Fidelis Mortgage Blog

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
The Department of Housing and Urban Development (HUD) announced today via Mortgagee Letter 2015-29, that the lending limits for Reverse Mortgages will remain at $625,500 for calendar year 2016.  This is great news for homeowners with housing values $417,000 and above considering the Reverse Mortgage.  Based on the youngest borrowers age and current interest rates, they are able to access a percentage of their appraised value OR the maximum lending limit (whichever is less).  HUD has extended this "temporary" lending limit of $625,500 every year since 2008. 
Posted in:Reverse Mortgate and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on December 9th, 2015 8:54 PM

The number one thing our Reverse Mortgage clients have in common is the desire to stay in their home and age in place.  If a client calls us and states that they no longer want to remain in their home, the first question we ask is "why"?  If they want to move because they don't like their home, don't like their neighbors (we do hear this believe it or not), or no longer need all of the additional square footage, then the Reverse Mortgage is not going to solve their problem.  If, however, they say they want to move because the home does not meet their medical and/or aging needs, then they may want to consider using the Reverse Mortgage for a home re-model.  Using the proceeds from the Reverse Mortgage, the homeowner can have the modifications done to the property to accommodate their specific needs.  It may be larger door ways for wheel chair accessibility, handicap accessible restrooms, etc..  It could also be a larger modification such as creating "private" space for a in-home caregiver to occupy. Regardless of how major the improvement is, the use of funds from the Reverse Mortgage would give the homeowner the ability to make the structural adjustments to their home and stay where they're comfortable; instead of moving.

Posted in:Reverse Mortgage and tagged: Reverse Mortgage
Posted by Eric Rittmeyer on November 29th, 2015 9:55 AM