standpoint of convenience and cash flow. The only real hitch is that if it is required, you have to have adequate funds available to you under the reverse mortgage to pay off any loans currently on the property, fund the LESA and still have the remaining proceeds to do what you want to do with the reverse mortgage loan. Let us know and we can run the numbers for you to see if it will work out for your needs.
HUD allows you to rent out a portion of the home while you're in it, but once you rent out the entire home the property is no longer your primary residence, it is theirs. If they refused to vacate it could cause all kinds of legal entanglements and I would have to say that if you rent out the entire property it is not your primary residence and could be a problem. When all else fails, you go to the terms of the legal documents themselves. Here is what the Deed of Trust the borrower must sign states regarding occupancy and the right of the lender to call the loan due and payable:
UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:
4. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application;
Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal residence after the
execution of this Security Instrument and Borrower (or at least one Borrower, if initially more than one person are
Borrowers) shall continue to occupy the Property as Borrower's principal residence for the term of the Security
Instrument. "Principal residence" shall have the same meaning as in the Loan Agreement.
9. Grounds for Acceleration of Debt.
(b) Due and Payable with Secretary Approval. Lender may require immediate payment in full of all sums
secured by this Security Instrument, upon approval by an authorized representative of the Secretary, if:
(i) The Property ceases to be the principal residence of a Borrower for reasons other than death and the
Property is not the principal residence of at least one other Borrower; or
(ii) For a period of longer than twelve (12) consecutive months, a Borrower fails to physically occupy the
Property because of physical or mental illness and the Property is not the principal residence of at least
one other Borrower; or
(iii) An obligation of the Borrower under this Security Instrument is not performed.
There is no provision for "temporary rental or release of primary residence". So I would have to say that if you move from the home and rent it out for the winter (presumably 3 months or more at a time) you could run the risk of having the home declared as being other than your primary residence at that time and subject to being called due and payable since this does not have to run 12 months to be effective based on the terms of the Deed of Trust (you notice the right to call the loan is 12 months OR no longer living in the home, not AND).
The lender does not automatically get the house ever. The home passes from the owners to their heirs and the heirs must decide what they wish to do, sell the home and pay off the loan with the proceeds, refinance it and pay off the loan with the new proceeds and keep the home or pay off the loan with other funds available to them. We recommend that heirs contact a local real estate professional to determine the value as soon as possible so that they can make an informed decision. If there is equity in the home, it is in the heirs best interest to move quickly to protect their interest. If the values have not increased or even decreased, it may make a difference in their decision making. At any rate, HUD requires lenders to give borrowers and their heirs ample time to sell the home if that is their decision (and that time changes in different markets as those markets change).
If the lender has to take the home back by foreclosure, they do it through a foreclosure sale in which their bid is just what is owed to them. They do not sell the home on the open market for heirs. If it gets to the point where the lender is selling the home, it is because they have already gone through the entire foreclosure process and then any loss or profit from the sale goes to the lender. This is why heirs should use the time that HUD will allow to heirs to sell or finance the home if there is equity still in the property before it ever gets to the point of foreclosure.
More here: Reverse Mortgages: What Happens After Death?
There is never a problem with your attorney reviewing anything you sign but I would just like to ask to which documents you are referring? Do you mean the original application package, the final loan documents that actually constitute the loan agreement or both? The reason I ask is because both sets of documents afford you ample time to receive legal counsel before you are in any way committed. Let me explain.
The original application package is a very thick package but you receive not only the one that you sign and return but also a copy for yourself for your own records. In that initial package is also a sample of the Note, Deed and Security Agreement that you will be asked to sign later with your loan. Your lender cannot obtain a HUD Case Number and therefore lock in your lending parameters (especially important if you are trying to obtain a reverse mortgage before the new financial assessment guidelines go into effect) until they have a counseling certificate signed by you and a HUD approved counselor. You can return your signed loan application package to the lender along with instructions not to order any services that would incur a cost to you until after you have had your attorney view the documents and you would be protected from HUD changing their program as well as no costs to you if you decided to cancel.
The second set of loan documents that you would have the opportunity to review are the loan documents at closing. All borrowers have a 3 day right of rescission on refinance loans that actually extends to 4 to 5 days that would give you an opportunity to have your attorney take a second look at the loan documents once they had your individual information (the sample set at application will contain the same covenants and responsibilities but will not have your individual information included). The right of rescission period does not include the day the documents are signed, Sundays or Holidays so the shortest possible time the rescission period can run would be a final funding on Friday if you signed on Monday (assuming no holidays and that you do not rescind the transaction in the middle). Otherwise, if you sign on Tuesday - Saturday, you would not be able to count Sunday for sure and if any of the days were also a holiday your rescission period would go to 5 or even 6 days.
So as you can see, no lender could possibly keep your attorney from reviewing your documents, even if they didn't like the idea - and I do not know a lender who would balk at such a request. You just need to keep in mind which documents are date specific and if a specific date is needed, sign the document on the required date and then hold it until after your attorney has done the review if need be. If you later decide that you don't want to return the documents after discussing with counsel, you can always destroy the documents and not return them. It's just a matter of finding out if it's a date issue on the documents or what but there is almost always a way to do things right and still protect yourself.
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As an owner of the home and an heir, you absolutely can stay in the home. However, your parents did borrower money under certain terms and as the new sole owner of the property when they pass, you will have to abide by the terms of the loan they took out. Nothing in that loan says who can own the property or what you must do with it once you do own it, it only states that the loan must be repaid once they are no longer living in the home.
If you want to keep the home, that means refinancing the loan with a loan in your name or paying the loan off with other funds. If you want to sell the home and keep any proceeds, that would be your decision as well. Knowing your rights now will allow you to make sure that you have all your plans in place when the time comes that you do have to make a decision as to which way you want to act.
Interest is charged on the outstanding balance. Because the outstanding balance does grow, the amount of interest accruing would also grow if there were no payments by the borrower. That is one thing that many borrowers do choose to do though. There is never a payment owed, but there is also never a prepayment penalty and so many choose to make some payment on the loan, whether it be monthly, quarterly, annually or just whenever they have a little extra money. In your example, the monthly interest would be $270.83. Borrowers who wish to retard or eliminate the growth of the balance might elect to make a payment if it is within their means. The great thing about a reverse mortgage is that no payment is ever required so if a month ever came where this payment was not possible due to other expenses, if it was skipped there would be no consequences other than the balance increasing.
Borrowers need to weigh the desire for equity retention with the need for reverse mortgage funds. Those who desire to maintain the most possible equity in their homes and have the wherewithal to sustain their lifestyles on their current income or have families who can help them meet their expenses might determine that the reverse mortgage is not the best alternative for them. Those who do not have benefit of family support, find that their incomes do not see them through each month's demands and realize that rental housing can often cost more than the interest they accrue on a reverse mortgage, eating through sale equity just as fast or even faster in some cases, have found that a reverse mortgage often meets their needs extremely well. We encourage all borrowers to explore all alternatives with their families and financial advisors and choose the path that is best for them.
Hello Mr. Robson,
The settlement fee is the fee that is charged by the Settlement/Closing agent that handles the transaction. This is a 3rd party provider fee and not a fee that All Reverse Mortgage charges.
Lenders require a Closing Protection Letter from Title for every loan they close. It is an agreement that indemnifies the lender against any issues arising from any closing agent errors, or negligence. In some areas, that we do business in this is an additional charge from title, and in other areas it is included in the title premium. This varies from state to state and sometimes from county to county.
This is an estimated charge for the final signing of closing docs as the final loan document set must be notarized. If the final signing is done at a local attorney’s office and they do not charge an additional signing/notary fee, then this fee is waived.
The recording fee is an estimate of the cost to record the documents. For a Reverse Mortgage loan, there are 2 deeds of trust and 2 notes, etc. as the Secretary of HUD takes a 2nd lien position at the same time as the lender. Due to having 2 deeds to record and the deeds being multiple pages, Reverse Mortgage recording charges are higher than a traditional or Forward mortgage.
I'm sorry to hear about your mom. I can't speak for Wells Fargo, but there are a few things to remember here. Firstly, you own the home and to keep it, you are, by your measurements, just $19,500 short of owning the home free and clear. I don't know a lot of information at this point so I can only give you some blind suggestions. Firstly, I don't know the value of the home or your age. If the home is valued at $40,000 or more and you are 62 or older yourself, you can probably get a reverse mortgage on your own and may or may not have to use some of the insurance money to close the loan. Wells Fargo no longer originates reverse mortgages so you would have to check with other lenders if you think this is the way you want to go.
If you are not over 62, then there are other loan types you can also look at if Wells Fargo is not willing to extend you a new loan. Again, depending on the current value of the home and your ability to pay mortgage payments and at what amount, you might look into a home equity line of credit, a small first trust deed or check with a local HUD approved housing counseling provider to see what other programs may be available to you for your circumstances. We only do reverse mortgages and therefore I am not familiar with other programs for disabled individuals, etc., but I would certainly give that a try as well.
I know this is a tough time in your life and it is a very difficult time to begin looking at all these alternatives but I caution you not to wait too long. The sooner you know what your options are, the easier it will be to take whatever actions necessary in the timeframes you have available to you. I wish you the best.
You can apply for a reverse mortgage 60 days prior to your 62nd birthday but you cannot close it until your 62nd birthday. Your wife would be a non-borrowing spouse which means she would not be on title to the property and not on the loan, but you can add her back on title later and under HUD's new guidelines, your wife would be able to stay in the home for as long as she lives in it, even if something were to happen to you.
However, HUD is changing their program guidelines on March 2, 2015 so that loans started after that date will have qualification guidelines borrowers will have to meet. Since you do not turn 62 until June, your application cannot begin until April and therefore, you will fall under the new parameters. We would be happy to contact you nearer the end of March to update you on current program rates, etc. if you would like but until then, you cannot begin your loan at this time.
Reverse mortgages can only be done on your primary residence. If the property meets all of HUD's guidelines and is zoned for rental use in other parts of the home (i.e. a 2 - 4 unit property) then yes, you can live in one of the units and rent out the other legal rental(s). If you are asking if you can place a reverse mortgage on a rental property though that you do not live in, the answer is definitely no.
HUD states that some nominal commercial usage of the home is allowed providing it does not change the residential nature of the home and no more than 25% of the property is so used. This is typically used more when considering a home office. So while it is not specifically forbidden, HUD's 25% rule is much more difficult to apply to a rental situation when you rent a portion of your home to others. It's easy to say that a 200 square foot office is 13.3% of a 1500 square foot home and therefore would meet HUD's requirements if a borrower ran his accounting business from that location so long as the residential nature of the home is not changed. However, when you rent out a portion of the home, that most likely includes bathroom space, kitchen and common area usage and therefore lines are blurred as to the actual space used for commercial or income purposes. So if you are talking about can you rent out just a portion of your house such as a room, I would have to tell you that it would depend on the circumstances.
First let me say that I am terribly sorry for your loss.
As for the insurance checks, I honestly do not know what is holding them up. It would be purely conjecture on my part to try to guess what the lender is still researching at this time and why they would hold up any insurance payments. There may be an issues with many different things, some out of the lenders control that would delay the process. They may have zoning issues on rebuilding the home, there may be a dispute with the insurance company on the amount that was paid versus the actual loss or, and let's hope this is not the case, if your mom allowed her insurance to lapse, then the lender has to force-place coverage that does not include contents, just the dwelling. what I do not understand though is why you have not been told what the hold-up is at this point and I would put more pressure on the servicing company to divulge the information.
However, I think I would put a little more pressure on the insurance company as well. Your mother's lender is also listed a payee in the instance of a claim so that they can be certain the money is slated to going toward rebuilding the home thus protecting their collateral. However, the insurance company can certainly tell you what coverage your mother had on the contents of the home as well as the lender. Have they told you why they will not give you the amount of that coverage? As long as your mothers' policy was in force which covered the dwelling and the contents, then I would at least try to push them harder for the information you are seeking or a valid reason for why they cannot give it to you.
if all else fails, I would seek competent legal counsel. I don't know the insurance laws and I don't know what they are required to say to whom in such as instance. Are you now the legal owner of the property? If so, I would think that you would have rights to get information. If the house did not pass to you upon your mother's death, there may be privacy laws that are in effect of which I am not aware and that's why you really need to speak to an attorney.
At any rate, let me again tell you that I am sorry for your loss and I do hope that this is all resolved soon.
The Deed of Trust allows the Lender to make reasonable inspections provided they give you prior notice and specifying a purpose for the inspection and that the inspection must be related to the lender's interest in the property. In other words, if the lender has reason to believe that the property is no longer owner occupied, is vacant or has been turned into a business, the lender, or the lender's agent (an appraiser) has the right to inspect or perform an appraisal of the premises with prior notice. However, if the lender did not tell you why they wanted to perform such as appraisal, they are acting in violation of the Security Agreement. They need to have a legitimate reason for the inspection and it's not a secret, they need to tell you why. The paragraph below is from a CA HECM Deed of Trust:
6. Inspection. Lender or its agent may enter on, inspect or make appraisals of the Property in a reasonable manner and at reasonable times provided that Lender shall give the Borrower notice prior to any inspection or appraisal specifying a purpose for the inspection or appraisal which must be related to Lender's interest in the Property. If the Property is vacant or abandoned or the loan is in default, Lender may take reasonable action to protect and preserve such vacant or abandoned Property without notice to the Borrower.
