Lower Fees for Reverse Mortgages, But Still Expensive Says NY Times

201004200903.jpg New York Times contributor Tara Siegel Bernard wrote over the weekend that if you’ve been thinking about getting a reverse mortgage, it’s worth taking a closer look now because several lenders have cut prices in recent weeks.

Driven by an increase in demand for Ginnie Mae HMBS from Wall Street, lenders like Bank of America, Wells Fargo, MetLife Bank and Financial Freedom have all waived their origination fees and other charges on certain reverse mortgages they sell as part of the Federal Housing Administration’s Home Equity Conversion program says the Times.

Why is the demand so high? The fact the loans are backed by the Federal Housing Administration and because they also tend to be more predictable for a longer period of time says the Times.

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Reverse Mortgages Still Costly, but Less So

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  • “There's no feree lunch”. If a borrower wants a loan with no payments, (and all the guarantees), there has to be some sort of a cost to it. Banks and investors have to make money at this…

  • I don't get the problem here, in 2027 the owner is dead, the $102,000 is the heirs equity – it appears to be a windfall for them. The owner lived out his final 17 years financially comfortable. Maybe the heirs will get some of this too.

  • It is unfortunate that so few see or promote this product for the cash management tool it actually can and should be. While closed end HECMs are not well suited for this purpose, adjustable rate are well suited for such purposes. Since closed end HECMs are a recent phenomenon, it is odd so few emphasize this aspect of HECMs.

    Unfortunately equity is an elusive number. To conclude from a less than perfect projection that heirs will receive anything at any point in time is not only unfortunate but also dangerous. We need to better educate borrowers, such as RM Borrower, on the unreliability and weaknesses of our so called amortization schedules. This schedule would be much better if its underlying assumptions were fully disclosed in writing.

  • It is unfortunate that so few see or promote this product for the cash management tool it actually can and should be. While closed end HECMs are not well suited for this purpose, adjustable rate are well suited for such purposes. Since closed end HECMs are a recent phenomenon, it is odd so few emphasize this aspect of HECMs.rnrnUnfortunately equity is an elusive number. To conclude from a less than perfect projection that heirs will receive anything at any point in time is not only unfortunate but also dangerous. We need to better educate borrowers, such as RM Borrower, on the unreliability and weaknesses of our so called amortization schedules. This schedule would be much better if its underlying assumptions were fully disclosed in writing.

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