Issue 1.13
Today, there is a lot of discussion concerning the future of reverse mortgages. And, to make a long story short, if you are looking at a reverse loan now or in the future, you may want to do it sooner than later. As the terms of this loan in the future are most certainly going to be less aggressive as it pertains to the various options available with the loan today.
The Reverse mortgage has had a long history of ups and downs over the past 30 years since FHA has been insuring this loan. With the recent release of the financial deficit that FHA has inked for this year, Congress is turning to HUD and wanting answers as to its future.
FHA released a deficit in their budget of over 16 billion dollars in 2013. Most of the losses due to the financial market collapse of 2006 to 2009, but never the less certainly looking at a loss.
With our senior’s living longer and our homes perhaps not carrying the appreciation that they have had over the history of this loan, Congress would like HUD to address some major changes if not terminating the loan in its entirety. I have been talking about these points for the past two years straight trying to indicate that if we are choosing a home to be in for the next fifteen years or hopefully the rest of our lives the terms of the loan today make it an easy decision over paying cash for a home and or making a conventional mortgage payment for life.
The main concern’s with Congress today is the inability of client’s to maintain the property tax payments and insurance payments on their homes even though they are not making mortgage payments. Because of the financial economics that our country has faced, even though our senior client’s do not have a mortgage payment, they are still struggling with making the necessary property taxes and insurance payments needed in order to secure their home for their lifetimes. Obviously, a home can be forced to be sold if a homeowner is not current on their property taxes and home insurance regardless of what loan you’re in. However, the focus seems to come down on these HECM loans with defaults more so than other conventional loans.
The elimination of reverse loan is truly not good for today’s economy and or for FHA. But, most certainly Congress will need and demand some changes to the program in 2013. You have seen the exit of the major players in the industry over the past couple of years that included Bank of America, Wells Fargo and Met Life. Our institution, Cherry Creek Mortgage Company is the only local lender today that funds and underwrites our own FHA HECM mortgages and one of only 35 lenders across the country that have HUD authority to fund and underwrite these loans.
On January 31st of 2013 HUD will most likely bring some changes to the program that will address the fixed interest rate as well as the escrow issues that Congress and HUD are working through.
So, if you are 62 and over and you’re looking at buying a home, and or looking at staying in your home and wanting to eliminate your mortgage payment for life, please give our office a call to understand the changes that are in front of us, so you can determine the timing of your choices concerning this loan now and in the future.
On behalf of Cherry Creek Mortgage, we wish our entire senior clients a wonderful and safe 2013. Best wishes to you and your families.
Brandon Hansen is a Senior Mortgage Banker, Registered Investment Advisor Representative for
Cherry Creek Mortgage / Investment Advisors International. He can be contacted at 435-668-2840 / 435-773-4164. www.seniorbankingtoday.com