Fidelis Mortgage Blog

A new law has taken effect on January 1st for Maryland homeowners.  The new law now requires all homeowners to have smoke alarms (FHA already requires carbon monoxide detectors in homes with any form of gas/propane heat, fireplace, and/or attached garage).  More specifically, if your current smoke alarms are hard wired and more than 10 years old, they MUST be replaced with new hard wired devices.  If the home currently has battery-only smoke alarms (more than 10 years old), they must be replaced with new 10 year devices with sealed batteries and a "hush" feature (to silence the alarm temporarily during cooking).  The law states that smoke alarms should be placed on every level of the home and inside every bedroom.

For FHA Reverse Mortgage borrowers, we are recommending the detectors be replaced/installed prior to the property appraisal being ordered.  This will save the borrower from having to pay an additional "re-inspection" fee for the appraiser to revisit the property and confirm proper compliance with the new law. At the end of the day, the overall purpose of the law is to reduce fire related deaths and injuries. 

Please contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com with any questions.

Posted in:Reverse Mortgage and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on January 23rd, 2018 11:07 AM
New year, new lending limits for the federally insured Reverse Mortgage program.  Effective for FHA case numbers assigned on or after 1/1/18, the new lending limit for the HECM program will be $679,650.  Details of the increase were announced with release of Mortgagee Letter 2017-17.  The increased limit for 2018 is welcome news for home owners with higher property values, and means they will be able to access more of their homes equity.  Please contact us at (410) 668-6501 or eric@fidelismtg.com for more information.
Posted in:Reverse Mortgage and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on January 13th, 2018 11:24 AM

On 8/29/17, FHA announced some major changes to the Federally Insured HECM program.  All HECM loans with case numbers assigned on or after 10/2/17, will be susceptible to these new guidelines.  Amongst the changes were a change to the upfront mortgage insurance premium (MIP), a decrease in the annual/ongoing MIP, and a decrease in the Principle Limit Factors (LTV).  To summarize, the upfront MIP is now going to be 2% of the appraised value, the annual/ongoing MIP will be .50% of the loan balance, and the new Principle Limit Factors (LTV's) will see an approximate 10-20% reduction.  These changes were announced with no prior warning or notification from FHA.  The change to likely have the largest negative impact on potential HECM borrowers is the LTV reduction. 

Please contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com for more information 

Posted by Eric Rittmeyer on September 3rd, 2017 9:31 AM

Unfortunately, there are lots of misconceptions tied to when the FHA insured Reverse Mortgage becomes due and payable - and more importantly, how long the heirs have to satisfy the lien.  When the last HECM borrower permanently vacates the property, the Reverse Mortgage must be satisfied.  Lots of borrowers and heirs assume they automatically have one year to satisfy the loan.  That's not accurate.  The FHA guideline gives the heirs 6 months initially to satisfy the lien.  If after 6 months the property has not sold, the heirs can REQUEST up to two, three month extensions (one year total).  I emphasize request, because the lender does not have to grant the extension at that point.  At the one year mark, FHA guidelines give the lender the right to foreclose on the property.  The very first thing the heirs should do upon the passing of the last HECM borrower is contact the lender to notify them, and to inform them of their intentions with the property.  Communication with the lender is truly key.

Please contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com for more information.

Posted in:Reverse Mortgage and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on February 26th, 2017 10:46 AM

When determining how much a borrower qualifies for on a Home Equity Conversion Mortgage (HECM), FHA uses 2 factors - the age of the youngest borrower and the current interest rate.  The lower the interest rate, the higher the LTV or loan to value (a percentage of the homes appraised value).  Reverse Mortgage borrowers have been very fortunate over the last couple of years with interest rates remaining relatively low.  Unfortunately, the industry has seen an increase in rates over the last few weeks.  For borrowers considering the Reverse Mortgage, now might be the time to move forward in order to maximize proceeds.

Please contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com for more information.

Posted in:Reverse Mortgage and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on December 9th, 2016 8:35 AM

FHA announced last week that the lending limit for reverse mortgage's will be increased to $636,150 for calendar year 2017.  This is an increase from $625,500, which was been in effect since 2008.  FHA stated that the increase was implemented due to an increase in home values.  This is welcome news for reverse mortgage borrowers looking to access more of their homes equity.

Please contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com for more information.

Posted in:Reverse Mortgage and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on December 7th, 2016 3:10 PM

It only took 27 years, but as of October 2016, total FHA insured Reverse Mortgage volume exceeded the 1 million mark.  FHA has been tracking all HECM loan volume since it's inception in 1989.  Although the industry has seen a decline over the last couple of years, hitting this impressive milestone is proof that the Reverse Mortgage is here to stay.  Through significant recent guideline changes and educational initiatives to demystify the benefits of the program, the Reverse Mortgage industry is poised to see an increase in volume for the coming years. 

Please contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com for more information.

Posted in:Reverse Mortgage and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on November 9th, 2016 10:37 AM

The federally insured Home Equity Conversion Mortgage (HECM) was introduced in 1988 by Ronald Reagan as a tool used by homeowners 62 and over to access a portion of their homes equity for living expenses.  Since the first HECM settled in 1989, just over 1 million borrowers have taken advantage of this powerful financial planning tool.  One of the payment options available on the Reverse Mortgage is a term payment.  This option has been gaining a lot of popularity with borrowers as a way to "defer" receiving their Social Security benefits until they reach full retirement age.  With a term payment, the borrower receives a set amount of monthly disbursements from the lender for a specified period of time.  This would give a 62 year old borrower the ability to wait 8 years to start drawing on Social Security.  When they turn 70, they stop drawing on the Reverse Mortgage and start drawing on their Social Security which is now maximized by them reaching full retirement age. 

Please contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com for more information.

Posted in:Reverse Mortgage and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on November 4th, 2016 3:25 PM

On 9/27/16, FHA proposed new rules that will change the approval process for potential Reverse Mortgage borrowers.  The new rules would be similar to the way FHA used to approve condos based on "Spot Approval."  In the simplest terms, this would allow individual unit owners to obtain FHA approval, as opposed to requiring the entire association be approved.  An example of the proposed changes is how FHA currently requires approved condos have a minimum of 50% of the units occupied by owners.  With the new rules, this could be adjusted to a more lenient range between 25-75%.

This is welcome news for HECM borrowers that currently are unable to obtain financing because their condo is not approved.  FHA is currently seeking public comments on the 43 page proposal and we're hoping to have more information in the very near future.

Please contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com for more information. 

Posted in:General and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on September 29th, 2016 3:18 PM

On 4/27/15, FHA introduced new underwriting guidelines that now require Reverse Mortgage borrowers to qualify based on income and credit.  A borrower is not required to have a full time job and/or currently be employed, but they are required to document income that shows they make enough to maintain ongoing housing expenses (property taxes, insurance, utilities, etc).  In addition, there's now a credit component that looks closer at credit reports and how property taxes have been paid in the past.  There is no minimum credit score required.  If a borrower doesn't meet these new requirements, it's not an automatic "denial".  FHA established what's called a "life expectancy set aside (LESA)" for these borrowers that don't qualify.  It's essentially an account that is established at settlement to pay for future property taxes and homeowners insurance.  Basically like an escrow account.  There's also an option to "opt in" to the LESA for borrowers who meet all of the guidelines and just want the piece of mind with not having to worry about paying these expenses in the future.  These changes were welcomed by the industry and the overall effect is a more secure program for all parties involved.

Contact Eric Rittmeyer at (410) 668-6501 or eric@fidelismtg.com for more information.

Posted by Eric Rittmeyer on August 30th, 2016 11:11 AM

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