Assisting Seniors to Live Life on Their Terms

In the course of the nine years I have been a Reverse Loan Consultant, there have been many changes in the HUD program from simply one loan to several different options.   In the last couple of years, we have seen a Fixed rate become available as well as a reduction in the costs of the loan to the borrower.

The new “Saver” program cuts the costs considerably and gives the senior an option of either a Fixed rate or a Line of Credit.   And there is also an opportunity to use funds from a Reverse mortgage to purchase a home without having to qualify on income or credit.

Here’s a recent update on the volume of business in the Reverse loan industry:

“Reverse mortgage applications increased to 8,149 units during February, up 10.2% from the previous month according to data from the Federal Housing Administration.

While application volumes may not be as high as some would like, it’s up 22.7% from the same period last year.

During February, the seasonally adjusted annual rate for total applications rose 15.6% to an estimated 1,676,800. The actual count of applications was 114,215—9.8% over January which was seriously affected by very bad weather, said the agency. Of the total number of applications, 67,990 were purchase transactions; 38,076 were refinances; and 8,149 were for reverse mortgages.

In February, lenders endorsed 6,904 HECM units with a total max claim amount of $6.904 billion, up 6.8% from January. Of all the endorsements, 6,092 were traditional reverse mortgages, and 117 were for the HECM for purchase. HECM Saver volume continued to increase, reaching 296 units during the month, an increase of 79.4%.

Overall, FHA endorsed 88,269 mortgages with a maximum claim amount of $16.8 billion in February. This included 46,899 purchase money mortgages and 34,466 refinanced transactions.

For the purchase loans, three out of every four mortgages were for first-time home buyers, according to FHA.

With respect to the refinanced mortgage transactions, 16,459 were prior FHA cases and 18,009 were conventional mortgages converting to FHA.”

Reverse Mortgage Daily

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A recent article by NCOA discusses Pres. Obama’s White House budget and how it will effect the senior community due to proposed cuts of 45% in the Community Service Employment Program.

For many seniors, they are using these extra funds from part-time employment to maintain their ability to survive from month to month and without them will experience severe difficulties in paying for their day to day needs.  And on top of this blow, more will come from each state as they look for ways to cut back on spending by eliminating some programs that seniors have come to rely upon.

As much as some seniors don’t want to consider using a Reverse loan to stay in their homes and self-fund their costs of living, they at least have this as an option to increase their cash flow. 

Seniors need to get past their fears about the myths concerning the loan program and take advantage of the free HUD counseling that is available as of this post & find out how a Reverse loan can help them.

Once they have done some research from reliable and credible resources, will they be in the position to decide if using one is right for them.

NOCA:  Obama Budget Slashes Jobs for Low Income Seniors

“Spending cuts included in the White House Budget released this week ”would drastically slash initiatives that empower older Americans to sustain their health and economic independence,” according to a statement from the National Council on Aging (NCOA).

The organization points to a proposed 45% cut in the Senior Community Service Employment Program, which it says is the only major jobs program targeted toward helping disadvantaged older adults who need to remain in or return to the workforce to avoid financial crisis.

The program serves the extremely low income population, and NCOA says the proposed budget cut would lead to the loss of 55,000 part-time jobs, as well as struggle among thousands within the senior demographic who need to remain employed.

“At a time when Democrats and Republicans are both talking about jobs, it just doesn’t make sense to cut the only jobs program for seniors,” said Jim Firman, president and CEO of NCOA. “The unemployment rate just went down in December as 36,000 new jobs were created and now the Administration wants to give them right back.”

Among other points in the budget aimed toward seniors, NCOA expressed disappointment in response to a proposed cut from the the Low Income Home Energy Assistance Program (LIHEAP) budget by almost half, and praise for continued funding for family caregivers under the Older Americans Act.”

NCOA is one resource for home equity and reverse mortgage counseling for seniors.

Written by Elizabeth Ecker

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I know that this isn’t any news when you consider in light of the financial markets crashing in the last few years, but the Boomer generation will not have enough money to retire.   They may not even have any money to fall back on as they age.  The following article discusses the latest figures on this and mulls about the solution.