This action can be the result from the servicer receiving mail back from the post office undelivered or it can be as a result of other attempts to contact you at the subject property being unsuccessful. At any rate, the lender must tell you why they want to do the inspection and the reason has to be a legitimate reason to protect their security interest - they can't do it "just because".
HUD requires borrowers to use the appraised value or the purchase price, whichever is less, for all homes purchased less than one year ago. After one year, the lender would use just the current appraised value.
I'm sorry, I really can't give you any clear guidance on this and I would really suggest that you contact a local real estate attorney. As far as the loan is concerned, it is a non-recourse loan and regardless of how much interest accrues, etc., your mother or her estate cannot be made to pay anything to cover any shortfall. With regard to the rights of other parties, I really cannot comment on what they can or cannot do in any particular area to protect their interest. If your mother has moved out of the home, she can turn the utilities off, stopping any further costs there. Her own insurance is probably on a yearly renewal and she can probably choose not to renew her private policy which would require the lender to purchase their own coverage on the property. I honestly don't know what rights the HOA has if they are not paid (whether or not they can seek to lien your mom) and that's why I really think you should seek the counsel of an attorney and maybe he/she can also speed the process for the Deed in Lieu of Foreclosure.
I can't really give you a full proposal without knowing all the parameters, but under the best of circumstances, running the information that you have given me tells me that the reverse mortgage would still leave you at least $87,500 short to pay off your current mortgage, and that is assuming a value of $625,500 or more and that your 67th birthday will fall within 180 days of the anticipated closing date. If your value is $625,500 or greater and you think bringing in this much money is an option and want to discuss the programs, please let us know. You might also contact your current lender and ask if there are any options for a lower payoff under the circumstances.
HUD and lenders both have specific requirements of manufactured housing and one of the requirements is that the home must be permanently affixed to the land that you own. Unfortunately, the scenario you describe would not meet that requirement.
If you don't know who the lender/servicer is, then the only other possible entity you could contact would be HUD. You can find the local office just by typing HUD.gov into your web browser and calling the office to report the circumstances. They insured the loan and I don't know how aggressively they will pursue this but stating that you will occupy the property and then not doing so is definitely a violation of the terms of the loan.
The borrower paid mortgage insurance when they got the loan and neither the borrower's estate nor their heirs will ever have to pay a dime of the shortfall. The loan is a "non-recourse" loan which means that the lender can only look to the property for repayment of the debt. If there is a shortfall, the lender can put a claim in to HUD for reimbursement from the insurance fund.
Hi Rhonda, The factors that go into the reverse mortgage calculations are the value of the property, the amount owed, your age, interest rates at the time, current HUD Lending Limits and the HUD program parameters. You could look at what a 62 year old borrower receives today and it may not look anything like that in 14 years. I'm sorry, I don't know of any way to tell you what the rates will be, home valut HUD will have done with their program by that time.
Hi Karen, You are correct. There is no repayment required as long as you live in the property and abide by the terms of the loan agreement which include paying the taxes as they come due, maintaining adequate hazard insurance, and keeping the property adequately maintained.
The borrower always owns the property and therefore is responsible for the insurance, taxes, HOA dues, any maintenance, etc. You can sell the property at any time you wish and the equity is always yours. It's just like any other loan except that you do not make monthly payments and instead of the balance going down each month as you make a payment, the balance rises as you accrue interest on the unpaid balance.
Firstly, I would never allow you to do the loan without your wife, especially if she was of age, unless that was something for which you made provisions and decided to proceed that way even after my counsel against it. I would also suggest that you find out if you can do a refinance now to add her, although you stated that you have no money, if there is enough equity, you may be able to do a no cost loan and get her on title. This is important because if she is not on title and did not do the loan prior to August 4th of this year when her age was considered in the loan, then yes, she is at risk.
I'm not sure I totally understand what you're asking so if I don't answer this to your satisfaction, please feel free to contact us back but here goes. The bank does not buy any reverse mortgage borrower's home. They are not in the business of buying and selling homes. They prefer that the borrower or the borrower's heirs retain the property (or sell it) and pay off the reverse mortgage balance. That is the cleanest and easiest way for all lenders to loan money, Lend the money, receive repayment at the end of the contract and then lend again. If there is equity still in the home, then you should contact a real estate professional in the area and make arrangements to sell the home if you do not want to keep the home yourself.
The bank has only those rights given to it by the borrower under the security instrument (Deed of Trust or Mortgage). The bank has the ability to foreclose and take the home in the instance of default to protect their interest but that is not what they want to do. No bank is looking to increase their real estate owned portfolio and if they do have to foreclose on property, they aggressively market it to get it sold and off of their books. So if a reverse mortgage borrower passes, had no heirs and the bank had to foreclose because no one inherited the property (or none of the heirs wanted the property), then the bank would do everything it could to sell the home as quickly as possible, if someone else didn't buy the home at the foreclosure sale. The property would go up for public sale after a prescribed advertising period and then the opening bid is the amount owed to the bank, the bank is not allowed to bid any higher.
I hope this answers your question but if not, please let me know.
I must admit, I'm really not sure where to go with this one. I'm afraid that any answer I give you to a question like this would be construed as "legal advice" which I am not licensed nor am I qualified to give. There have also been different reverse mortgages available throughout the years and not knowing what loan this individual has, I could not even render an opinion as to what conditions may appear in the security agreement or the Note and Deed of Trust.
I can tell you this though. The Deed of Trust is a recorded document and your attorney can pull a copy from public records and if the loan is the HUD Home Equity Conversion Mortgage (HECM), then it would be easy enough for him or her to get a sample set of the loan documents and then render a legal opinion on this question. I hope this helps.
It's not that it is all that difficult, you just have to have enough equity and many borrowers have not seen enough appreciation in their homes yet to make it work (especially since the amounts borrowers receive under the program have been reduced in recent years). It doesn't hurt and it doesn't cost a dime to go online and see that the calculator says for your potential benefits and then you can decide it it's worth pursuing further from there!
The loan actually closes pretty quickly. If you did a reverse mortgage purchase on a short sale that took that long, it was probably due to issues with the approvals needed from the selling lender that hung things up.
If you have a purchase that is not working with a short pay, or a foreclosure property and you look at the All Reverse FAQ's that you can find here or you can read about the program and what HUD will and will not allow on the HUD Website at this link. Either way, knowing what the loan is all about and what HUD will and will not allow BEFORE you make an offer will save you a lot of grief.
The purchase reverse mortgage is an FHA-insured loan. That means that you have to follow the HUD protocol for eligibility and appraisal. While the transaction does not take exorbitantly long, don't plan on it closing in 5 days either! The property and appraisal has to meet the HUD requirements shown on the HUD website and failure to do so does not mean that the house is not a great house, but it could mean that it's not eligible for FHA/HUD insured financing.
The biggest thing I tell folks is to know the issues that can be the biggest stumbling blocks and if you have those covered, you're probably going to have a positive experience. If you remember to follow the FAQ's and ask questions in advance, there typically are not any problems. Not all properties are acceptable to HUD. It doesn't make the house a bad house but it might not be an FHA-insurable property so it's best to find out everything you can in advance.
If I'm reading your question right, I think I have to disagree with both of you. I'm not sure what you mean by "lost to the lender" but if you mean forfeited and the lender gets to keep the money from your line, that is not the case. I can tell you that it does not go toward paying down the principal balance either though. But I think I can explain this to your satisfaction.
Firstly, you and your wife have a line of credit that does not accrue any interest until you actually use the money. In other words, the line of credit is available to you but until you actually borrow the funds, it's like a credit card that you have a $20,000 limit but you only spent $500 on it. There is nothing to forfeit or pay down with the available credit if you decide to get rid of that card, you just pay off the $500 and you never used the other $19,500 so you just don't have to repay it. The reverse mortgage line of credit is the same way.
If you have a line of credit in the amount of $200,000 available to you and something happens to you but you only ever spent $50,000 of the money, then your heirs only have to pay back the amount that you spent plus any interest that accrued on that amount. Nothing is forfeited to the bank and nothing is credited to the amount owed from the unused line, the line is simply frozen at the amount you used and that is all that must be repaid when your heirs take over the property.
Remember, you always own the property and then your heirs after you. All equity in the property always belongs to you or your heirs as you designate. The bank has no method by which it can just take ownership of the property so you and your heirs always have the choice and decision of what the final disposition will be (i.e. sale of the property, one of the heirs moves in and refinances with a loan of their own, they pay off the loan other funds available to them and keep the home, etc). Any remaining amount left on the line of credit is just money un-borrowed and therefore not to be repaid.
I hope this clears up the debate but if there is anything else I left out, or if any of this is unclear, please let us know.
On the purchase program, you don't "draw" from the reverse mortgage over time, you take a lump sum distribution to purchase the home and then you put down the remaining amount as your down payment. Not knowing where you are located and with all areas having different closing costs for state and local title and other services, I can't tell you exactly what the costs would be but I can get you in the ball park.
You would need to put down about $55,000 - $57,000 depending on state fees for a purchase price of $120,000 and the reverse mortgage would put down the rest. You would not have any funds available to draw from, but you would also have no mortgage payment for as long as you lived in the home and you would not have to use all of your $85,000. If you need to know the numbers on any specific scenario, you can visit our website or contact us and we would be more than happy to let you know what you would need for down payment, etc.
That's a great question. There is not a set fixed maximum amount of land that the parcel can include with a reverse mortgage, but there are a number of requirements that properties have to qualify for a HUD, FHA-insured loan, including land value, land use and excess land. For example, HUD requires that the property is not used for agricultural purposes, that it is a residential property. Also, the amount of land can be several acres, but the value cannot be primarily in the land except in certain circumstances where land is at an absolute premium and then even with an average size lot, the land value is very high (such as in high cost areas). The amount of land must be similar to the other sales that the appraiser uses to determine the value and therefore excessive adjustments are not required. For example, if you have 5 acres and all the sales around you are all about the same size, that would not create a problem as the appraiser would have no problem comparing "like" properties - but if you have 5 acres and everything around you is a half-acre or less, that could create a difficulty determining the true value for a property such as yours in that area with no similar sales to compare to.
Sometimes borrowers do a lot split before the loan application when the parcel of land is too large and there are sales available to support smaller parcels. For example, we recently closed a loan on which the borrower had 35 acres of land in an area full of properties recently sold on 1 acre parcels and no other large acreage sales. The borrowers did a lot split and kept the 34 remaining acres separate and only obtained the reverse mortgage on the 1 acre parcel with the dwelling on it. This worked for them because the value attributed to the excess land was not high anyway and there were many sales available to support the value with the smaller lot. Remember though, if you think you might have to do something like this, before you do any kind of alteration to your property, you really need to verify whether or not it will make any positive difference in your application and also if there are any tax ramifications as well so that you can make an informed decision as to whether or not it makes sense to proceed in your case.
I'm sorry for your loss. The actual answer is yes, you can refinance and can get more money, but the value has to have gone up enough to where the value will support the new mortgage and give you new benefits of at least 5 times the cost of the loan. For example, if the cost of the new loan is $5,000 (and you do not have to pay the amount of the initial mortgage insurance premium that you have already paid), then the new loan must net you at least $25,000 in additional benefits. Otherwise HUD considers the loan not to be adequate benefit for the borrower and will not let us do the refinance. If you can send us a copy of your most recent statement along with your date of birth and the date that you took out the first reverse mortgage, we can determine if there is a possibility of doing the refinance.
If the Florida home goes into foreclosure after the North Carolina property has already been in a reverse mortgage there would be no effect on the North Carolina home. The loan on the NC property is already closed and the one property is not tied to the other in any way.
A Bankruptcy on the other hand could affect your reverse mortgage on your NC home. Section 4.4 of the Security Agreement of your reverse mortgage states: "Bankruptcy. Lender shall have no obligation to make further Loan Advances on or following the date that a petition for bankruptcy of Borrower is filed." This gives the lender an opportunity to determine if the bankruptcy will endanger their security position and they may or may not make any further advances to you at that time. They could again begin making payments to you once they have determined that they are not affected by the terms of the BK, or if the full proceeds have already been withdrawn, it would not affect the loan.
Yes you can and the Initial Mortgage Insurance Premium (IMIP) that you paid for the first loan does not have to be paid again on the refinance. You would be responsible to pay the difference between the higher amount on the new value and what you had already paid, but you would not have to pay the portion you had already paid a second time. For example, if your IMIP on the initial loan was $6,000 but because the new value was so much higher, the new IMIP is $9,000, you would not have to pay the $6,000 that you had already paid, but would only be responsible for the difference of $3,000.
I do need to let you know that HUD has a rule that is known as the "5 Times Benefit Rule". In short, it means that HUD will not allow lenders to do refinances for you unless the benefit to you for the new loan nets you 5 times or more the costs to get the loan. This is done for a specific reason, HUD does not want people contacting reverse mortgage borrowers to try to get them to constantly churn refinances that do little or no good for them. This way the loan must make sense for the borrower or it cannot be done.
