BUSH Signs the Housing Bill: It's Now The Law
IT'S THE LAW: BUSH SIGNS THE NEW HOUSING FORECLOSURE AND RESCUE BILL
AROUND 7:00 AM THIS MORNING.
"Bush signed the measure in the Oval Office shortly after 7 a.m. EDT with his economic team on hand, including Treasury Secretary Henry Paulson who helped negotiate the package with the Democratic-controlled Congress." (Reuters 7-30-2008)
At last, the new Housing Bill is law, and HUD, FHA and other involved agencies will be busy putting the new programs into effect. While some of them will not be effective until October 1, 2008, we should all be preparing for using these new programs. A few of the Reverse Mortgage changes may come quickly, as FHA only needs to send out a new mortgage authorization letter putting the new loan amounts and commissions into effect. But the documentation for Co-ops and home purchases may take a bit longer.
For senior citizens, and also Realtors, now is the time to begin planning for the changes and start our work to make sure we are ready to implement them.
For the Reverse Mortgage the changes will be:
1. A single national loan limit of $417,000 that can increase up to as much as $625,500 in high cost areas. (Currently, limits vary by county and range from $200,160 to $362,790.)
2. Ability to use FHA insured reverse mortgages to purchase homes.
3. Ability to get a HECM on a co-op property.
4. Reduced origination fees of 2% on the initial $200,000 of maximum claim amount (lesser of the home value or county lending limit) and 1% on the balance thereafter with a cap of $6,000.
5. Prohibitions on requiring the purchase of annuities and other financial products6. Restrictions around cross selling financial products.
7. Requirements on counseling protocols, funding and practices that promote independence and quality in counseling.
REALTORS:
The Reverse Mortgage is now a tool that will be of assistance to you to help your older clients downsize, and move to an area they have been wishing for.
Often the elderly have not had enough equity when they sell their current home to purchase a home of their choice in this area, or another place, such as in a retirement community. And, because of their lowered income, they could not qualify for a loan for the difference between their down payment (equity from old home) and the cost of the new home.
Now they can sell their home, use all or part of the equity as a down payment, and get the balance from a Reverse Mortgage. Between the down payment and the Reverse Mortgage the house will be paid for, and the new Reverse Mortgage borrower will not have any loan payments.
In addition there is no qualifying for the Reverse Mortgage. The Reverse mortgage does not require any credit score, does not check into assets or reserves.
And, the Reverse Mortgage is a non-recourse loan. In other words the borrower/homeowner may have assets in stocks, CD's, other real estate, but in that case, when they leave the new home by moving or death, and if the amount owed is greater than the value of the home, none of their other assets can be used to pay off the Reverse Mortgage.
At the end of the Reverse Mortgage, normally there is a great deal of equity. The heirs may refinance the home, or sell it. And FHA not only gives them up to a year to sell the home (more in a bad market), but FHA contributes 7% in closing costs.
In other words, the payback of the loan is 93%. The balance at the end is the total of the origination costs, principal used and accrued interest.
If you have questions, please call me at 703/244-8151. In addition I will be posting more details in the days ahead.
SENIORS:
Many seniors have not been able to qualify for a Reverse Mortgage large enough to pay off their current loan. With the increase to $417,000 up to $625,000 in high cost areas, many more senior homeowners will be eligible for this mortgage.
Another boon is that the new FHA Loan amounts will no longer be governed by the county one lives in. The new, larger loan amounts are the same throughout the country.
For many seniors who have a reverse mortgage from the 1990's or early 2000's, their home, in spite of the recent real estate turn down, is very likely much higher in value, and the senior is older.
Both these facts would indicate that it might be worth their while to investigate whether it would be financially worthwhile for them to refinance the older loan.
The amount of the Reverse Mortgage is based on the value of the property, the interest rate and the age of the borrower. Depending on these factors, the borrower is eligible for a percentage of the FHA cap. With such a huge increase in this borrowing cap (from $210,000 - $372.790 depending on the county) up to $417,000-$625,000 it is possible current Reverse Mortgage holders may be able to obtain a new influx of cash.
We have been waiting for this legislation regarding Reverse Mortgages to happen since April of 2007...and now the new opportunities are here.
One very important note of caution: Make Sure You Check Out Your Loan Officer and Your Lender. Do not let anyone take advantage of you, and make sure you understand every facet of this new improved Reverse Mortgage.
A good place to check for an ethical and professional reverse mortgage expert in your area is to go to the National Reverse Mortgage Lender Association (NRMLA) at http://www.reversemortgage.org/ . On this page are directions for selecting approved lenders.
NRMLA is the Reverse Mortgage industry trade organization and oversees the ethics, professionalism of lenders, as well as representing the industry before Congress.
Please call me if you have any questions.
