Comments on: Fannie Mae Discontinues CMT Based Reverse Mortgages

By: Chris Schafale

Chris Schafale — Wed, 03 Jun 2009 10:45:04 +0000

Can someone explain to me (a non-lender), why the LIBOR is seen as so much more desirable in the lending community?

By: Jeff Birdsell

Jeff Birdsell — Tue, 02 Jun 2009 22:06:30 +0000

Ultimately this is exactly what Fannie Mae needed to do, and I had hoped that they would do. No other investment bank or potential purchaser of whole loans or securities has any interest in CMT based products. This move is intended to help stimulate more investment entrants into this space and will in fact do just that.

I don’t think it will drive them in today, but it will bring them in much sooner than if potential new entrants had to compete with, or deal with, CMT based products.

By: Fannie Mae Will Discontinue CMT Based Reverse Mortgages in September | Reverse Mortgage Guides - News

Tue, 02 Jun 2009 17:26:48 +0000

[...] Mae announced yesterday that it will no longer buy CMT based reverse mortgages beginning September 1, 2009. [...]

By: Skip

Skip — Tue, 02 Jun 2009 16:23:14 +0000

Downside is some folks absolutely insisted on Annual Treasury because of the conservative nature of the caps. Yes, lots less money, but those in fear of potential 13% rates wouldn’t listen to the typical “short-term” nature of the increases.

By: John Doe

John Doe — Tue, 02 Jun 2009 16:19:02 +0000

I would love to be positive but its reality not doom and gloom. Sure with time more investors will mean lower margins. Although, the rates are going to be much higher. Therefore, a lower margin doesn’t mean much when rates are 8-9-10% if not higher. It all comes down to the benefit to the borrower. Today a 62 yr old senior with a 625,500 value and expected rate of 6.5% gets 300K and costs of 21K. Just 2% higher(which is conservative) at 8.5% expected rate this same senior gets 190K and the same costs of 21K. Sure there will be more seniors because of the baby boom. Although, the amount of seniors that will qualify or believe its a benefit is going to be much less than we have experienced over the past 6-7 years. Again as I said in my earlier comments those who have been in the industry for longer than 6-7 years realize this. Those who have been around 7 years or less which is most of the industry don’t realize the impact of the interest rates.
Mark Draper and Mike Manfredi I guarantee have only been around during the good years with rates being low. Otherwise, they would realize the seriousness of the rates to our seniors.

By: manny

manny — Tue, 02 Jun 2009 15:53:09 +0000

I am in Texas do you konow if purchase reverse is approve by the state?

By: Mark Draper

Mark Draper — Tue, 02 Jun 2009 15:42:33 +0000

I agree with Mike, the future is bright.

By: Max

Max — Tue, 02 Jun 2009 15:30:46 +0000

I am unsure as to why they would move away from the CMT and use a international interest rate instead. Is this the beginning of the world economy and the end of confidence in the U.S. Treasury?