Some other things to keep in mind are maximum lending limits, interest rates in effect at the time, other HUD parameters, etc. There may be a variety of reasons that would not make a refinance a benefit or even a possibility and you should not go into the transaction thinking that the refinance is a given. We absolutely do them and during times of appreciation or when HUD raises the lending limits, they have been more plentiful than at other times. Conversely, when rates rise, HUD cuts the limits back or the values drop, fewer borrowers will qualify for a refinance. Just know that the answer is yes, you can always refinance the loan if the equity is there and the benefits are there, but you have to go into the loan not counting on a subsequent refinance as too many things can change in the future.
Have you gotten on the phone with the servicer? I think the problem that you are having is that there is a second policy that covers the interior for condominiums known as a "walls-in" policy and that is probably what the servicer is requesting, but I can't tell you that for sure. Homeowner's Association policies typically only cover the exterior of the building and lenders also require an insurance policy that covers any damage that may occur from a fire, etc, to the individual homeowner's unit. Unless the Association policy does this (and I don't remember off hand ever seeing one that did) then the lender would require this coverage as well. Your mother had to have this policy in place to close the loan.
When a lender has to force place coverage, that policy is always more expensive than one your mother can obtain for herself. I would suggest that you help her by first contacting the servicer and determining if the walls-in policy is what they are requesting, and then if so, make some inquiries of some local insurance companies for prices. This coverage is usually very inexpensive and she can probably get a policy that also covers her personal belongings that would be much more beneficial to her if there ever was a fire. When a lender has to force place coverage, it not only is more expensive, but it also does not insure any of the contents so your mother's furniture and other personal property is not protected at this time.
I certainly understand, unfortunately I'm afraid the help I am limited to being able to give you is information about reverse mortgages. The program currently gives borrowers a little over 50% benefit (52.5%) at age 62 after the last cutback in in September of last year. After the costs of the loan, even if we could still do the loan without an origination fee as we can now, the amount available to you after the HUD mortgage insurance and third party fees would be just about 50% of the value of the home. Based on the numbers you have given me ($330,000 mortgage and $175,000 equity), I can assume a value of $505,000. Based on those assumptions, you would not receive enough money available to you to pay off your existing loan and would have to bring in about $79,000 just to close the reverse mortgage, even with no origination fee at current HUD parameters.
Having said that, I do not know what the lending limits will be in November. We are currently under a temporary increase in the Lending Limit to $625,500 that has been in effect since 2009 and we have not received word that HUD will extend this increase again this year as of this time. If they do not, we could revert to the permanent lending limit of $417,000 at the end of September to begin HUD's new fiscal year on October 1, 2014. If this does happen, then your benefit amount would be based on the value of your property or the HUD lending limit, whichever is less and you would be almost $123,000 short to close a reverse mortgage loan based on a current mortgage owing of $330,000.
The bottom line is that if you do not have $79,000 to bring in to close the loan or possibly $123,000 if the loan limits change by November, then a reverse mortgage may not be the saving grace for which you are hoping. My recommendation to you would be to contact a HUD approved counseling company in your area now to see what alternatives may be available to you before the time comes when a decision must be made hastily. There may be other programs of which you are not aware that they can recommend. I wish I could be of more help but at least you have the information you need to make an informed decision and can plan accordingly. I wish you the best.
You have a couple of issues you need to address but let's start with the title. If you have been on title all along, then removing a second party is easy and I would suggest that you do this right now. If the second party changes his mind later or does not get off of title early enough, it can cause delays not to mention that he would be required later to go through counseling if he is on title at the time you started your application. It would be much cleaner and easier for all if a Deed could be signed and recorded through a title company now.
Secondly is the timing. You can begin your application up to 60 days before your 62 birthday. The counseling can be done at any time, but the certificate is only good for 6 months so I would wait and schedule the counseling session for some time about a week or two before that 60 day period so that you are not in danger of letting your certificate expire in the process. I would also advise you to contact a seasoned reverse mortgage originator and go through an initial discussion about your property about 3 months before your 62nd birthday. You can review the current HUD guidelines at that time (HUD is going to roll out the Financial Assessment requirements sometime this summer) as well as this would give the originator a chance to discuss your property and review recent sales in the area. If you are aware of any deferred maintenance or if there are any other concerns, this gives you both a chance to discuss opportunities, alternatives and requirements before you spend money on an appraisal.
If there are no issues that would prevent the mortgage, there are plenty of recent sales and everything comes together as it usually does, then you can start your application 60 days prior to your 62nd birthday and close the loan (sign your final loan documents) as soon as you have had your birthday. There is a 3 day Right of Rescission period that all borrowers who are refinancing their primary residence are given after they sign their loan documents as a final chance to think about the transaction to decide if they want to cancel. With the 3 day right of rescission that is required by law, you would not be able to count the day you signed or Sundays or holidays as a rescission day but then you would receive your money after that time period expired and the loan recorded. It's best to figure about 5 days after signing before you actually have the funds wired to your account.
The loan becomes due and payable at the time your mom stops living in the home, whether that is because of death, she sells the house or for whatever reason she no longer occupies the home as her primary residence. As long as she is still living in the home, she has access to any of the reverse mortgage proceeds available to her under the program. If she takes all the funds now, then that will just raise the amount owing at the time she leaves the home.
The question of "does it have to be paid back" is the significant question at this point. Yes, there is a Deed of Trust securing the property for the loan. Yes, when the property is sold, the lender would have to be paid the amount owed to the lender. However, the loan is also a non-recourse loan. In other words, if the loan balance is higher than the value of the home, then the lender and HUD cannot look to any other assets for the repayment of the loan. So yes, the loan does have to be repaid, it is the terms of the repayment that are subject to some interpretation in those instances where the property is worth less than the amount owed. And because most borrowers never really know when their time will come, there is no provision in the loan that states that if you take the money available to you within 30, 60, 90 or even 180 days from the date you pass that all bets are off and your heirs must repay the loan funds at that time. As a reverse mortgage borrower, you are given a set of benefits and you can choose to receive those benefits at any time as long as you are not in default on the mortgage.
I wish your mother well and hope the best for her.
They should be able to send you an accounting of the loan but even more importantly now, I would take the balance off of the current statement and begin to make some quick decisions. If you talk to local realtors in the area and the property has a good equity position based on the prices for which other similar homes in the area currently sell, then you can decide if you want to sell or keep the house for yourself. Either of those actions can begin now while you work to get Champion to send you the entire history of the loan. Also know that if the value is less than what is owed on the property and you still want to keep it, HUD allows you to pay off the current loan at 95% of the current market value or the amount owed, whichever is less. So if your stepfather's balance is $135,000 and the property is only valued at $100,000, you can pay off the existing loan at $95,000 and keep the home as well - but you must look into obtaining financing in your name if you do not happen to have $95,000 of your own laying around. If the lender will not cooperate with you after you begin your steps to either finance the loan in your own name or sell the property and still will not give you the information you are requesting, I would advise you to contact HUD directly and inform them that you are trying to settle the estate and property but are receiving no cooperation from the lender. HUD has to pay any claims on the property and I am sure they would love to see this resolved before a claim is incurred.
This is absolutely acceptable. The property type meets HUD's guidelines and the property would have to as well but you are both over the minimum age of 62 so this would meet their parameters. Let us know if we can help you!
The reverse mortgage is a loan just like any other loan when it comes to your mother's rights as a borrower. I would suggest that you contact the lender to request an accounting of the sale and amounts owed. If the sale exceeded the amount owed to the lender, that would belong to your mother.
I'm sorry but this is one of a couple areas in which I can't help. I am not licensed to give tax or legal advice and would never want to steer someone in the wrong direction. For tax information, I would strongly suggest that you speak to your financial advisor or CPA.
This is not a yes or no answer so forgive me if this is a bit longer answer than you wanted. Most collections do not have to be paid off to get a reverse mortgage. Now having said that, if the collection is for a federally insured debt (such as federally-insured student loan), then it would have to be paid to close the loan. Also, if the debt can become one that affects the title to the property, the lender could require the payoff of the loan.
Judgments on the other hand, usually do have to be paid in full as they are a recorded liability against a borrower that can affect the property. Just as before though, you also have some exceptions here. Some judgments are expressly prohibited by law from having an effect on real property. For example, Texas has very strong property rights and will not allow some judgments to affect a borrower's home. Here again, you have to be careful because we recently had a home on which a judgment did affect a borrower's home in Texas for taxes on a rental property that he owned. Whereas the state would not allow other creditors to lien his home, the state was allowed to do so for taxes on the other property.
If you have questions about your individual circumstances, you can always have your lender order the credit report and title policy first and not order the appraisal until after those items are in and you know exactly what will be required of you. It might stretch out the processing time of your loan, but this way if it turns out the judgments and collection accounts are too numerous to continue, you did not have to pay for an appraisal to make this determination.
Not knowing all the particulars for your loan (age, value, existing lien to be paid and how much cash you intend to take and when), I really am not sure how to answer this question. I think I know what you're asking so let me take a stab at it and if this does not answer your question, please feel free to get back to us.
The line of credit grows on the fixed rate at a constant percentage based on the unused portion of the line yearly. In other words, as long as you don't use the line, it will continue to grow in availability by multiplying the unused portion of the line by the credit growth rate. The property value is not a factor in this computation, until you reach the HUD maximum claim amount.
Once your line reaches the HUD maximum claim amount on your documents (150% of the appraised value or the HUD maximum lending limit, whichever is less), then to receive any additional funds you would need to request an extension of the line. For example, if your property was worth $500,000 at the time you first took out your reverse mortgage, your maximum claim amount would be $750,000. If you were 70 years old living in CA with normal fees and you did not touch your line, sometime just before the end of the 16th year, between the existing balance and the line available of about $730,000+/-, you would reach the HUD maximum claim for your loan. You could draw up to the $750,000 no matter what the current value of the home was, but in order to exceed that amount, you would need to get an extension from the lender.
We were curious to see how many borrowers have actually ever been limited by this provision so we reached out to the industry's only rated servicer to ask. They have never had a borrower hit this maximum as that would take borrowers who did not access any of the line typically for over 15 years and it just hasn't happened. The President did confirm that if the property had increased in value the procedures were in place to process an extension, but that no borrower had yet even made the request so he could not comment on the viability from the valuation standpoint.
HUD has some definite requirements that lenders have to meet in order to be able to offer a refinance of a reverse mortgage and many properties do not qualify because they have not gone up in value enough from when the loan was originally closed to where it makes economic sense (let alone meet the HUD requirements). However, depending on where your parents' home is, what the value is now, what it was when they took out their loan and what the HUD lending limits were at the time, a refinance may just work for them.
The lending limits changed for reverse mortgages for the first major time in 2008 with the Home Economic Recovery Act (HERA). Prior to 2008, HUD had different lending limits by county all over the nation and some of the limits were much lower. Even in the highest counties, prior to HERA, the highest lending limit was $362,790 (except for some high cost areas like Alaska and Hawaii and this would not affect your parents). So if your parents' home was worth and continues to be valued above the limits in effect at that time, there is a possibility that a refinance may work for them. The only way to know for sure is to contact us and let us look at the current balance on their loan, the property values in the area and do a quick analysis. You never know until you check.
NO, not all reverse mortgage programs are part of the HUD Home Equity Conversion Mortgage (HECM or "Heck-um") program. There have been many proprietary programs that were not affiliated with HUD in any way and did not carry the FHA insurance. The "jumbo" programs that were once much more readily available were not FHA-insured loans. FNMA also had a program known as the Homekeeper that they discontinued December 31, 2008 with the signing into law of the Housing and Economic Recovery Act that eliminated county by county limits on the HUD HECM.
With the meltdown of the mortgage market in 2008/2009, most of the proprietary loans disappeared for a while and the American Recovery and Reinvestment Act of 2009 raised the Maximum Claim Amount on the program to $625,500 for a temporary time period where it still remains today (the permanent maximum is $417,000). Because the new HUD limits allowed more high dollar properties to utilize the HECM program at lower costs and the market appetite for non-insured product dried up, the HUD HECM became just about the sole product available for several years.
There are many sources talking again now of the resurgence of proprietary programs but still no new strong programs available in the market. So while not all reverse mortgages are backed by FHA, the HECM loans are certainly the overwhelming majority of reverse mortgage loans available at this particular time.
No "penalty", but the terms of the reverse mortgage require you to live in the home as your primary residence. If you move out of the property, whether you rent it or not, the loan would become due and payable requiring you to pay off the loan by either refinancing the loan with a new loan or selling the property. If you did not do this and the lender discovered that the home is not owner occupied, they would be within their right to begin foreclosure proceedings.
Because the typical foreclosure takes many months to complete, lenders have to consider when is the "right time" to initiate the process if they feel they must resort to foreclosure. If it appears to the lender that the borrower has violated the terms of the reverse mortgage agreement (and worse if the lender feels that the borrower has taken additional steps to conceal those facts from the lender), the lender would be much less likely to delay the start of the process.
