Reverse Mortgage News

One of the things that you may not take into consideration when doing financial planning but which undboutedly has an underlying impact on your choices is the structure of your family. A recent article has taken a look at three common family structures - traditional families, blended families and single woman families - with regards to how the structure itself impacts the financial planning that is done by the head(s) of the household.

What was interesting to find was that financial planning differed greatly among people from different types of family structures but that plans for use of the reverse mortgage to supplement income did not vary significantly between the three types of family structures. The only difference was in the percentage of people who had this option available to them (a single woman is less likely to own property than is a traditional or blended family). Those homeowners in all categories did, however, consider the reverse mortgage to be an important tool in financial planning regardless of the other financial decisions they would be making.

Question of the Day: Why does the reverse mortgage remain a constant between family structures when other financial planning options do not?

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One of the major concerns that people have regarding the prevalence of the reverse mortgage loan among seniors today is that these seniors are going to be taken advantage of by predatory lenders who want to close the reverse mortgage deal at all costs. This is a concern in all countries where the reverse mortgage is an option and each of these countries are doing different things to try to keep their seniors safe.

New Zealand has just entered the market of trying to keep reverse mortgages safe by releasing a "code of practice" for reverse mortgage arrangements that take place there. The code of practice establishes a guideline of basic principles which should be followed during reverse mortgage arrangements - principles such as making sure seniors are fully informed and understand the transaction and that the reverse mortgage loan can't exceed the total amount of home value.

The code of practice is currently a voluntary code that reverse mortgage lenders can choose to follow if they desire. It may become mandatory in the future. This is beneficial to assisting seniors in choosing the lenders that are going to be the most honest in their reverse mortgage transactions and is one method countries may use to keep their seniors safe.

Question of the Day: Which country has the best practices regarding reverse mortgages in terms of keeping seniors safe?

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President Bush recently passed a Housing Bill that has a definite impact on the reverse mortgage laws in this country (something discussed here in the past). For those people who haven't closely read about this topic, here are the seven major things that you need to know regarding reverse mortgage rules under the new law:

1. Remember that you will be relinquishing equity in your home.

2. The amount available to borrow has been increased with the new law but is still limited to between $400,000 and $600,000 depending on the area where the home is located.

3. Know that there are fees attached. These were previously exorbitant but have now been moderated. They are still there and still somewhat high.

4. You still are required to get reverse mortgage counseling before obtaining the loan.

5. The law limits the ability of predatory lenders to oversell you on the product but there is still some risk that this may take place so be aware of aggressive lending practices.

6. Remember that you must still continuing paying house costs like the property taxes on the home even after getting a reverse mortgage.

7. Know what will happen when you sell the home.

Question of the Day: Do these seven points cover everything that you need to know about how the reverse mortgage is impacted by the new Housing Bill?

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One of the biggest problems facing seniors today is that they are living long enough to require long-term care in or out of the home as they age and that they need to find a way to pay for this care. One of the leading ways to do so seems to be to obtain a reverse mortgage loan to assist with making long-term care payments either for care in the home or for care of one spouse outside of the home.

One report says that there are five major ways that seniors choose to fund their long-term care. These ways include long-term care insurance, personal savings and government assistance. And they also include the use of the reverse mortgage loan to come up with the money to pay those bills.

The one caveat to keep in mind is that the reverse mortgage borrower must remain in the home as the primary residence or the reverse mortgage may no longer be applicable and the funds borrowed may become due. This means that the long-term care financed by the reverse mortgage may require the individual to receive that care in the home.

Question of the Day: Is the reverse mortgage a good method of paying for long-term care?

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Everyone in the country seems to be talking about the new Housing Bill that President Bush recently signed in to legislation. Considering the housing economy slump over the last few years, this is no surprise. But the conversations that are taking place seem to be mired in confusion because people don't clearly understand what the new changes mean for them.