Gloria
703/244-8151
IT'S THE LAW: BUSH SIGNS THE NEW HOUSING FORECLOSURE AND RESCUE BILL
AROUND 7:00 AM THIS MORNING.
"Bush signed the measure in the Oval Office shortly after 7 a.m. EDT with his economic team on hand, including Treasury Secretary Henry Paulson who helped negotiate the package with the Democratic-controlled Congress." (Reuters 7-30-2008)
At last, the new Housing Bill is law, and HUD, FHA and other involved agencies will be busy putting the new programs into effect. While some of them will not be effective until October 1, 2008, we should all be preparing for using these new programs. A few of the Reverse Mortgage changes may come quickly, as FHA only needs to send out a new mortgage authorization letter putting the new loan amounts and commissions into effect. But the documentation for Co-ops and home purchases may take a bit longer.
For senior citizens, and also Realtors, now is the time to begin planning for the changes and start our work to make sure we are ready to implement them.
For the Reverse Mortgage the changes will be:
1. A single national loan limit of $417,000 that can increase up to as much as $625,500 in high cost areas. (Currently, limits vary by county and range from $200,160 to $362,790.)
2. Ability to use FHA insured reverse mortgages to purchase homes.
3. Ability to get a HECM on a co-op property.
4. Reduced origination fees of 2% on the initial $200,000 of maximum claim amount (lesser of the home value or county lending limit) and 1% on the balance thereafter with a cap of $6,000.
5. Prohibitions on requiring the purchase of annuities and other financial products6. Restrictions around cross selling financial products.
7. Requirements on counseling protocols, funding and practices that promote independence and quality in counseling.
REALTORS:
The Reverse Mortgage is now a tool that will be of assistance to you to help your older clients downsize, and move to an area they have been wishing for.
Often the elderly have not had enough equity when they sell their current home to purchase a home of their choice in this area, or another place, such as in a retirement community. And, because of their lowered income, they could not qualify for a loan for the difference between their down payment (equity from old home) and the cost of the new home.
Now they can sell their home, use all or part of the equity as a down payment, and get the balance from a Reverse Mortgage. Between the down payment and the Reverse Mortgage the house will be paid for, and the new Reverse Mortgage borrower will not have any loan payments.
In addition there is no qualifying for the Reverse Mortgage. The Reverse mortgage does not require any credit score, does not check into assets or reserves.
And, the Reverse Mortgage is a non-recourse loan. In other words the borrower/homeowner may have assets in stocks, CD's, other real estate, but in that case, when they leave the new home by moving or death, and if the amount owed is greater than the value of the home, none of their other assets can be used to pay off the Reverse Mortgage.
At the end of the Reverse Mortgage, normally there is a great deal of equity. The heirs may refinance the home, or sell it. And FHA not only gives them up to a year to sell the home (more in a bad market), but FHA contributes 7% in closing costs.
In other words, the payback of the loan is 93%. The balance at the end is the total of the origination costs, principal used and accrued interest.
If you have questions, please call me at 703/244-8151. In addition I will be posting more details in the days ahead.
SENIORS:
Many seniors have not been able to qualify for a Reverse Mortgage large enough to pay off their current loan. With the increase to $417,000 up to $625,000 in high cost areas, many more senior homeowners will be eligible for this mortgage.
Another boon is that the new FHA Loan amounts will no longer be governed by the county one lives in. The new, larger loan amounts are the same throughout the country.
For many seniors who have a reverse mortgage from the 1990's or early 2000's, their home, in spite of the recent real estate turn down, is very likely much higher in value, and the senior is older.
Both these facts would indicate that it might be worth their while to investigate whether it would be financially worthwhile for them to refinance the older loan.
The amount of the Reverse Mortgage is based on the value of the property, the interest rate and the age of the borrower. Depending on these factors, the borrower is eligible for a percentage of the FHA cap. With such a huge increase in this borrowing cap (from $210,000 - $372.790 depending on the county) up to $417,000-$625,000 it is possible current Reverse Mortgage holders may be able to obtain a new influx of cash.
We have been waiting for this legislation regarding Reverse Mortgages to happen since April of 2007...and now the new opportunities are here.
One very important note of caution: Make Sure You Check Out Your Loan Officer and Your Lender. Do not let anyone take advantage of you, and make sure you understand every facet of this new improved Reverse Mortgage.
A good place to check for an ethical and professional reverse mortgage expert in your area is to go to the National Reverse Mortgage Lender Association (NRMLA) at http://www.reversemortgage.org/ . On this page are directions for selecting approved lenders.
NRMLA is the Reverse Mortgage industry trade organization and oversees the ethics, professionalism of lenders, as well as representing the industry before Congress.
Please call me if you have any questions.
Gloria
703/244-8151
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Thank you for posting this information. Please let us know if you hear any additional information about a reverse FHA mortgage mortgagee letter.
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