I'm not sure if you are asking me what the negative side of getting a reverse mortgage is for a condo unit owner or for HUD. For the unit owner, getting a reverse mortgage is really no different than for an owner who owns any other type of property. For HUD though, it does contain additional risks and that ties in to your second question as well. Condominiums are usually the first type of properties in any market to lose value when those markets do depreciate. Condominiums, even more than other properties are affected by the units and even the project in which they are located much more than a single family residence. If an entire neighborhood is affected by an external influence, all properties can be adversely affected but individual unit owners can be affected also by the HOA, lawsuits, building defects on other units that affect an individual owner's value, assessments, vacancies, rentals in the units as opposed to owner-occupied units, etc. that may not even be present at the time some buyers move in and some loans are made. Therefore HUD requires all loans in condo projects to be in projects approved by HUD and even after a project is approved, the approval is only valid for a limited time.
The reason that it may be harder in some areas than others is that the lender is required to verify that the project does not contain more than a certain percentage of rentals, that the insurance on the project is adequate, that the project has an adequate budget for ongoing operations and expenses and all entities who handle funds for the project are covered with adequate fidelity insurance and many projects try to cut expenses by not carrying the coverages required. In short, HUD and lenders have many years' experience with condominiums and they know where the greatest risks lie and what characteristics are most prevalent when projects fail. Over the years they have developed an approval process designed to protect both the FHA insurance fund and their borrowers. It's unfortunate, but we find that only about half of the projects from which we receive requests are approved or even approvable and this is not saying that all projects not approved by HUD will fail. It simply means that the risks are greater than HUD is willing to accept in order to insure the loan.
The reverse mortgage loan can be a very expensive loan as all the fees are front-loaded. However, there are some lenders who do charge less than others and at times there may be other special options available that further reduce those costs. The Initial Mortgage Insurance Premium (IMIP) will vary depending on how much your mom needs to take at the onset to pay off her current mortgage. If she takes 60% or less of the total amount available to her in the initial 12 months, the IMIP is limited to just 20% of the amount that it costs if she takes a larger draw in the first 12 months. I would encourage you to compare with us to see if your mom can take advantage of any of these cost saving avenues.
Yes there is. The mortgage insurance is the charge that goes to HUD and is not hazard insurance, it is the amount charged by HUD to cover the risk of default and loss under the reverse mortgage program. The amount is 1.25% of the outstanding balance so as long as your balance remains low, the insurance is very negligible (as is the risk to HUD). As the balance on the loan grows, so does the risk to HUD and the insurance premium.
The property ownership is decided by your aunt and her wishes, just like any other loan. If she died with a will, then the ownership would pass in accordance with the will. If she did not have a will, then I would suggest you contact any other family members and an attorney who handles such matters and see what would need to be done to pass the title to you. Once you know what the hurdles may or may not be to get the property changed to your name, you can contact the lender and let them know of your intentions and they will do an appraisal. You will have an option to pay off the existing loan with a new loan or sell the property and pay it off with the proceeds, whichever you prefer so if you wish to keep the home, you should also be looking into permanent financing in your name (assuming of course that there will not be any issues with the ownership and any other family members).
I wish you the best.
Not FHA approved, yes, but the property must meet FHA guidelines in order to get a current reverse mortgage under the HUD HECM program. When you say the property is not FHA approved, I do not know if you mean that the property has in some way been deemed unacceptable for FHA insurance (such as a property that underwent an FHA appraisal and was deemed to be outside of HUD's acceptable parameters) or that it has not ever been approved (as is the case with a non-approved condominium project that was never reviewed or submitted for approval). If the property has already been declined, it might be worth a second look depending on the reason(s) for denial and if it has never been approved or denied, then a review of the property and then an appraisal if no glaring deficiencies would be in order.
This is one of those areas that start out black and white then quickly can become more and more gray. The loan documents state that you must keep the property as your primary residence. In fact, the loan may be called due and payable if the lender can show that the property is no longer your primary residence and typically the measure for this determination is that you may not be out of the property for more than 12 months at a time.
If I left it just at that, it would seem that there would never be an issue and your answer would be an unqualified "yes" to the question above. However, HUD will not insure a loan on an income producing property that is not built, zoned and maintained as such that meets their guidelines. A good example of such a property would be a duplex in which the owner occupies one unit and rents the other. Your condo does not meet HUD's definition of an owner-occupied multiple family property and as you describe it. "No more than one month at a time" is also somewhat vague - that could be one month with a small respite and then another month for several months out of the year or it could mean only one month a year or ? I do not believe most lenders would approve such an arrangement.
At any rate, there is no specific language in the security documents that states that you could not go on a vacation once a year and swap houses with another family to defray expenses or rent your home while you were gone. However, if this is something that you regularly do and plan to continue doing in the future, I would suggest that you fully disclose this to the lender in advance and verify that you do not violate any provisions in the documents before you even incur any costs in the transaction.
With a purchase reverse, most borrowers use all their eligible funds when they purchase the home and there are no funds left over to give them a line of credit from which they can draw or to pay them monthly payments. For example, let's assume that you are 62 today and are buying that home under today's program. The loan that gives you access to the most funds today is the HECM Standard LIBOR program. Based on your age, the area in which you are buying and our normal fees (some lenders are higher), you would have to come into escrow with approximately $147,350 which would cover your fees and your down payment to close the purchase transaction if you wanted to use all the reverse mortgage proceeds for the purchase of the property. The reverse mortgage would pay the rest of the amount required for the purchase but there would be no money left over for a line of credit.
If you wanted funds available in a line of credit or to make payments to you later, you would have to bring in more of your money for the purchase and use less of your available proceeds from the reverse mortgage to close the purchase transaction. In other words, if you chose to bring in $247,350 to the closing, you would have to use $100,000 less of the reverse mortgage funds available to you and therefore, you could then opt to use those funds in a line of credit or as monthly payments. As I started by saying though, most borrowers choose to use all of the proceeds available to them for the purchase and then there are no funds left for a line of credit or to make monthly payments to them in the future (but then you would have the extra $100,000 available that you didn't have to bring in).
There are two caveats to this explanation though. The first is that if you choose the fixed rate reverse mortgage, the loan is a closed-end instrument and regardless of whether or not you choose to pay down any portion of the loan up to and including the full amount at any time, you can never re-borrow the funds. In other words, you only get one trip to the well. The funds are paid to you in one lump sum only and it is only available as a Saver Loan at this time. this means that you would have to bring in more money to close, approximately $171,500.
Secondly, with the passage of the Reverse Mortgage Stabilization Act of 2013, HUD now has the authority to make changes to the program as they see fit to eliminate the losses the likes of which the program saw in 2012. Limitations on initial draws, financial assessments or qualification criteria, and impound requirements for taxes and insurance may soon all be parts of the reverse mortgage program. This may require borrowers to bring in even more money just to close a purchase reverse mortgage in the near future notwithstanding setting additional funds aside for an additional line of credit.
The benefits for a reverse mortgage continue to get larger for each year additional year of age of the borrowers, except when you hit the maximum at 90 years old when you no longer receive any higher benefits for additional years of age. Up until 90, every year older will raise the benefit to the borrower and if you are within 6 months of your next birthday by the time the loan closes, you will receive the benefit for the next higher age. In the case of loans with two people, the benefits are determined by the age of the younger borrower. So in your example above, the benefits will be determined by the younger borrower turning 67, not the borrower turning 70. If you were closing the loan this month, even though your husband is still 66, you would receive the higher benefit of a 67 year old because his birthday falls within the next 6 months.
So if I understand your question correctly, there is no magic change to the formula if one or both of the borrowers are 70 years of age that should make borrowers use this age as a benchmark. The younger spouse would have to be 70 before that age would even drive the benefit calculation. The calculations do have some "steps" that allow for a slightly larger increases along the way, but the difference for the most part is nominal. In the case of a 69 or 70 year old borrower, in today's market with an expected rate still below 5%, the difference in the Principal Limit on a $300,000 home would be $1200 in benefits.
Interest rates affect the amount of money the borrower will receive far more than a year or two of age. Now that we are very quickly approaching rates that will take us above the HUD floor, in the example I used above ($300,000 home with a 70 year old borrower), an effective rate just .085% above the floor of 5% (less than one eighth of one percent) will cost the borrower over $5,000 in available benefits. At 5.210% or .210% over the floor, that same borrower would receive over $12,000 less. If rates rise just another quarter percent, the borrower would receive almost $19,000 less under the program. So while waiting for several months may get some borrowers a few hundred dollars more in benefits due to age, in times like these with rising interest rates, waiting could end up costing them thousands!
You cannot be delinquent on any government obligations and still be eligible for a reverse mortgage. Some student loans are government-insured student loans while other loans are private loans. If your loan is one of the government-insured loans, you would not be eligible for the reverse mortgage program if there was still a loss outstanding on another government-insured loan program.
On another note though, HUD is about to implement financial assessment guidelines on the reverse mortgage program. In other words, borrowers will have to be able to demonstrate the ability to pay things like taxes, insurance and still be able to live comfortably on their income. Without knowing what income would be added by your receipt of the reverse mortgage proceeds, you may wish to consider consulting a financial or reverse mortgage counselor to determine if the mortgage is the right decision for you.
With monthly income of just $732 and with property taxes and insurance in Florida being a bit on the high side, you may be using all your equity far too fast just to stay in the home. There are times when other alternatives may be less expensive and more appropriate, especially if your income, assets and reverse mortgage proceeds will not allow you to still live comfortably in the home without quickly stripping your equity.
What that means is that because there are no payments, the balance grows (the amount is added onto the balance each month). When you sell your home or when you pass and your heirs sell it, then the loan and any interest that has accrued is repaid at that time.
You and your heirs always own the home and the equity is always yours. You are only borrowing money and accruing interest on the money that you borrow. You just don't have to repay that money until the time that you no longer live in the home and the home is sold and that time can come when you pass or when you choose to move yourself.
Once you pay off your existing reverse mortgage, you can apply for another reverse mortgage on another primary residence, whether that is on a property you already own or one you wish to purchase. The lender would look at the circumstances behind the occupancy though and it would have to make sense as all reverse mortgages currently must be placed on primary residences. On the property you already own you may want to check with the lender prior to application to determine if there are any seasoning requirements, or a set period of time, that you must be in your home and what documentation they will require at application as verification of occupancy.
I honestly could not answer this for all borrowers. I have only run a credit report on one borrower who took a full draw and she paid off other revolving debt and her scores went up considerably. Since there are no payments to report, the last time I checked, reverse mortgages were not reporting to the repositories. And while the big three credit agencies will not divulge exactly what goes into their credit score formulas, most experts will tell you that the availability of revolving credit to the amount used is what they weight most heavily after current credit patterns. Most borrowers' credit scores are not affected by their mortgages...only if they do not pay them on time.
I guess the only way to know this for sure would be to contact several individuals who have full draw reverse mortgages to see if their scores changed from the time before and after they obtained their reverse mortgage.
This is one I simply can't answer. You're asking me to predict the future of interest rates, appreciation rates and how long the loan will remain outstanding. You only pay interest on the reverse mortgage proceeds that you actually use so unless you can get as good a return on the funds as you pay, you're losing money by taking $160,000 out of the property only to put them in the bank. Right now, depositor's make less than 1% on deposits. Assuming you received the 3.99% fixed rate and added the 1.25% HUD mortgage insurance premium. We know that the amount paid on deposits will eventually go up, but that will be sometime after 2015 if you listen to economists so we'll use an average of 1.5% on the funds in the bank.
Just using a quick calculation on the interest accrued on the extra $160,000, I calculate that the balance would be roughly $106,641.88 higher on the extra funds. I calculate that the balance on the funds would be only about $34,000 higher after the same 10 years. Depending on property values, etc, there is no way for me to determine what would be a better option for family members at this time. If we had the same market as we have had between 2007 and 2011, then you could be correct. With any reasonable appreciation, would it cost more than $60,000 to sell the property and make the funds a better option, probably not.
Any way you look at it, the outcome will depend on future events and what if you only stay in your home for 4 or 5 years and something comes up that you have to sell? Then you would have paid many thousands of dollars for funds you did not need or use and did not come close to making up for with interest paid to you on the funds. I always tell people when they ask me about future events that my crystal ball broke years ago, otherwise I would have retired a very rich man long before now! I simply would not know how to advise you based on future events which way would be the best and so I would suggest you contact a competent financial advisor who is not trying to sell you anything to help go over the pros and cons of both paths.
The reverse mortgage insurance premium is a premium the borrower pays that protects lenders and investors against risk of default as well as the borrower and the borrower's heirs against any shortfall should the current value not be enough to pay off the existing loan.
The house goes to whomever the borrower leaves it, just like any other loan. The borrowers heir(s) then have a choice of paying off the reverse mortgage with funds available to them, with a refinance into another mortgage loan, or by selling the home. The mortgage insurance allows the reverse mortgage to be a non-recourse loan so that the lender will look only to the home for repayment of the debt, regardless of the current balance on the mortgage or the current value of the home. In other words, even if the borrower has other assets, the lender cannot seek to cover any shortfall with any other funds or assets the borrower may have had and the heirs can never be forced to pay more than the property is worth to pay off the loan (even if they want to keep the property).
The is the role of the HUD mortgage insurance. It is not like life insurance that is sometimes also referred to as "mortgage cancellation insurance" that pays a death benefit. Also remember that the lender never "automatically gets the house". The borrower or the borrower's heirs always own the home and they choose whether they want to keep the home, sell it or let the bank dispose of it by not moving to pay off the mortgage in one of the ways described above and then the bank still has to either have the title given to them by the borrower or the heirs, or obtain the title by default and foreclosure.