One report indicates that there are five major questions that keep coming up again and again among people concerned about the impact of the Housing Bill. Those questions are:

1. Why do Fannie Mae and Freddie Mac get assistance from the government from this bill?

2. Which homeowners qualify to refinance their existing mortgages under the new bill?

3. What are the details of the homebuyer tax credit written into the bill?

4. What else do I need to know that's in the fine print of this bill?

5. How does the bill impact reverse mortgages?

It is important to realize that the Housing Bill improves the reverse mortgage loan for seniors. Apparently people remain confused about what this all means. Those people who are considering reverse mortgage loans should discuss the impact of the bill with their reverse mortgage counselors.

Question of the Day: What is causing confusion regarding the reverse mortgage aspect of the new Housing Bill?

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It can not be stressed enough that you really need to understand what you are getting in to when you opt to take out a reverse home mortgage. These loans are really great for most borrowers if they are used properly but they can turn ugly really fast if you don't make good choices when utilizing the loan.

For example, there is a Q&A online today exploring the situation of an eighty five year old woman who is at risk of being evicted from her home because of failures she made with the reverse mortgage. No, she didn't get a bad reverse mortgage loan from a predatory lender. She just didn't seem to know what she was doing when she got the loan.

Apparently this woman has failed to make basic maintenance and assessment charges since getting the reverse mortgage loan. The home owner remains responsible for all of the fees associated with the home even after taking out a reverse mortgage. It is important for all borrowers to realize things like this so that they don't end up in a bad reverse mortgage situation. The reverse mortgage really is supposed to make your life easier, not harder!

Question of the Day: Why do so many seniors fail to understand the terms of their reverse mortgage loans?

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One of the questions that many people have about their reverse home mortgage loans is "what actions or non-actions will trigger the reverse home mortgage loan to come due?" These people often worry that staying in the home too long after getting a reverse mortgage loan is going to cause them to get kicked out of the home or to have to pay their reverse mortgage loan back. This isn't the case.

As pointed out in a recent reverse mortgage blog post, there are basically three different situations which can cause your HECM reverse mortgage to come due:

1. Death of the person who took out the reverse home mortgage loan. In the case of spouses, death of the last spouse remaining. At this time, the reverse mortgage comes due and the remaining family members must deal with the decision about what to do with the home.

2. Leaving the home. When the borrower chooses to leave the home via sale of the home or is forced to leave the home for more than one year because of ailments or other responsibilities, the home ceases to be considered the primary home of the borrower and therefore the reverse mortgage loan comes due.

3. Failure to maintain or make payments on the home. It is the borrowers responsibility to keep the home up to liveable standards and to pay things like property taxes. Failure to do so can result in required repayment of the reverse mortgage loan.

Barring these three basic situations, the reverse home mortgage borrower should be able to remain comfortably in the home without having to repay the reverse mortgage.

Question of the Day: Are there any other situations that would trigger repayment of a traditional HECM reverse mortgage loan?

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If your elderly parents find that they are struggling with financial problems then they might seek to get a reverse mortgage loan. In doing so, they are most likely going to go to their local bank or mortgage lender to get information about the loan. But what if you actually have the money to give to them? It may be possible to set up a private reverse mortgage loan for your parents.

There is a new service that sets up intrafamily loans so that the details of the loan are made official. One of the types of loans that this service offers to families is the reverse mortgage loan. Families can set up this type of loan for their parents to use without requiring them to go through the actual bank process.

It seems like this would eliminate one of the major problems which accompanies the reverse home mortgage loan which is that the home loan must be repaid at the time of the borrower's death (or leave from the house) and that this often means that adult children don't inherit the homes that they once thought they would.

Question of the Day: How does a private reverse mortgage loan from a family member differ from a traditional reverse home mortgage from a bank?

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In addition to the traditional reverse home mortgage that is available to borrowers age 62 and older, there are also alternative reverse mortgages that offer more flexible terms for borrowers that may not yet qualify for a traditional home mortgage. These alternatives function like a reverse mortgage in many ways but have a distinct difference - they give the lender a percentage stake in the home which goes to them at the time of the home sale in exchange for the up front money the lender gives to the borrower today.

