Whatever Happened To Reverse Mortgage Volume? Waiting for the New Rules! ALSO SHELBY SAYS NO BAILOUT AGREEMENT

By Megan Ainscow and edited by Nancy Girgis©CEP News Ltd. 2008
MortgageNewsDaily.com 9-25-2008

Senator Shelby Says No Agreement Reached on U.S. Treasury's Bailout Plan

Speaking after a meeting with President George W. Bush, Senator Richard Shelby said he does not think an agreement has been made on the $700 billion bailout plan proposed by the U.S. Treasury earlier this week.

"We ought to look at alternatives" to the plan proposed by Treasury Secretary Henry Paulson, Shelby said, adding that there are a lot of different opinions on the bailout plan.

The announcement came as a surprise considering that House Financial Services Committee Chairman Barney Frank said both House and Senate Democrats have agreed on a version of the bill.

House Speaker Nancy Pelosi also said that the White House has agreed to the principles of the democratic bill.

Richard Shelby is a ranking Republican on the U.S. Senate Committee on Banking.

WHAT ABOUT REVERSE MORTGAGE VOLUME??

Notes:

The posted article below makes some excellent and pertinent points on how valuable reverse mortgages are, and how they can help out the retiree in this messed up economy.

I think a large part of the low volume in Reverse Mortgages this year is due to the tedious, tedious waiting for the FHA Moderization Act, included in the larger Housing and Rescue Bill, to become effectivbe on October 1st. The Housing and Rescue Bill passed on July 30th.

If truth be told, seniors have been waiting for the changes since December, 2007, when the FHA Modernization Bill was passed. Then the two Houses of Congress had to reconcile language and that took us into February 2008; suddenly the FHA Modernization Bill was put into the controversial Housing and Rescue Bill, signed July 30th by the President, and deemed to go into effect on Octobert 1st.

So, far we believe it will be effective then; however, there is an interagency dispute on how the HUD's Single Family Housing division is reporting it's statistics on Reverse Mortgages, versus how the GAO (Government Accounting Office) desires them. Will that hold up the effective date of the new Reverse Mortgage? No one knows, yet.

But, given no information to the contrary, the New Reverse Mortgage will:

Have lower Origination Fees.

The Nationwide Cap will be a minimum of $417,000 (instead of ranging from $210,600 - to
$362,790 on a county by county basis).

For High Cost-Areas, FHA is empowered to raise the Reverse Mortgage Limit to $625,000. The industry has not heard, yet, how the $625 will be implemented, or if it will be before 1/1/2009.

Purchasing Power. To date the Reverse Mortgage has only been allowed to be used as a refinance - to help seniors pay off their current mortgages and/or tap into their home equity.

NOW, the Reverse Mortgage will be able to be utilized to PURCHASE a home.

EXAMPLE: A lot of retirees were planning on selling their homes and using the equity to buy a smaller home. But with the slumping prices, many found that they no longer had the equity to buy a smaller home, and didn't qualify for a forward, purchase loan.

Now, if your equity is less, you can combine it with a Reverse Mortgage to purchase a home, and still have no mortgage payments. This is going to be a tremendous boon to seniors who have been waiting to get out of their 'too large' family home, and buy that dream retirement home, and not have to touch savings, or use monthly income for payments

.
In addition, the new FHA Modernization Bill now will include Co-Ops in their program. Prior to this change only co-ops in New York City were allowed.

There have also been some additional changes made that make it easier to do a Reverse Mortgage on mobile or modular home.


WHATEVER HAPPENED TO REVERSE MORTGAGE VOLUME?
By: Reverse Mortgage Breaking News
September 25, 2005

Given the state of the economy — not-so-good, bordering on outright collapse if we are to believe federal officials — you might think that reverse mortgages would be as popular as winning lottery tickets.

To get a reverse mortgage backed with FHA insurance you do not need a particular income, a job or a good relationship with a bank. Instead, you need to be age 62 and above, sentient and the owner of a prime residence which holds real estate equity. What you make per week or per month is irrelevant, a not-so-minor consideration in a year when 9.4 million people are unemployed.

Given this background you might think that reverse mortgage borrowing would be strongly on the rise. How could that not be the case?

Well, interestingly, it is the case.

Through September 15th, HUD reports that it has endorsed 107,074 home equity conversion mortgages (HECMs). That’s up 3.5 percent from the same period a year ago.The reverse mortgage results contrast sharply with FHA activity in general: So far in fiscal 2008, says HUD, the FHA has endorsed 1,119,430 mortgages, an increase of 159.7 percent.

You have to wonder about this: In a weak economy a reverse mortgage can be very attractive because it’s debt without the need to make current payments. That’s much better than a forward mortgage where a payment is due without fail every month.

A reverse mortgage is also a financial device which can be used to avoid foreclosure. In the right circumstances, a senior property owner can refinance an existing loan with a reverse mortgage and wind up with a house that does not require huge monthly payments. For a growing number of people that could be the difference between foreclosure fears and no foreclosure worries.

No less important, a reverse mortgage is insured by the U.S. government, If a reverse mortgage lender fails and you’re owed money, the government will pay up. Guaranteed.

So why the modest showing with reverse mortgages?

I suspect some loans have been lost because of declining home values and thus declining amounts of equity. As well, the mortgage market in general looks fairly foreboding for anyone who reads the daily paper. Lastly, some reverse mortgage lenders have gone under and with them potential loan sales.

Will things change in fiscal 2009, a period that begins October 1st? Perhaps that will be the case given that origination fees are falling under the FHA reform measure passed by the Congress over the summer.