Unfortunately, that is exactly what that means. HUD will not allow things like trades or "sweat equity" (payment for work done) in the purchase reverse mortgage program. To utilize the program, you would have to have verifiable cash down payment. HUD guidelines go one step further and not only does the bank account where the funds are currently kept need to be verified, but the account must be verified for 3 months prior to transaction date to see that the funds were also not borrowed. Borrowers must be able to show where any large deposits came from and that they were not borrowed as well.
It doesn't take over your existing loan but like any refinance, it pays the current mortgage in full so that the only loan remaining on the property is the reverse mortgage. You need to speak with a qualified tax specialist as I cannot give you tax advice, but my understanding is that interest is deductible when it is paid, not accrued. If that is the case, you still have interest that accrues but you cannot use it as a write-off until you actually pay it.
For most borrowers, this would be when they sold the home or paid off the mortgage through other means. Some borrowers choose to make a payment of some sort on a monthly, quarterly or annual basis as a tax planning and equity retention method. While an interim payment is not required on a reverse mortgage, you can pay whatever you like up to and including payment in full on a reverse mortgage at any time and there is never a prepayment penalty. Borrowers are responsible to pay the taxes and insurance and maintain the home and some borrowers choose to enjoy living in the home, with just those expenses for the rest of their lives. Some borrowers choose to make payments regularly to keep the loan balance from rising. Some simply look at their tax situation near the end of each year with their accountant and make a lump payment only those years when they and their tax advisor feel it is advisable. At any rate, this is something you really need to discuss with your tax professional before you obtain your reverse mortgage to make sure that it is the best solution for your situation.
There are many ways to hold title and some allow you to still obtain a reverse mortgage and some do not. if the property is not fee simple, in other words, you do not own the property outright whether there are liens due to mortgages or not, then HUD will allow lenders to accept some forms of ownership provided the method of ownership extends beyond any timeframe that would endanger the reverse mortgage. For example, with leased land or a borrower who has a title based on a life estate, the term of the lease or estate must be renewable for 99 years or run at least 50 years beyond the youngest borrower's 150th birthday.
The only way to know if your particular title is or can be made acceptable would be to allow a reverse mortgage lender to review the title from a title report. They can tell you if your particular method of holding title is acceptable, or can be made acceptable. We have had some borrowers who have had good luck in renegotiating terms of leases, etc. to enable them to obtain a reverse mortgage and some methods that did not qualify and could not be altered. You just never know until you try.
There is never a prepayment penalty on a reverse mortgage and so you can make any payments back to the lender at any time you desire without penalty. The one thing that you must keep in mind is that any payments made will be applied to different portions of the loan in accordance with the Loan Agreement. This really does not affect the overall balance since all must be paid eventually, but some borrowers think that they want the money they pay to go only toward "interest", etc. for tax purposes but any payments made will be applied in accordance with the Agreement.
As for who "is responsible" to sell the home, the lender and HUD hope that the borrower's heirs will step in and sell the home, keeping any remaining equity. However, the heirs have the option to decide whether or not they wish to do this. If there are no heirs or they do not wish to become involved in the selling of the home, then the lender would have to obtain title of the home through a foreclosure action and would then sell the property. As for paying interest only payments during the sales period, I have not heard of anyone asking a lender if they could do so and I honestly do not know what that would do to the claim of the lender. That would be a question for the lender/servicer at the time as this could vary from lender to lender and possibly from state to state based on the laws in effect. Anything that is not specifically spelled out in the mortgage loan documents (the contract with the lender) could change based on changes to the laws or HUD procedures at the time.
HUD currently has no minimum time requirement for a borrower after a short sale before they are eligible for a reverse mortgage. Tw things you need to keep in mind though: 1) Lenders can impose more strict guidelines; and 2) HUD does have restrictions on borrowers if the property on which they had the short sale was an FHA-insured loan and HUD suffered a loss as a result.
HUD is in the process of reviewing financial assessment guidelines and therefore they may have tighter restrictions on past credit issues as soon as they announce their new guidelines. If you speak with a lender in the meantime that is imposing stricter guidelines than HUD, then you certainly can call around and talk to other lenders. If the short sale you had was a government-insured loan, you may not be eligible for another government insured loan until all losses have been reimbursed to HUD. If the loan on which you had the short sale was not government-insured, you would not have to worry about this issue.
The answer to all of this is yes...but there are guidelines that HUD requires lenders to follow. The Short Sale, as with Foreclosure will not preclude you from getting a reverse mortgage, but I would have to ask if the Short Sale caused a loss on government-insured or guaranteed loan. You would not be eligible for another government loan until all losses were paid in full.
With regard to your assets. The insurance must have had a cash value available for which you are taking your funds and the lender would require previous statements verifying that the money was available and then a copy of the check and statement from when you cashed in the policy to verify that it was not a loan against the policy. You can get a gift from a family member. The family member will have to supply 3 months' bank statements to verify that they had the funds to give, a copy of the transfer of the funds and they will need to give you a gift letter that the funds are a gift, not a loan which must be repaid.
Good Morning Franchon,
We absolutely do and we actually fund several each month. Our company was one of the first to really embrace the purchase reverse mortgage program and as a result, we have been able to work with builders, realtors, borrowers and sellers to educate them and close loans. In most instances, we have closed the reverse mortgage purchases faster and easier than the forward purchases were closing and we made some steadfast converts along the way. Several of the people who were wary of this "new kind of financing" and balked at it in the beginning, asked us afterward why they hadn't heard of this before since it was the easiest closing they ever had.
The borrowers do not currently have to show employment or income. Their credit is reviewed for defaults on federal obligations, but there is no minimum credit requirement at this time. HUD has indicated that there will be some form of financial assessment in the future, but we still do not know what the income of credit requirements will be.
How much you can borrow depends on a number of things: the property's appraised value, sales price or HUD Lending Limit (whichever is less), the interest rates available at the time, the loan program you choose, the fees in effect at the time and the third party services you and the seller choose. While we cannot narrow them down in advance on a purchase because we do not choose the third party services, you can get a good idea by visiting our calculator here and just be sure to check the box that says "This Reverse Mortgage is For My New Home Purchase". Please feel free to give us a call or drop us a line if you have any questions at all!
The counselor is "kind of right". Borrowers do not need to contact a lender for anything prior to a session with a counselor and in fact, many borrowers choose to talk to a counselor before they even choose a lender. However, if you do know who your lender is going to be, then the counselors want to see the Loan Comparison Page, the Amortization Schedule and the Total All Loan Costs (TALC) from the proposal that you received so that they can go over the actual numbers you received. If you have never gotten these items, then they have to send them to you in the mail before they will even schedule the appointment and it slows down the process.
There are a number of ways to get the necessary documents to the counselor. Here at All Reverse Mortgage, we set up a website and when we prepare a proposal for our customers we also give you the website address and an access code for you to give to your counselor. They can then log on to the website and by using the code you supply to them, they can pull the forms they need right off their computer. For those few who cannot access external websites, we also offer to have them contact us directly and we can send them the forms they need so as not to delay your appointment.
So if you have already obtained a proposal from us, you have the forms they require in the information we sent to you. You can either give them the counseling access code and website address, you can just forward the proposal to the counselor directly from your computer and the forms they require are included, or you can have them contact us and we will be happy to help by sending them the specific forms listed above that they require.
You cannot just "add" a new borrower to title and to the existing mortgage, it would require a refinance of the loan. This may or may not be an easy task at the time you wish to do it based on a number of factors. Firstly, keep in mind that when you refinance a HUD Home Equity Conversion Mortgage (HECM or "Heck-um") with another HECM, you do not have to pay the portion of the Up-Front Mortgage Insurance Premium that you have already paid so that is a good thing. But what is important to remember is that your benefits are determined by factors such as the age of the younger borrower on the loan, interest rates at the time, the program you first borrowed under and property value or HUD Lending Limit, whichever is less.
So if the new spouse is younger than the deceased borrower and they are younger than the existing borrower, that would automatically take the eligible amount to a lower level. Even though HUD has strict guidelines for refinancing reverse mortgages so that borrowers are not targeted for churning refinances, most often exceptions can be made when adding a spouse to allow borrowers to refinance who would not normally have met the HUD guidelines - but it might still require the borrowers to bring money in to close if the eligible benefits are lower. This can also be true if all the funds are used and interest accrues or if HUD changes the Lending Limits.
The bottom line is that you can refinance to add a spouse, but you need to contact a reverse mortgage specialist to see if it works in your case or if it is feasible for your circumstances.
That would not be the case. The reverse mortgage is designed to allow you to live in your home for the rest of your life and not have to make any mortgage payments and it does have the safeguard that when you pass or are forced to permanently leave the home, you and your heirs can never be made to pay more than the home is worth. However, as I stated in my first response, the reverse mortgage is a lot like every other loan in many respects and this is one of them. If you choose to sell your home, that is, you make a voluntary decision to move, you would be responsible to pay off the entire mortgage, not just the realtors cost of sale, or there would be possible negative ramifications.
Let me explain. If you passed while you had a reverse mortgage and the balance exceeded the value and your heirs did not wish to purchase the home, the lender would obtain the home from the heirs through either a Deed in Lieu of Foreclosure or through the Foreclosure process if the heirs were not cooperative or there were no heirs. There would be no negative impact on the borrower since there are no credit concerns at this point and the lender would not even have any reason to report such a credit incident to a reporting agency due to the passing of the borrower. However, the loan is meant to allow you to remain in your home for the rest of your life without having to make a payment. If you choose to leave the home at an earlier time and there is a deficiency balance, it is true that the lender cannot seek judgment against the borrower but they can report the foreclosure on the borrower's credit. This action would also make the borrower ineligible for any HUD financing in the future until any deficiency had been repaid.
Again, depending on the reason for early departure, this may have no impact on the borrower whatsoever. Borrowers leaving their home due to the fact that they can no longer care for themselves would not be affected by this as they would not be in the market to purchase again in the future and would no longer have credit concerns. The loan provides for borrowers to be able to remain in the home no matter how far upside down it may go, so if a borrower simply chooses to move at some point, guaranteeing a loss to HUD's insurance, it's still considered a mortgage default.
Hello Mr. Gibbons,
In this respect, the reverse mortgage is just a loan like any other loan. The differences in how you receive your funds and when you must repay them do not affect your homeownership or your property rights or obligations. You still own your home and are responsible for payment of all property taxes, insurance and maintenance of the home. If you decide to sell the home and not live in it for the rest of your life as the mortgage allows, you certainly have that option. You are correct that, just as you would with any other loan, you would be responsible for any costs to sell your home and then the reverse mortgage would be paid from the proceeds of the sale...again, just like any other loan. You also would then retain all equity in the home. In other words, if the house sold for $200,000 and the amount owed on the reverse mortgage at the time was $125,000, the $75,000 equity is solely yours.
You receive a monthly statement with a reverse mortgage just as you would with any other loan. You can track your loan balance and contrary to what many borrowers believe, while you are never required to make a monthly payment with a reverse mortgage, you have the option to pay any portion at any time to minimize the growing balance if you desire. Many borrowers do choose to make monthly, quarterly or even annual payments of some amount due to their situation and their goals which is certainly allowable under reverse mortgages (while not required). Therefore, if your goals are to sell in a set period of time and you wish to keep your balance under a certain level, you can always make provisions in advance to do so, knowing that the equity you retain belongs to you or your heirs.
So the bottom line is that when considering a reverse mortgage, you can figure future costs of marketing, sales, etc. just as you would if you had any other type of home loan.
If the loan involved in the shortsale was a conventional loan (non-FHA financing) there should be no issues with the reverse mortgage for home purchase. Fel free to use our online purchase calculator or call us Toll Free 800-565-1722. Thank you!
1-4 Units are acceptable properties for the HECM program but the reverse mortgage was designed for primary residences only, she would need to occupy at least one of the units to qualify.
The prior foreclosure will not prevent you from getting the reverse mortgage if it was not a government insured loan. HUD will not insure additional loans for borrowers if there are still outstanding claims from prior loans but if the loan that you had was not a government loan and therefore not government insured or guaranteed, you would not be ineligible due to the prior foreclosure.
I don't know what they would be referring to as "not allowed". It would all depend on the type of improvements you intended to make, whether or not they were done with permits and what that did to the property. A good example would be a 1200 square foot home in a neighborhood of 2500 square foot homes. You could add a permitted addition of 1300 square feet that added functional space and upgraded the home so that it was very similar to the other properties selling in the area. This is absolutely allowed and would not be an issue provided the work was complete and the certificate of occupancy had been issued by the city/county where the property is located.
However, if the work is not done is a quality manner, does not conform to the neighborhood or there are no sales to support the new improvements, that could actually hurt the owner's chances of obtaining a reverse mortgage. Another example of this would be a borrower who added a second unit without permits to a property that was zoned for only one unit and therefore the new improvements did not conform to the local zoning laws.
