HECM Proceeds May Decrease in October says Lender

With fiscal year 2011 budget proposals making their way through the House and Senate, the Federal Housing Administration’s reverse mortgage program could see a 150 percent increase in annual insurance premiums, as well as reductions in available proceeds the HECM (Home Equity Conversion Mortgage) program says Generation Mortgage Company.

“Now is a good time for seniors to take advantage of low rates on reverse mortgages and get the maximum return on the product before the new fiscal year starts this fall,” said Jeff Lewis, Chairman of the Atlanta, GA based reverse mortgage lender.

According to Lewis, starting October 1st, both bills will change the HECM value proposition if approved in their current form.

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“With the upcoming Senate vote, seniors have limited time to take advantage of the current pricing on reverse mortgages,” commented Lewis. “Reverse mortgages provide financial independence to thousands of seniors struggling to sustain their retirement. A majority of our borrowers use reverse mortgages to pay off existing traditional mortgages, and free up much-needed income.”

In early July, the Transportation Housing and Urban Development, and Related Agencies Appropriations Subcommittee met and provided $150 million in funding for the Federal Housing Administration’s reverse mortgage program. The bill passed the full House Appropriations Committee late last month and went to the House of Representatives two weeks ago. In the house, the appropriation was lowered to $140 million, and later passed by a vote of 251 to 167.

The Senate adjourned for the remainder of the year without passing a proposed FY 2011 appropriation for HUD, they’re expected to reconvene in mid September.

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  • Is there any thing new in this article? That does not make it unimportant. It is important that MLOs send the same message to their prospects. Jeff is a bright industry leader with a well timed message for his MLOs’ propspects.rnrnThere are at least three more messages we need to be sending our prospects. The first is, PLFs are guaranteed to go down October 1, 2010 when HUD introduces its new PLF tables based on other comments on this website. The second is that PLFs could go down even further if Congress fails to pass a reconciled appropriations bill which includes HECMs.rnrnThe third and final message is that to get the benefits of the current HECM program, they need to act now. In the past, those borrowers who had FHA Case Numbers before the date of the change, got the benefits of the program as they existed before the change. Remember 9/11 is the date for the change in counseling protocol and some are indicating counseling will slow. If counseling is not completed (with its more stringent rules) and an application has not been taken before 9/30, there is little hope of getting an FHA Case Number before 10/1.rnrnThere are fewer than 50 days before the anticipated program changes occur. Get the word out to your prospects or you and your propects will be in the same boat as you and those prospects were last 10/1. You owe it to yourself and your prospects.

  • There are still some organizations and LO who either don’t believe it or are not educated. All organizations should bring this info to the attention of their LO who will then be able to spread the word. Although, large organizations for what ever reason are not trainning their LO? In the end, there will again be a mad rush the end of Sept just like last year and worse upset confused seniors.

    • 2545,rnrnYou can bring readers good info but you can’t force them to respond. I’m sure there will be complaint after complaint after complaint again this year. But then again, more may listen. Hope springs eternal.

    • Any LO that is not aware of what is happening and hasn’t made prospects aware doesn’t deserve to be trained. LOs are not employees in the typical sense. They are business owners, or at least should be.rnrnWith the overall production pace down this year I wouldn’t expect much of a rush.

      • I agree with you, oldguy49. We should all know what is going on in our business because it is our business. If we are caught by surprise after all the information which has been put in our hands, shame on us!

      • oldguy49,rnrnWe are not business owners. Most of us are commissioned earning employees.

      • Exactly! Nothing will be handed to us and we don’t get paid unless we close loans. We are responsible for how we do. If we aren’t managing our careers like a business man manages his business, we don’t do too well.

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