Reverse Mortgage Cover Story in the Washington Times

NewImageReverse mortgages can help a range of people according to an article from the Washingotn Times.

“While few traditional-mortgage borrowers give me a hug after the closing, it is very common to have that happen after we close on a reverse mortgage,” said Chris Warner, a reverse-mortgage consultant with MetLife Bank. “Most people are just so relieved to have that financial pressure relieved.”

Several changes have been made to the product over the last few years, including the release of the Federal Housing Administration’s HECM Saver program.

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“In addition to the saver option for a reverse mortgage, a couple of other changes that have taken place in the past couple of years have created a new enthusiasm for these loans,” Mr. Warner says. “First, a fixed-rate option was introduced, which a lot of people prefer over an adjustable-rate mortgage. Second, a number of lenders, including MetLife, decided to lower the origination fees and servicing fees on a reverse mortgage to make them more attractive to borrowers.”

Cover story: Reverse mortgages satisfy many goals

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  • While it is great to see a prominent story which is not negative about reverse mortgages, it would have been much better if those quoted from the industry had not engaged in presenting their own myths.

    For example too many times, the term income is used to describe proceeds even by originators. Nowhere is the concept of term payouts presented. It seems all monthly payouts are tenure. One originator made it look like tenure payouts cannot be stopped or suspended as long as the senior is still living in the home. Yet declaration of bankruptcy can suspend payouts and what happens if the loan is paid off by the senior and remains in the home to name just a few situations where that is not the case?

    Then there is a new concept thrown out called “total non-recourse.” What in the world is that? Even HUD carefully labeled Mortgagee Letter 2008-38 as “Home Equity Conversion Mortgages (HECMs) – Clarification regarding borrower’s recourse for repayment of HECM loan debt and termination of a HECM mortgage.” But not to worry our originator friend has found a reverse mortgage that is like total non-recourse, dude.

    Then one originator tells seniors that if they take out a home-equity loan or line of credit they will have to pay it down if they later want a reverse mortgage. What nonsense, unless the balance due is greater than principal limit and then only if the senior has no “qualified” cash available to pay down the difference.

    Then there is the dribble that “approval for a reverse mortgage is based on a sliding scale tied to the homeowners’ age and the appraised value of the home.” First of all how is approval based on these factors? No one can even determine what their principal limit factor is based on these two factors alone. Where is the expected interest rate and why wasn’t it at least mentioned? It is now a significant factor in how much seniors can get on an adjustable rate HECM. Worse one originator discusses actual principal limits with no caveat for interest rates. What a mess!!

    This article is a model of what not to say in an interview. There was far more originator myth in this article than clarity. Most counselors would have done much better than this. We need to learn how to speak without cramming our feet down our gullets.

  • I seriously doubt a loan originator from Met Life is approved to make a statement to the press without approval from their legal dept.
    Leave comments in the press to the experts!

    • I agree, most of the larger institutions have a standard policy directing all comments back to the PR dept (although they always give such vanilla replies)

  • What is doubtful from this interview is that the writer went around the country and found the poorest educated originators possible and interviewed them for this article. It shows far too many originators have never taken the time to get to know HECMs.

    If there were violations of corporate policies, then the responding originators deserve to be whacked. NRMLA please take note. There needs to be minimum education standards for the industry.

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