Even having made this distinction, remember that improvements rarely bring a dollar for dollar value to a home. The best way to get an idea of what your planned improvements might actually bring you in an appraisal is to find houses in your immediate area that have sold in the past 3 - 4 months that are similar to what your house would be with the planned improvements. These are the sale comparables that an appraiser would have to consider when appraising your home. If houses with the improvements you are contemplating bring $40,000 more on the market but your cost would be $60,000, you would not realize the full value of the cost of the improvements. The times when this does not seem to be the case is like in the first example above, when the improvements put the home into a whole new category of property that commands a much higher price. But keep in mind that there is such a thing as an over-improvement for the neighborhood and you need to make sure that your improvements are common with the properties in your immediate area and sales with similar amenities are available or once again, you would not realize the cost of the improvements in an appraisal.
Because the balance of the mortgage grows, borrowers are required to maintain the property, keep the insurance active and to pay all property taxes as they become due. Many states do have provisions for tax deferral under certain circumstances but HECM borrowers agree to keep all taxes current when they sign their loan documents.
When a reverse mortgage is closed, there are two Notes and Two Deeds for the loan. The second being to FHA so that if they ever have to advance any funds to the borrower, they are protected under this Note and Deed. The amount of the Deeds that were recorded should have been for 150% of the appraised value at the time the loan was placed. therefore, if the Deed was recorded for $529,000, that would indicate a value of about $352,650 at the time the loan closed. The reason behind the 150% is that the loan grows over time and therefore, they have to put a higher limit on the recorded loan amount or you mother may lose access to funds she would otherwise have had. HUD's rules are that no dollar amount is required on the Deed unless it is required by the state and then 150% of the property value is to be used. Most states do require a dollar amount to be included.
With regard to the date, the loan becomes due and payable when your mom permanently moves out of the home or passes. Since there is no way to know when that will occur, and the documents require a firm date to be included, the date placed on the documents is 50 years beyond the borrower's 100th birthday.
But as you noted, just like any other loan, your mom only owes what she borrowed and any fees/interest that accrues on that amount. So if the balance is $200,000 and your mom wanted to sell her house today, $200,000 is what she would owe. Also. many reverse mortgage borrowers choose to make some repayments monthly, quarterly or annually to keep their balances lower, even though no monthly payments are required. We have a calculator on our site that allows borrowers to see how much different payment amounts would affect their balance over time if they would like to run different scenarios.
For this question I would refer you to an attorney practicing in the state where the property is located. This is not question of the loan, but rather the association's rights to seek back association dues and I am afraid I cannot answer this question for you. The fact that the second individual you refer to is a co-signer indicates that he/she signed documents agreeing to pay certain things and only the attorney can determine his/her obligations in accordance with local and state laws. I do not know what legal rights that would give to the HOA to seek payment and therefore, a consultation with an attorney would be a very wise action.
You can always stay after your mom passes, your mom and then her heirs always own the home. However, you just cannot stay on the same reverse mortgage loan. A reverse mortgage borrower cannot just add others to the loan or title after the loan closes as the loan becomes due and payable when the last remaining borrower on the loan passes or permanently leaves the home.
When that time comes, you have the option of selling the home, paying off the mortgage if the home is still worth more than what is owed on it, or paying 95% of the current market value if the mortgage balance exceeds the home value and you can keep the home that way as well. So you can make provisions to remain in the property and keep the home in the family after your mom passes, but you would have to either pay off the loan with funds available to you or refinance the loan at that time in your own name.
The answer to your question is... that depends! FHA has a program available for non-occupant co-signers as well as occupying co-borrowers. If you did the loan is a co-signer and did not state that you were going to live in the property as your primary residence, then FHA guidelines will allow you to get a reverse mortgage now. You would have to get a copy of the Note and Deed from the first transaction with your kids to verify the nature of that transaction as well as 12 months cancelled checks from the children to verify that they have been making the payments on the other loan.
If however you were listed as a co-borrower on your kids transaction and you stated that you were going to occupy that property, then you would not be eligible for an FHA-insured reverse mortgage on another property now. Your kids would have to sell or refinance that loan thereby removing you from the liability for you to become eligible for another owner-occupied FHA loan. Unfortunately we see a lot of instances where borrowers are coached into signing as occupying co-borrowers for ease of qualification on other family members' purchases, never knowing what it might do to their own chances of getting an FHA-insured loan later. It does not even seem to occur to those not involved in reverse mortgages that it may adversely affect borrowers seeking this type of financing later and I sincerely hope that this is not the case for you.
To be eligible for the reverse mortgage, you would have to occupy the property itself. Just living in a travel trailer that was parked on the property would not meet the requirement and therefore would not make you eligible for the program. You would be eligible if you did occupy one of the units and rented the other 2 as long as they are legal units in a zoning that allows for a three unit property.
However, you bring up a good point. If, with the reverse mortgage and the rents on the remaining two units you still cannot afford to live in the property, then you really need to ask yourself if this is the right course of action for you. If, even with the rents and the reverse mortgage the costs are still beyond your means, this is really a time when a hard look at the downsizing may be in order. Reverse mortgages are not for everyone and if you still cannot afford to live comfortably in the property while paying your taxes, insurance, maintenance and other expenses, the reverse mortgage would only further erode your equity while delaying the inevitable - a sale of the property and relocation.
Since you are both over the age of 62 and you would both be living in the property, you both qualify for the reverse mortgage. There is no requirement that you be married.
The eligible benefits are determined from the younger borrower's age, interest rates and costs, so if you would like to either go onto our website and run the purchase calculator to determine benefits for your circumstances based on the costs in your area, or contact us so we can get this information, we can give you a better idea of the purchase price you should be considering with $45,000 available to you. But you do not have to worry, the fact that you are not married will not prevent you from getting the loan and the eligible benefits will not be affected in any way.
Yes you can, but your spouse would have to be removed from title and this is not something we recommend lightly. Because the loan becomes due and payable when the last borrower on the loan permanently leaves the home or passes, if the younger borrower who would not be on title or on the loan is not ready to move when this event occurs and you do not have other provisions in place beforehand to provide for this, it could create extreme hardships on the remaining spouse.
Some provisions borrowers have informed us of that worked for them is an insurance policy that paid the mortgage off when the older borrower passed; a second property that the borrowers owned that the spouse intended to occupy after the passing of the older borrower anyway; and also the plans that the younger spouse fully intended to move to another state to be with family if and when the older spouse was no longer living anyway. Absent a clear alternative such as one of these, it would be very sad for the spouse of a reverse mortgage borrower to be uprooted from his/her home at the worst possible time if that was not in the plans simply because the loan was now being called due and payable with the passing of the borrower and the remaining borrower did not have the means to refinance the loan in his or her own name at that time. Please be sure to read our blog post "Spouse Under 62 Leaves Vulnerability"
There is a trust review that has to be done by the lender to be certain that the trust does meet HUD guidelines but the cost of the review is sometimes covered by the lender and when it is not, it is usually less than $200 and can be added to the closing costs rather than paid in advance, out of pocket. Most of the trusts we see do meet the guidelines but every once in a while we do need to get an amendment drawn up to meet the requirements and that is usually quick and easy. The only way to know though is for you to submit the trust to the lender and let them do their review.
All borrowers on a reverse mortgage transaction must be at least 62 years of age, must be on title to the property and must occupy the home. Borrowers do not need to be spouses, but reverse mortgages require that the property is the primary residence of the borrower and therefore they must live in the home.
HUD has very explicit requirements for condominium project approvals. They will not insure a loan in a project unless the project is HUD approved. One of the criteria that HUD looks at to determine whether or not they will approve a project (among many other things) is whether or not the project is currently in litigation.
Not all litigation automatically disqualifies the project. If the HOA is suing a vendor for something minor or there is a small lawsuit for which the HOA has adequate insurance that will cover all losses anyway, and if the project meets all other requirements, it may still be approved. If the HOA is involved in litigation due to faulty construction of the project or anything that could be deemed as detrimental to future ability to sell the units, then HUD would not approve the project on that basis.
On a side note though, we are seeing more than 50% of the projects currently being submitted declined for several reasons. Litigation, ratio of homeowners to renters, inadequate insurance, inadequate reserves by the HOA are just some of the reasons we see on a weekly basis for project declinations. Borrowers who live in condominium projects or who are contemplating a purchase in a condominium project with a reverse mortgage should make certain that the project is on HUD's approved list as soon as possible to be sure the loan can be done in that project.
The reverse mortgage is just like any other loan in that you are still responsible for your taxes, insurance, maintenance and repairs on the home. It's still your home and just the same as if you did not have a reverse mortgage, any maintenance or repairs that come up are your responsibility.
The answer to your question depends on a couple of things, the reason for the Power of Attorney (POA) and the lender who will be funding the loan (HUD has basic guidelines but lenders can and often do interpret the guidelines a bit differently from lender to lender or add some additional documentation requirements of their own). But you have two different reasons for borrowers using a power of attorney. One is incompetency and the other is for facilitation.
HUD and lenders do allow a POA to be used if a borrower is incompetent however, there are very specific guidelines that must be met. Firstly, the POA must be a durable POA that was written with the specific intent to survive any incapacity. It must have been drawn up and signed by the borrower when they still had the legal capacity to understand the instrument and therefore, lenders and HUD will require the borrower's doctor to provide a letter stating the date of the onset of their incapacitation and the POA must be dated prior to this date. This is important to remember as often we receive a POA with a recent date only to discover that the date of the onset of the incapacitation was much earlier, making the POA unusable. The Attorney in Fact will then attend the HUD-Mandated Counseling and can sign the Counseling Certificate.
The person holding the POA would also sign the application and all closing documents.
The other reason for using a POA is facilitation of the transaction when the borrower(s) still maintain legal competency. This is a bit more tricky as HUD does allow for it providing the actual borrower signed the Loan Application but then many lenders will differ on what they will or will not allow from there. 4-6 of the HUD 4235.1 Manual for HECM loans does not specify to lenders whether or not any other documents must be signed by the competent borrower or whether the POA may or may not sign them. This leaves a lot of discretion, and risk, to the lender if they are not prudent with the decision they make to allow or not allow a POA to sign for the borrower. Therefore, lenders will look at each loan request and make a determination when the borrower is not incapacitated and determine whether or not the circumstances warrant the additional risk. They may require the borrower to sign a minimum number of the documents on their own, they may not allow the POA but they will base their decision on the individual case. One word of caution though, most lenders are not very quick to accept a POA for a borrower who is not incapacitated unless there are well-documented circumstances that they feel warrant the use. Read more on Power of Attorney & Trust Matters here or call us Toll Free 800-565-1722
We have an article here concerning the fact that there are two Deeds of Trust or Mortgages (depending on the state in which you live) recorded with a reverse mortgage. In a nutshell, the reason is because money can be advanced by both the lender and HUD on a reverse mortgage and each Deed or Mortgage secures funds advanced by each entity. Your HELOC lender would be correct that any instrument recorded behind those Deeds/Mortgages would be in third position.
The underlying guideline will be whether or not the borrower(s) is/are absent long enough to still consider the property the primary residence. If the borrowers want to take a 3 or 4 month vacation, no servicer I know would take issue with that time period. If the time frame was to be 2 years, I think it would be safe to say that the property was no longer their primary residence during that period and therefore under the HUD rules, they would have to call the loan Due and Payable.
Unfortunately, there is no set time period on the Deed of Trust for which the borrowers can be out of the home on a "vacation" basis so I cannot give you a definitive answer. What servicers are doing today as a matter of policy may not be the same as they do tomorrow and unless it is specifically spelled out in your loan documents, there is some room for HUD and the servicer to interpret and change policy. However, I can tell you this for sure: good communication with the servicer goes a long way.
If you have a reverse mortgage and you get the opportunity to travel for extended periods, notify your servicer and make sure they are aware of the circumstances. As long as they are sure that the home is still occupied as your primary residence and that the borrowers have not left the home, they can work with you to make certain there are no miscommunications. The troubles typically start when people think they need to hide something and when servicers can't get in touch with borrowers, that's when it really appears the home has been vacated for good and the servicer needs to take action.
Click here to download a helpful .pdf brochure written by our servicing company Celink in regards to occupancy requirements.
As a matter of fact, yes it is and we've done it! I will advise you though that the sellers of the property have to know that you are using a reverse mortgage as there are several things on a reverse that do not go exactly as a forward or traditional mortgage do. The Title and Settlement services must be handled by a company/individual who is familiar with reverse mortgage transactions or it can be extremely frustrating for all parties. Finally, there can be no credit to the buyer and the property cannot close if it does not meet HUD's minimum condition requirements so those would be issues that you would also want to keep in mind. Keep in mind that the borrower's benefits will be determined from the sales price or appraised value, whichever is less (or the HUD lending limit if it happens to be less than either of the above and it's currently at $625,500).
Most REO's and Short Sales are a matter of "hurry up and wait". Everyone is anxious to get some things done and then it seems that time drags while you wait for approvals, etc. Then, everything is back to being a huge rush. As long as everyone knows what to expect from the onset, things can go smoothly with no problems.
There is never a prepayment penalty so you can pay any or all of your reverse mortgage at any time. You need to review the Security Agreement though as payments have a specific order to which they will be applied. All prepayments have a specific order on the Note as to how they will be applied and go First to that portion of the balance which represents the payments made for Mortgage Insurance; Secondly to servicing fees on the loan, if any; Thirdly to that portion of the outstanding balance which represents accrued interest and Fourthly to the Principal Balance.
