|
|||||
|
|
|
|
|
|
|
 NRMLA’s annual meeting highlights the push for national loan limit, the reduction of up-front insurance costs and the continual push for education and awarenessNEWS RELEASEOctober 8, 2003 FOR IMMEDIATE RELEASE
Reverse Mortgage Companies Battle Misleading PerceptionsLenders push for national loan limit, reduction on up-front insurance costsCHICAGO—While reverse mortgage companies around the country showed glowing statistics supporting another banner year, the rapidly expanding group wants seniors to be able to tap a greater percentage of their home equity.The National Reverse Mortgage Lenders Association's annual meeting was highlighted by calls for a single national loan limit, a reduction on up-front mortgage insurance costs and a continual push for education and awareness. "The typical Congressman in this country knows as much about a reverse mortgage as a doughnut," Peter Bell, president of the Washington, D.C.-based NRMLA told more than 350 lenders gathered for the event. Sarah Hulbert, vice president and national director for Seattle Mortgage one of the "big three" national reverse mortgage originators, said more seniors would have access to a greater portion of their hard-earned home equity if a single national loan limit were approved. Now, the U.S. Department of Housing and Urban Development, which insures the most popular reverse program, ties loan limits to average household incomes in specific areas. "The goal in all we do is to provide seniors with a greater access to funds," Hulbert said. "But if a senior has an expensive house with a lot of equity in a rural area, that person would be really restricted in the amount he or she could borrow. The reverse mortgage often would not provide them with the money they really need—yet the equity is clearly there." Reverse borrowers make no monthly payments on their mortgage during its term. The loan comes due when the borrower permanently moves out of his or her home. However, seniors can "outlive" the value of their home without being forced to move. The homeowner cannot be displaced and forced to sell the home to pay off the mortgage, even if the principal balance grows to exceed the value of the property. If the value of the house exceeds what is owed at the time of homeowner's death, the rest goes to the estate. To qualify, consumers must be at least 62 years of age and own their own home. The home does not have to be paid off entirely but the greater the equity, the greater the reverse loan amount. Age, location and loan type also factor in the reverse mortgage amount. Lenders say their typical customer is a widow approximately 75 years old who is looking to supplement her monthly income. HUD, through its Federal Housing Administration, backs the most popular reverse program known as the Home Equity Conversion Mortgage. The agency recently announced it had insured an all-time monthly high of 2,253 HECMs during August and a total 16,448 loans through August 31. According to HUD, the previous monthly production record – 1,945 loans – was established one month earlier. Last year at this time, FHA had endorsed 11,833 HECMs, including 1,198 in August 2002, and ended its fiscal year in September with a total of 13,048. In fiscal 1999, a total of 7,982 HECMs were made. Representatives from the two other companies making up the "big three" in reverse loan originations—Wells Fargo and Financial Freedom Senior Funding—said the growth in reverse lending would definitely continue. "You have 5,500 people turning 65 every day," said Wells Fargo's Cheryl Chapin. "When you consider the vast number of people who will be eligible for this product in the next few years, the market is going to be huge." Just how big could the reverse market "easily" become? Approximately $74 billion by 2015, according to Wells Fargo projections. Jim Mahoney, a veteran of 13 years in reverse lending, heads Irvine, Calif.-based Financial Freedom Senior Lending Corp., a subsidiary of Lehman Brothers Bank FSB. Mahoney said the industry now faces similar challenges of the "forward" market in regard to disclosure and compensation to brokers and non-lenders. "We moved from a cottage industry to a real force in all 50 states," Mahoney said. "We have growing issues that include a way of making sure property taxes are paid and insurance premiums are paid. "But our biggest challenges continues to be education. We constantly battle the idea some people have that we are going to take the house. A reverse mortgage is simply a lien—just like any other mortgage." The NRMLA would like everyone to know that—including all U.S. Congressmen. Tom Kelly, former real estate editor for The Seattle Times, is a syndicated columnist and talk show host. Send questions and comments to news@tomkelly.com. |
|
|||||||||||
 |
Home | Your Privacy | Terms of Use |
| Copyright 2001 Financial Freedom Senior Funding Corporation. All rights reserved. |
|
|
|
|
|