I feel that the Reverse loan will become a more and more attractive consideration for the Boomer generation.   They are and will be less fearful of it and will consider it to be a logical solution to lack of cash flow as they age and will allow them to remain in their homes and independent.

Baby Boomers: 25% Have No Retirement Savings
February 16th, 2011  |  by eecker Published in News, Retirement, Reverse Mortgage

 
“Retirement savings numbers are falling across age groups, says a November Harris Interactive poll.
The November survey, which included 2,151 adults from around the U.S. found 34% of Americans have no retirement savings and 27% have no personal savings.
For baby boomers, many of whom are quickly nearing retirement age, 25% of those surveyed have no savings for retirement. Of those who are 65 and older, the proportion was 22%.
In terms of portfolio mix, 70% of adults said they have not changed their portfolio mix in the last six months.

Eighteen percent report keeping their retirement investments mostly in stocks and mutual funds and 22% say they keep retirement funds in an equal mix of stocks/mutual funds and investments such as bonds and money market funds.
‘Current economic conditions seem to be driving somewhat less risky investment behavior by Gen Xers, which goes against the grain of traditional investment advice,’ said Harris Vice President of Financial Services Research, Barbara Bertner, of the findings. Those who are closer to retirement age, however, and do not have any savings, may need to seek alternative sources of income or delay retirement.”

Written by Elizabeth Ecker

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I found this to be a very interesting article about the popularity of Reverse loans in Canada.   Their loan program is very limited and does not offer more than one program unlike what we have here in the United States.
January 10th, 2011  |  by Neil Published in International, News, Reverse Mortgage

Reverse mortgage professionals who may look longingly across our northern border at the Canadian market with a mix of envy and puzzlement, may be cautioned that it could be apples and oranges they are comparing. “I am perplexed,” says one reverse originator here in the States, “at how consistently and, at times, rapidly the reverse mortgage product has grown in Canada. It just seems odd to me that two neighboring countries with similar cultures, demographics and needs, are having drastically different growth patterns in a very similar industry,” he laments.

Indeed, the “CHIP – Canadian Home Income Plan,” essentially the only reverse mortgage program in Canada, “has evolved from a niche product and is continuing to garner popularity as a mainstream financial solution,” says Steven Ranson, President and CEO, HomEquity Bank, the single source of the product there since 1986.
But, behind the curtain, one sees as many differences as similarities. In Canada, the minimum qualifying age for a reverse mortgage is 60; there are nearly 7 million Canadians that age or older, out of a total population of 33 million – about one-tenth the size of the U.S.

Then, there is the culture.

“Canadians hate to borrow,“ says Arthur Krzycki, a bank spokesman, noting that “despite face-value similarities between the two markets, the consumer attitudes are different,” including a lack of mortgage interest deduction in the tax laws there. (Proceeds from the CHIP reverse mortgage are received tax-free and are not added to taxable income. When the proceeds are used to purchase new investments, the interest expense of the loan may be used to offset tax on the new investment income and reduce the overall tax payable.)

As of September 30, 2010, the bank’s portfolio comprised approximately 7,800 reverse mortgages with an accrued value of $985 million, secured by residential properties across Canada worth approximately $2.7 billion. Currently, a CHIP reverse mortgage charges prime plus 1.75 percent interest.

“Our product has evolved,” says Krzycki, noting that the biggest changes have come in the last five years, with the introduction of more flexible terms, including rules on how one can take money (lump sum or over time) and how often. These have contributed to gains of 15 percent annually in CHIP, he reports.

According to Ranson, over the coming months, the bank intends to “introduce additional product features that will enable an even broader segment of Canadian seniors and homeowners approaching retirement to put their home equity to work for them.”

Written by Neil Morse

Related Posts
HomEquity Bank Celebrates 25 Years of Reverse Mortgages
CHIP Reduces Reverse Mortgage Interest Rates
Reverse Mortgage Volume Continues To Grow In Canada

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