In other words, if you send in a prepayment, the amount will be credited to the first two items on the list above (many loans today have no servicing fees), and then toward interest. You cannot simply direct it to go toward "interest" if the mortgage insurance premiums have not yet been paid. The mortgage insurance has both the Up-Front and an annual accrual for renewal. The only way to eliminate one is to take a program in which the lender is willing to pay for it for you, which often comes at a higher rate on the Standard Program. The Up-Front portion on the Saver Program is so low that many lenders are willing to pay it on your behalf since the cost for a $300,000 property is just $30.00 as opposed to the $6,000 on the Standard Program.
Regardless of which program you choose, none of the premium is refundable, however, if you choose to refinance the reverse mortgage loan with a new reverse mortgage loan, you do not have to repay the portion of the up-front mortgage insurance premium that you have already paid. Here is a link to our recent post on repayments on the reverse mortgages repayments on the reverse mortgages
Great question and I don't have a great answer. The short answer is that "no", the HUD HECM is not currently available for cooperative units. There were some proprietary programs in the past that did accept cooperatives, but I have not seen any recently. As for whether or not it will change, I absolutely expect that it will, the question is when.
In 2008, the rules were changed so that HUD could insure loans on cooperative units under the HECM program, but they have either found other priorities since then or simply have not found an acceptable method to do it yet. They have the authority to do them, they just haven't yet.
There are also rumors of large insurance companies about to enter the market with private programs again. While I have no indication that they will include cooperatives at this time, it would not be unreasonable to think that they may be included sooner or later, especially if and when more investors get back into the market with these private programs.
You have a few different issues here that can all be addressed differently. Firstly, HUD has no seasoning requirements but the lenders are now requiring borrowers to own and occupy the property for a minimum of 12 months prior to being able to apply for a reverse mortgage. This was a move made to eliminate a problem seen earlier with family members deeding property to other senior family members solely to utilize reverse mortgage financing when they did not qualify under the age restrictions. Often the senior did not actually own the property and in many instances, did not even reside in it. The lenders added the restriction to protect themselves from the abuses.
The next issue is the issue of a gift of the down payment on a purchase transaction. HUD will allow gifts from family members for a purchase reverse mortgage except that the individual cannot be an interested party in the transaction. In other words, the family member making the gift cannot be the seller or a real estate agent involved in the transaction.
Finally, the down payment cannot be waived by the seller. If this were the case, the buyer is really not actually paying the amount claimed. For example, if the purchase price is $175,000, the down payment should be $69,000 and it is just "waived, then your uncle did not pay $175,000, he paid only $106,000 and the new benefit amount would be calculated from that number. He would have to still come in with the difference as his new down payment. This is pursuant to HUD's rules. You can find more FAQ's for Purchase here
Well, based on those two criteria, nothing. The reason being, those are not the factors used to determine your benefit amount on a reverse mortgage. The program uses reverse mortgage calculator which takes the following factors into consideration to determine how much money you will receive:
• Property Value (as determined by an FHA appraisal, not a tax assessment) or the HUD lending limit, whichever is less
• The age of the youngest borrower on the loan
• Applicable interest rates
• The program chosen by the borrower (HUD has both Standard and Saver programs that give borrowers different benefit amounts in return for different insurance costs)
• Any fees being charged up-front or ongoing (such as mortgage insurance premiums, loan origination fees, closing costs and servicing fees, if any, etc)
• And your existing mortgage would have to be paid from the proceeds or funds you brought in from a verified source
The amount you would receive would be the amount of your benefits minus the costs to obtain the loan plus the amount to pay off existing mortgages and liens. In some instances, people do not receive enough benefit in their reverse mortgage to pay off their entire existing mortgage but choose to bring money in at closing in order to eliminate their monthly mortgage payment. The bottom line though, to determine how much you could receive is quick and simple and requires only a minimum amount of information at the link above.
Thank you for your question. We've gone ahead and posted this in our "Ask the Expert Series" found here
Let's start with your last part of your question first and work our way back. The answer to whether or not you can be prequalified is "yes and no". The lender can do everything they need to on your part to see of you meet the requirements for the program, but there are always a few things for the HUD requirements that cannot be 100% determined until after the property has been chosen and all parties have been run through HUD's GSA/LDP lists to determine if they are eligible to take part in a loan program with government-insured financing (not to mention the property has to meet all specified parameters and many condominium projects do not). We do multiple purchase transactions every month and we tell borrowers to be sure to include a provision in the purchase contract for final financing approval even if a borrower has been "pre-qualified".
The benefit amount of the reverse mortgage will be determined on the lower of the Sales Price, Appraised Value or HUD Lending Limit. The HUD Lending Limit is currently $625,500 so assuming the property you purchase is valued/purchased less than that, the benefit amount (loan amount) would be determined from the lesser of the sales price or appraised value.
Finally, the amount received under the reverse mortgage is determined by a number of things which are all put into a calculation and if you are considering different homes and different purchase prices, the best thing to do is give the information to your reverse mortgage specialist and let him/her give you a proposal tailored to that purchase price. He/she will run the specifics based on the anticipated closing costs for that area and the sales prices you desire and give you the information you need to make a decision as to what purchase prices you may want to consider. Give us a call, you may also find our purchase calculator helpful in estimating your required down payment.
The issue really isn't how long you have to wait. On a bona fide purchase there is no seasoning requirement before you can do a reverse mortgage. If you bought the home for cash and moved in, you are eligible for a reverse mortgage immediately.
The issue that some borrowers run in to is that they are trying to use the current value and not the value or sales price, whichever is less. The problem most borrowers have is that if they buy a home at auction for less than the actual value, the lender is going to use the current appraised value, or the acquisition cost (purchase price) of the home for 12 months. Lenders will allow you to use the value of any verifiable improvements you make to the home, but they will not give you credit for more than the purchase price for 12 months unless you can prove that you put the money into the property and then only the amount you actually put in.
For example, if you buy a home at auction for $100,000 and now you believe the home will appraise for $150,000 because you got such a good deal, the lender will not allow you to use the $150,000 value for the first 12 months. They would determine the amount of your benefits on the $100,000 purchase price.
On the other hand, if you bought the property for $100,000 and then you put $50,000 into the property to improve the property and have the receipts to show the expenditures, the lender will allow you to include these costs in the value consideration. Keep in mind though, that if you put $50,000 into a home after you pay $100,000 and the new appraised value is $225,000, the lender will still base your eligible benefits on the purchase price plus the cash into the property or $150,000 if you take the loan out within the first 12 months, not the higher value of $225,000. To estimate your down payment on a reverse mortgage for purchase scenario use our HECM Purchase Calculator or call us at (800) 565-1722 for a complete analysis.
The Reverse Mortgage is a non-recourse loan. That means that the lender can only look to the property to repay the obligation, regardless of other assets. There is no telling what the value will do between now and the time your father ultimately leaves the property but you are correct in that any money in your father's checking account would not be subject to forfeiture in order to repay the reverse mortgage balance.
A reverse mortgage can be refinanced but only if the loan meets certain benefit tests for the borrower. HUD will not allow originators to refinance reverse mortgages for little to no benefits for the borrowers. If you are unsure if you would derive adequate benefits to refinance your reverse mortgage, you can contact a reverse mortgage specialist and with just a small amount of information, they can let you know. You would need to have your current statement as there is information on it that they will need; a copy of your closing statement from your existing reverse mortgage is extremely helpful as he/she will need to know how much Up Front Mortgage Insurance Premium (UFMIP) you paid on the first closing, and an approximate value of your home.
At that point, they can run the numbers and determine if the refinance is even in your best interest. Remember, some costs like the amount of UFMIP that you already paid would not have to be paid again, but you would have to pay title fees and other closing costs and depending on the area in which you live and the value of your property, these can still add up to more than $5,000 in some parts of the country on higher valued properties. A quick review does not cost you anything and at that point you would know if it makes sense for you. Give us a call at (800) 565-1722 or request a quote by clicking on the header link of our site, we’re happy to run you an analysis.
Hi Judy, HUD has very specific guidelines with respect to water sources, water pressure and water testing when the systems are not public systems. A tank with water delivery is not listed in HUD's acceptable water sources list. (Link to HUD's water system requirements)
Having said that, since we are not licensed in AZ, I have not had to deal with this particular set of circumstances and you may not have been given the final word on the matter, I really can't say. HUD does have a procedure available for waivers and they do grant them, we have gotten them on some water systems specifically mentioned as unacceptable conditions in the HUD manual. It is not quick or easy and requires several inspections and reports and then a waiver directly from HUD, but I would suggest that you ask a reverse mortgage specialist licensed in your area if they have ever tried for a waiver request on a property such as yours. If they have and HUD just won't grant them, then it did not hurt to ask and if they have not tried, you may find that HUD will grant a specific waiver for your home.
I wish you good luck and let us know how you make out.
In the past, HUD and lenders had almost no credit qualifications for a reverse mortgage. As long as the bankruptcy was completed and there was a good explanation for the foreclosure, the loan could still be done without too much problem if all other factors were as required by the program. However, HUD is going to announce new financial and credit assessment guidelines that will require borrowers to "qualify" to some extent for the reverse mortgage very soon. HUD has not announced their new requirements yet, but the National Reverse Mortgage Lenders Association (NRMLA) and at least one major lender have announced their recommendations or guidelines (in the case of NRMLA recommendations, in the case of the lender, they are their new lending guidelines). Other lenders have chosen to wait for HUD's announcement presumably so that they can issue guidelines one time - knowing that they will cover all requirements and not be too restrictive at the same time. Read more about credit qualifications here...
A number of factors go into the amount you receive on a reverse mortgage loan. The short answer though is that if you are not within 180 days of your next birthday, with today's rates and assuming your value is not greater than the current limit of $625,500 (which is currently set to go down to $417,000 on January 1, 2012 if Congress does not act to extend the current temporary increased limit), then you could expect to be eligible for a gross benefit of approximately 68% of the value of your home on the standard programs from which any liens and the reverse mortgage fees would be deducted. Some closing fees vary by area and so the only way to really know what you would be eligible for would be to have a proposal prepared with all your specific information.
The trust would have to be approved by the lender as meeting HUD guidelines and one of the things they look for is that the trust is revocable, not irrevocable (among other things). I am not an attorney and obviously could not give advice on a trust I had not seen even if I was so I would suggest that you find an attorney who renders legal opinions on trusts for lenders as to whether or not they meet HUD guidelines and have the trust reviewed. If it doesn't meet the standards and cannot be changed, the property would be ineligible for HUD lending programs and you really need to know that.
Hi Vince, We can only offer rates that are available in the secondary market. Unfortunately, since the number of reverse mortgages done is such a small number in comparison to the number of forward mortgages, the mortgage-backed securities originated and sold for this product is extremely limited. That does not allow lenders to get too creative or aggressive with the products as they cannot originate enough of the loans or sell enough of the securities. To make a long story short, I have a higher rate than the 4.5% available, but nothing lower at this time.
Hi Joel, There is no "cap" on the amount of interest that can accrue. In many cases, especially if the value of the home declines aw they have done in recent years, the balance of the reverse mortgage did exceed the value of the home. Although I saw several bad articles chided reverse mortgage for this fact, it actually worked to the borrowers' advantage and the authors did not take the positives of the product into consideration.
The example the authors used was a borrower who, with her husband, borrowed approximately $225,000 on their home with a reverse mortgage. After several years of living in the home without making any loan payments, the balance had grown. The husband passed and the wife found herself needing to leave the family home to move to a nursing facility and the property was now worth only $167,000, well below what was owed on the reverse mortgage.
Authors howled about the excessive fees (the highest fees were the HUD mortgage insurance fees of over $8,000) and they talked about how this borrower now had to leave her home with nothing because the reverse mortgage now had a balance of over $300,000 and there was nothing left for her. what escaped everyone was that the borrowers received $225,000 just a few years earlier, that they lived in their home for several years without making a payment and regardless of any type of mortgage, if you take a loan out for $225,000 and property values decline to $167,000, there will be no equity left when the home is sold.
The best thing that could have happened to this borrower is that they did take out the funds in a reverse mortgage since reverse mortgages are no-recourse loans. In other words, the borrower and her heirs never have to repay the shortfall between the current value of $167,000 and the $300,000+ owed on the loan. The HUD mortgage insurance premium that the borrowers paid made certain that they and their heirs would never have to pay any shortfall.
So the bottom line is that while we all hope that we get back to real estate markets where we see appreciation and that loan balances do not grow beyond the value of the homes, it is entirely possible and probable if the borrowers stay in the homes long enough and value do not increase. However, that is a common occurrence in today's market with loans of all kinds and falling values, but on other loans borrowers are also making monthly mortgage payments and are not guaranteed to be able to stay in their homes as long as they live there and meet the conditions in the mortgage agreements.
