Comments on: NMLS Website Hopes to Bring Greater Transparency to Mortgage Industry

By: Anonymous

Anonymous — Mon, 25 Jan 2010 19:43:00 +0000

Damn, Jackson, what is it about readership that you don’t understand? As far as “flipping”, are you nuts as well? These are Seniors: The Husband extremely sick, a Wife who wants to quit her job so she can remain home to help take care of him. Both of these fine people wish to remain in this house until their Maker calls. Fourteen–repeat–fourteen years of residency ought to eliminate even your concerns about “flipping”. How old are anyway?rn

By: Anonymous

Anonymous — Mon, 25 Jan 2010 19:02:00 +0000

ps – try MetLife on the refi, might work there.

By: Anonymous

Anonymous — Mon, 25 Jan 2010 18:31:00 +0000

Hi again James. It sounds like they had an option to purchase the home at a price of $350,000. The purchase/sale of any asset is not complete until all contingencies have been met (this is a principle of purchase/sale accounting and law), so they won’t have legal ownership until all contigencies have been met including obtaining financing and changing title. I’m sorry but I doubt very strongly that you will be allowed to use a value above $350,000 on a HECM for purchase on this. Regarding refinancing immediately thereafter and using a higher value, I suggest you shop around to see what you find, but you will likely find that all lenders require that you wait a year due to risks related to flipping. Good luck.

By: jamesanelson

jamesanelson — Mon, 25 Jan 2010 17:43:44 +0000

Damn, Jackson, what is it about readership that you don't understand? As far as “flipping”, are you nuts as well? These are Seniors: The Husband extremely sick, a Wife who wants to quit her job so she can remain home to help take care of him. Both of these fine people wish to remain in this house until their Maker calls. Fourteen–repeat–fourteen years of residency ought to eliminate even your concerns about “flipping”. How old are anyway?

By: lancejackson

lancejackson — Mon, 25 Jan 2010 17:02:01 +0000

ps – try MetLife on the refi, might work there.

By: lancejackson

lancejackson — Mon, 25 Jan 2010 16:31:22 +0000

Hi again James. It sounds like they had an option to purchase the home at a price of $350,000. The purchase/sale of any asset is not complete until all contingencies have been met (this is a principle of purchase/sale accounting and law), so they won't have legal ownership until all contigencies have been met including obtaining financing and changing title. I'm sorry but I doubt very strongly that you will be allowed to use a value above $350,000 on a HECM for purchase on this. Regarding refinancing immediately thereafter and using a higher value, I suggest you shop around to see what you find, but you will likely find that all lenders require that you wait a year due to risks related to flipping. Good luck.

By: jamesanelson

jamesanelson — Fri, 22 Jan 2010 18:53:33 +0000

Very interesting, Mr Veale: Actually, early in the FHA HECM process, we secured in writing from a lender the fact that fourteen years of occupancy with a written purchase agreement spelling out unusual terms was indeed proof of ownership even though title would only actually change at the competion of fourteen years of employment (and the contract consumated). Our homeowner was considered by the Employer an extremely valuable Employee whose continued loyalty was secured (guaranteed) with this powerful and unusual method of home purchase leading to ownership. And, the fact remains: The home is worth over $700,000, in even today's marketplace, with no debt whatsoever on ground that is considered by many the most valuable real estate in the State of Washington. This is one property any Bank should be happy to invest in with the borrower using an FHA HECM (where the Senior is limited in how much money can be borrowed vs the equity and FHA Insurance steps to protect the Bank against loss should we suffer a 1929 depresson again.) . It's just, if we could have completed this transaction in one step, the Senior could have saved himself close to $2,000 in Fees.

By: James_E_Veale_CPA_MBT

James_E_Veale_CPA_MBT — Fri, 22 Jan 2010 18:10:45 +0000

Mr. Nelson,

The issue surrounding the two types of financing appears to be the issue of risk of ownership. If at least title has not vested in the name of the senior, then how can any indicia of ownership have passed to the senior? I am not attempting to give legal advice or guidelines but rather trying to put some meat on the skeleton you have correctly analyzed.

There is no HUD rule on seasoning for HECMs other than flip issues. However, that does not mean that HUD is not curious as to why a particular transaction is not treated as a purchase rather than a traditional refinance. I have spent a few hours with the head underwriter of a much larger competitor on this issue.

Many banks including our own have taken various positions on seasoning. With us, we look at the existing financing. If any part of the financing is "non-traditional" mortgages like seller carryback financing or a construction loan, Security One requires one year of ownership.

Recently I did shopping among those lenders we use for an unusual type of property (at least in our part of the country) for which our warehousing lines will not provide financing. I found one lender in the group which did not require seasoning on those types of property.

To help this senior will probably require some "shopping" on your part. You may find that no lender is willing to take on this particular type of seasoning risk.