One of the things that you always hear about the reverse mortgage is that it is very important that you know what you are getting in to when you get this type of loan. The same is at least as true, if not more so, with reverse mortgage alternatives. That's because there are some significant drawbacks and considerations that have to be looked at and understood before you can determine whether or not the reverse mortgage is a good thing.

Learn more about reverse mortgage alternatives and how to weigh their pros and cons here.

Question of the Day: What would be your biggest concern when getting a reverse mortgage alternative loan?

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The reverse home mortgage loan is a popular financial tool for people who are living in the United States today. There are also several other countries where the reverse mortgage loan has grown in popularity in recent years (with India and Australia topping that list). Now we are starting to see the reverse mortgage loan creep in to other parts of the world as well.

The most recent report of the reverse mortgage launching in a foreign country comes from Romania. A company called HILD Management which is based in the United States has entered the Romanian financial market to offer what is basically a reverse home mortgage to seniors living there who are "asset rich but cash poor".

Some people believe that the reverse mortgage loan is a bad loan that preys upon seniors and are therefore upset to see that the reverse mortgage is coming to other parts of the world. However, the reverse mortgage loan has helped a large percentage of seniors in the United States and there are people living in countries like Romania who would like this help as well.

Question of the Day: Is it a positive thing or a negative thing that U.S. lenders are bringing the reverse mortgage loan to other countries?

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One of the countries other than the United States that regularly publishes headlines about the reverse home mortgage option available to seniors there is India. However, new reports indicate that very few people in the country are choosing to take advantage of the reverse mortgage loan despite all of the media coverage that these loans have gotten in recent months.

"Only 2,000 senior citizens across the country have received loans against their houses under the reverse mortgage scheme that has been introduced by various banks this year. Among the 18 banks and two housing finance companies offering the scheme, State Bank of India alone has extended a majority of the 1,900 loans." (source)

There could be many different reasons that the reverse mortgage loan hasn't quite taken off in India yet including the fact that the loans are relatively new there. These loans didn't take off in the United States until the last couple of years even though they had been available to seniors prior to that time. It may just take time for people to trust the benefits of the reverse mortgage in countries where it is still a relatively new lending process.

Question of the Day: Will the reverse mortgage loan ultimately take off in India?

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A group called the Rural Dynamics Inc. Consumer Credit Counseling Services based in Montana is trying to help residents of the state to become more economically independent in a wide variety of different ways. The group addresses the needs of all different types of people in the community. When considering the needs of seniors, the group realized the importance of the reverse mortgage to the senior community today and determined that it was important to offer reverse mortgage counseling classes as part of the program.

The group isn't a new group; it's been around for four decades. However, it has had to shift with the times to address the changing needs of the fluctuating economy and to provide options to people based on the choices that are available to them now. The reverse mortgage is something that people weren't looking at forty years ago but which is a really important part of the plan for economic independence for many post-retirement seniors today.

Question of the Day: Is the reverse mortgage loan a tool for gaining economic independence?

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The reverse mortgage blog called Let Your Home Pay You points out something really important about the federally-funded HECM reverse mortgage loan: it is a non-recourse loan. What this means is that people who get this type of reverse mortgage loan are not personally held responsible for repayment of the loan. The home itself is what is used to pay off the loan but the individuals living there aren't otherwise responsible for paying back the loan.

This is an important thing to think about when considering a reverse mortgage loan. Most people do get HECM reverse mortgage loans but some people opt instead to get private reverse mortgage loans. These private reverse mortgages may not be non-recourse loans which could mean that the borrower or the borrower's heirs would end up personally liable for repayment of the loan, something you definitely don't want to happen with the way that home values are changing!

Question of the Day: What is the value of getting a non-recourse reverse mortgage loan?

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