Hi Jim, Great question. If you want to have a reverse mortgage with your spouse now included on it, you would have to do a new loan and the benefits would be based on the current value and the youngest spouse's age (your wife). If you took a line of credit before and have not used all your funds, this may not be a tough thing to do (depending on property values and how much money you did use). If however you took the maximum amount of cash available and your property has gone down in value during this time as most of the country has continued to drop in value, then it may require you to come in with cash to close a reverse mortgage at this time in both your names. She can always be your heir and receive the home by will if you do predecease her even if you do not get a new reverse mortgage, but that may not be of any comfort if the values have gone down and she has no way to retire the existing reverse mortgage at the time. Your best bet is to find out what your property is worth, the benefit you both can now receive under current rates and programs at your current value and determine if it makes sense to do a new loan in both your names at this time. The thing you do have going for you are today's low interest rates so its worth giving it a try.
You can't both be on the loan because all borrowers must be a minimum of 62 years old at the time of the loan. We don't recommend dropping one borrower to qualify because while they "can't take the house away from your wife" as you put it, they can call the Note due and payable and if she has no means to pay off the loan, she would be forced to sell the home and move and who knows what the sales environment would be like at that time. She may do very well on a sale and be able to go purchase somewhere else, she may be forced to sell the home for very little and may not have enough proceeds at that time to purchase another property.
We advise borrowers to think long and hard before getting a reverse mortgage where one borrower has to come off the loan for qualification. Some justifying reasons borrowers have given us in the past which makes sense include adequate insurance on the older spouse to completely pay the reverse mortgage loan in full; the fact that the borrowers owned a second home that the younger spouse intended to sell the primary home to move into on the passing of the older spouse anyway; and imminent foreclosure which would mean that the couple would lose their home without the reverse mortgage and the younger spouse intended to move to be nearer to family upon the passing of the older spouse.
There may be other reasons which would make this action right for you, but you do need to understand that the loan will be due and payable as soon as the borrower on the loan stops living in the property as their primary residence due to moving out or passing. Without a good alternative plan in place, you do not want to have the remaining spouse have to face foreclosure if she is not able to refinance the loan or sell the property with adequate proceeds to live comfortably elsewhere at that time.
If we clear up any back taxes at the time of closing, is all right to start deferring taxes again while we are using our Reverse Mortgage? It was stated that these are considered “deferred taxes” and are not considered “delinquent taxes”. While that statement is true, it was my understanding that all taxes and insurance are to be kept current after closing. Meaning they would be paid each year where there would not be any indebtedness incurred on the property up until the property is sold or the last owner passes away?
This is such a very important point that he was so kind to refer me to you for confirmation and clarification. Thank you so much for your attention to our concerns.
There are many taxing authorities that do allow for tax deferral programs – however, there is typically a catch. In most states, if a person enters in to a tax deferral arrangement with their taxing authority, then that tax deferral automatically takes a first lien position on the property. The problem with this, as it relates to a reverse mortgage, is that it is a violation of the terms of the mortgage to have any lien on the property that supersedes, or takes the place of, the first lien position held by the reverse mortgage lender.
As a result, most tax deferral programs do not qualify under the loan terms for reverse mortgages. There are two states that I know where it is acceptable for a reverse mortgage borrower to enter into a tax deferral program: Oregon and Massachusetts. The reason why these two states are acceptable is that they specifically do not take a first lien on the property with their tax deferral agreement.
However, while tax deferrals are not allowed for most states, we always encourage people to look into local tax exemptions – which may help to significantly reduce your property tax obligations. I hope that this information has been helpful. Please let me know if you have any additional questions that I can assist you with.
Hi Maria, You can begin your application process 60 days before you turn 62 years of age, but you cannot close the loan prior to your 62nd birthday.
Hi Carol- You packed a lot into a very short comment/question! Any time a loan has a single repayment instead of requiring equal monthly payments over a period of time, it is considered a "balloon" payment. Not all balloons are equal though. The reverse mortgage requires a single repayment when a qualifying event occurs. That qualifying event could be the death of all borrowers originally on the loan, none of the borrowers are still living in the home as their primary residence, the borrowers are not paying their taxes or insurance, the borrowers sell the property, or the borrowers are not maintaining the home. However, unlike a traditional forward mortgage with a balloon payment, as long as you do continue to meet the conditions of the loan mentioned above, there is no set date when the balloon comes due which would force the borrowers to scramble to repay it. The reverse mortgage is intended to be the last loan you will ever need, allowing you to live the rest of your life in your home with no monthly mortgage payment. But you are correct, the equity does decrease while the debt increases as long as there are no periods of phenomenal appreciation and you are not making repayments on the loan. (...Continue reading on making payments) The loans come with adjustable rate and fixed rate options. Borrowers can choose the program that best suits your needs but the fixed rate option requires that you take all the funds in the beginning while the adjustable rate gives you the additional options to keep the funds in a line of credit or take a monthly payment as well as take a lump sum, or a combination of any or all of the above. With any of the programs you can repay any or all of the loan at any time without penalty. There is a difference though when making prepayments between the fixed rate and the adjustable rate loans.
The fixed rate reverse mortgage is a "closed-end" instrument that does not allow for further draws. In other words, once you pay a portion of the loan down, you would not be able to re-borrow those funds later without doing a new loan. On the other hand, the adjustable rate line of credit would allow the borrower to make multiple draws up to the remaining limit at any time. Borrowers should take all of this into consideration when determining which program best suits their needs.
This is a great question. The reverse mortgage program is not intended to be used as a renovation program. Some lenders do offer the HUD/FHA-insured loan program known as the 203-K loan which is intended exactly for just that purpose. However, since it is a "forward" loan and not a reverse mortgage, it does require a completely different qualification and monthly payments.
Now having said that, reverse mortgage borrowers can get what is known as a "repair set aside" if they are unable to finish all required repairs prior to close to complete certain approved items. There are restrictions on which repairs may be done after close and the amount of the money which can be set aside to complete the repairs. The amount available for set-aside fluctuates with the amount of money the borrower is receiving from their loan up to the HUD maximum of 15% of the maximum claim amount - which is the appraised value or the HUD Lending Limit, whichever is less. Depending on the type of repair, the lender may need a statement from the appraiser to determine what the repairs should cost or they may require bids from licensed contractors if they feel it greater than the appraiser's expertise to determine this amount. For this reason, borrowers who are aware of needed repairs should make their originator aware of those repairs right away. This way, the originator can let the borrowers know if the necessary repairs can be done after closing or must be done before the lender will issue the funds. In many instances it makes all the difference in the world.
You have no need to worry. The reverse mortgage is a non-recourse loan and that means that the lender can only look to the property to repay the loan. The lender cannot go after your grandmother's estate or you as the heir for any shortfall after the sale of the property. You can rest easier knowing that there will be no further recovery actions on this loan. I wish you the best of luck.
There are many excellent sources of information available for borrowers explaining the program in a factual, non-sales format. The reverse mortgage is exactly what it is proposed to be, it is a loan which requires repayment at some point in the future upon given repayment requirements. She needs to know that it is not "too good to be true", as you will be accruing interest and the lenders and HUD do still expect you to maintain the home in a reasonable fashion and to keep the taxes and insurance current. Other than that, you can live in your home for the rest of your lives and never make another monthly mortgage payment. The problem with reverse mortgage reporting is that what most people get is the author's personal bias when they read about the program.
If that author likes the program, the review is typically glowing and may read more like a sales pitch. If they don't like it, it can be wrought with inaccuracies and we've seen some extremely poor reporting from some otherwise "reputable" names. Reverse mortgages seem to be one of the topics into which a lot of journalists love to make sensational articles, but then when you really look at their facts they can be sadly mistaken. As you, yourself have found, you've already found one advisor who has formed an opinion that he doesn't like the product - but he doesn't even know why!
Reverse mortgages can be expensive and so we tell people to look at all the options. They are not a good short-term solution and are meant to be the last loan you will ever need. We have saved homes for people, improved their lives and have made many folks extremely happy with their reverse mortgages. But having said that, we acknowledge that reverse mortgages are not for everyone. It has to be right for you.
You can get information directly from the HUD Website which includes links to several informational booklets from such notable experts as the National Council on Aging. I think the HUD site does a good job of explaining things without injecting a personal bias, one way or the other.
All good questions. Once the last reverse mortgage borrower permanently leaves the home (and in this case, since there is only one) then the loan does become due and payable. The lender or the lender's servicer will work with the borrower or the borrower's heirs to give them ample time to sell the home, refinance it or pay the loan off with other proceeds. The amount owed would be the outstanding balance plus interest and any fees owed plus any amounts the lender was forced to advance, if any.
The reverse mortgage is a non recourse loan. What this means is that if the borrower lived in the home long enough so that the sale of the home was not sufficient to pay off the entire amount owed, the lender can look nowhere else for the repayment of the debt. At a time when either the interest over a long period with no payments and the falling property values combined can easily leave a home with no equity (many borrowers who make monthly payments are finding themselves upside down on property values), borrowers and their heirs are protected in that the only security the lender can look to is the property itself.
This is an excellent question. Borrowers have to make this decision every day when deciding whether or not to refinance a loan and you really need to consider all of the pros and cons to determine which is the right path for you. If you refinance, you will save $200 per month, but then you will raise your mortgage balance and begin payment on a new 30 year loan. If you look at just the hard numbers, it will take over 22 months at $200 just to recoup your initial $4,500 investment. That does not take into consideration the additional interest that you would be paying on the higher loan balance (not a lot, but an additional $240 or so in the first year).
Since you pay the most interest on a 30 year loan in the first years, after 8 years more money is going toward your principal reduction now that it would if you refinanced at this time. In other words, not only will your balance be higher, but it will remain higher longer. If you plan to get a reverse mortgage in the next 3 years anyway, you probably would never even recoup the cost of the refinance.
Having said that, what will $200 less payment now do for your quality of life? Only you can quantify if the lowered payment is worth it to you and your daily living situation. The numbers say don't do it for a loan you think you might keep for only 3 years or less, but numbers can't determine your living situation and whether or not $200 a month would really make a difference that is bigger to you than the bare numbers show.
One last thing I would caution. I don't know what kind of loan you currently have, but 5.375% AND $4,500 added to the principal balance sounds extremely high in today's market! If you determine that the lower payment in the short run is the way to go, I would really suggest that you shop around and compare rates. If you have the income to support a conventional loan at less than $417,000 loan amount, I cannot see any reason why you could not get a loan under 5% at that same fee structure in today's market.
Property taxes, absolutely. You can continue to deduct them since you still pay them just as you do with any other mortgage. Mortgage interest is a different situation. You really need to speak with a qualified accounting professional as we cannot give tax advice but most professionals agree that interest can be deducted with paid, not when accrued. What this means is that if you make any payments on your loan during the year, any interest you pay is deductible at the time you make that payment. However, since reverse mortgage loans are designed so that the borrowers do not have to make payments, most borrowers do not and under this scenario would not have any interest to deduct since none was paid. Some borrowers who do have the means to make payments and need some additional write-offs do meet with their accountants each November or December and determine how much they need to pay to greatly improve their tax situation. Another example of how a reverse mortgage is truly a financial tool. Learn more on reverse mortgages and tax deduction.
What HUD is saying is that the Saver program is available for all transaction types and payment plans - that HUD offers under the Standard HECM programs. The HECM Standard does not currently allow a line of credit on the fixed rate program. Therefore, the Saver program does not allow it either.
The line of credit is an "open-ended" mortgage. In other words, you can continue to go back for multiple draws. The fixed rate currently cannot accommodate an open-ended security instrument. Until such time as the HECM Standard Fixed Rate loan is available as a line of credit, it cannot be offered as a Saver product either. I'm sorry, we would love to be able to offer the line of credit in both Standard and Saver programs as a fixed rate, but it just isn't available.
Please feel free to have her give us a call, our toll-free number is 888-801-2762 or if she wants us to contact her we will be more than happy to do so. We serve many borrowers in the Bay area and have the procedures set up so that she will never have to leave her home. We would be more than happy to see to it that she receives excellent service for the reverse mortgage program which best suits her needs.
Rates have been going up lately. Lenders were able to pay more of borrowers' fees just a short time ago due to secondary marketing conditions which have changed dramatically for these loans just in the last 45 days. However, HUD did introduce the HECM Saver loan as a way to lower fees for borrowers who did not need as much money and did not want to pay as much on the up front-mortgage insurance last October and the Saver program does lower the single largest fee on most HECM loans, the Up-Front Mortgage Insurance Premium (UFMIP). The UFMIP alone for a Standard HECM on a property valued at $625,000 is $12,500.The UFMIP for a comparable HECM Saver is just $62.50.
However, there are other things you need to consider. The HECM Saver program has not been around long enough for secondary market investors to get a good enough feel for many of the factors that make them comfortable enough to readily buy the loans. They do not know how long the loans will remain outstanding and there is not yet a large pool of the product to gather any meaningful statistics so therefore their full acceptance with investors is still unknown. What this means to you the borrower is that the rates will be higher on the HECM Saver product and the pricing, or the fees charged by lenders, will be worse to the consumer (at least for the time being). The end result? I am certain you can lower your fees to $8,000 or less if you switch to the Saver program, but as you stated, you will get less money and the rate will be more along the line of 5.25% (this is not quoted as an APR) rather than the 4.99% you are looking at now. You can compare the amortization schedules of both programs and determine which better meets your needs.