by Jeffrey Bangerter
03 January 2013
Here is a simple, visual way to see how your home with a Reverse Mortgage is effected.
How A Reverse Mortgage Works.
by Jeffrey Bangerter
03 January 2013
Here is a simple, visual way to see how your home with a Reverse Mortgage is effected.
New California Reverse Mortgage Loan Amounts for August 2014
Nobody these days can afford to neglect that all important retirement planning and it is important to review your current provision for retirement. The mettle of seniors is tested because sometimes their long term security, an essential ingredient of their economic life, is jeopardized by not having enough funds to tide them over. Reverse mortgages are complicated financial products and in California, a reputable Sacramento Reverse Mortgage expert can guide seniors on making a reverse mortgage a useful financial tool; which will afford them a better retirement. Their beauty lies is the fact that the loan doesn’t have to be paid back until the borrower dies or moves out their home.
A Violation of Federal Law
A Sacramento Reverse Mortgage expert can advise and help homeowners to tap into the equity they have accumulated in their home. To qualify for a reverse mortgage you had to be 62 years of age or older, you needed to own your home or have substantial equity in the property and you needed to occupy the property as your principal residence.
Reverse mortgages have always been that once the borrower died, the surviving spouse had to repay the loan immediately. The law has changed with the federal court ruling that this HUD regulation violates federal law. Now under the new HUD guidelines, the non-borrowing spouse may remain in the home after the borrower has passed away. For more info click here.
Receive Some Extra Income in Retirement
These loans allow seniors to access a portion of the equity in their homes which will then supplement their retirement income and can be used for anything they desire. In 2014 the Department of Housing and Urban Development (HUD) announced that the rules for borrowers wanting to get a reverse mortgage were changing; and not only will borrowers who are older than 64 see their benefits increase, reverse mortgage loans are possible now for anyone where the one borrower doesn’t meet the traditional 62 year old age requirement.
The new rules say a couple can get a reverse mortgage even if just one spouse is over 62. In the past it meant that some couples where one spouse was younger than 62 only put the older spouse’s name on the reverse mortgage. Now the size of a married couple’s payout will be based on the younger spouse’s age even it their name isn’t on the mortgage’s title. This new change equates to less risk for lenders and non-borrowing spouses.
A Sacramento Reverse Mortgage Lawyers Warns of the Risks
It is important for any senior in Sacramento thinking of taking out a reverse mortgage to be cautious about risks. Investment issues; changing an investment portfolio are areas fraught with frustrations for the older generation and there is nothing wrong in proceeding cautiously; knowing the risks. A Sacramento Reverse Mortgage expert offers advice and tips to seniors before signing any HECM loan agreement and explain to seniors the new rules governing reverse mortgages.
The new Federal Housing Administration (FHA) program is giving seniors new hope; new ways to use equity in their homes. HUD policy requires now that FHA-backed reverse mortgages allow the non-borrowing spouse to remain in the home after the borrower dies as long as the non borrowing spouse is named in the loan documents; is married to the borrower at the time of the loan closing; their spousal status is disclosed at the time of closing; meets all obligations laid out in the loan documents and establishes legal ownership within 90 days of the death of the last surviving borrower. Failure of the non borrowing spouse to meet these requirements, the loan becomes due and payable.
Unwary Investors Need Advise and Guidance
Reverse mortgages have had negativity surrounding them, and it is advisable that each borrower, more so those with a spouse under the age of 62, contact a reliable and trustworthy Sacramento Reverse Mortgage Solutions expert to advise them, as unwary investors, on how to plan financially for all the different seasons of their life.
A reverse mortgage is a type of loan where an owner of a home can borrow money against the value of his home. Homeowners usually defer paying off the loan until they move out of the home, sell the home or die.
Initially, couples with a spouse that was under the age of 62 could not get a reverse mortgage. Even some lenders would recommend that they (the younger spouse) should be taken off the title. Studies even show that many seniors, who enter the reverse mortgages, are not well conversant with the terms and conditions associated with the loans and this is where lenders would take advantage.
The amount of money you borrowed with reverse mortgages depends on many factors, which includes age of the borrower. A borrower is entitled to less money if he or she has a younger spouse and has him or her included in the loan. Due to this, mortgage brokers have had a habit of advising homeowners to quitclaim the property to the older spouse and exclude the younger spouse with the aim of increasing the amount of loan. Shocks come thereafter when the borrower of the loan dies and the surviving younger spouse who wasn’t named in the loan is required to loan repayment and if he or she fails, the property is foreclosed.
Housing and Urban Development (HUD) allowed lenders to demand repay of the reverse mortgages after the death of the borrowing spouses. This led to claims that the regulations from HUD violated federal law because they did not give protection to non-mortgagers who were not supposed to repay the loans.
Regulations from the program (Home Equity Conversion Mortgage) stated that when mortgagers died, loans were due and payable even if there existed a surviving non-borrowing spouse.
But now, regarding to the letter written on April 25th of 2014 about Home Equity Conversation Mortgage Program – Non-Borrowing Spouse, written by the US department of Housing and Urban Development to all approved Mortgages all non-borrowing spouse will remain in the home even after the death of the borrower and the loan will be deferred from repayment as long as:
Loan documents show the names of the non-borrowing spouse.
At the time of closing, there is disclosure of the spousal status.
At the time of loan closing, there should be evidence to show that the non borrowing spouse was married to the borrower and remained married for the duration of the borrower’s lifetime.
Within 90 days (approximately three months) of the death of last surviving borrower, there must be a establishment of legal ownership by the non borrowing spouse.
All the obligations as described in loan documents should be met by the non-borrowing spouse.
However, if the non-borrowing spouse does not meet even one of the requirements, the loan then becomes due and payable. It has been noted that this is a problem for spouses, both expecting and those facing foreclosures are still unresolved once their spouses die.
When taking a reverse mortgage, you are advised to proceed carefully. It is also required for you to attend counseling sessions before you sign the loan documents. Additionally, familiarize yourself with the new rules pertaining reverse mortgages.
Today younger spouses will no longer have to worry about unnecessary requirements such as age. With this new unveiled reverse mortgage system they will have the freedom of enjoying the mortgage plans and be sure to work with a professional lender. With the aid of well sought information from this website, reverse mortgage guidance is only a click or call away.
Some improvements on the Adjustable Rate Reverse Mortgage, watch this short video:
I met with a couple both age 66 this week and they have enough money to make it to age 79 at which time they no longer have any money. They currently have around $75,000 and they spend around $5,000 a month to live their lifestyle. The reverse mortgage allows them to live with their current finances to age 97, I think that should be long enough for most people.
This is just one example of how the reverse mortgage has changed the life of a couple to allow them comfort in their retirement. Using someone that understands retirement planning to help you see if a reverse mortgage is the right solution can help you make an informed choice.
As a provider of California Reverse Mortgages from my Sacramento Reverse Mortgage Location I can help anyone that is ready for a Reverse Mortgage in California.
New California Reverse Mortgage Loans Make sure a Borrower can Repay
Available to homeowners 62 years of age and older, a reverse mortgage loan allows seniors to convert some of the equity in their home to cash. California reverse mortgage loans are varied, and a reputable loan originator is able to discuss how each one works. The idea is to assist retirees to make use of the wealth of their homes in order to take care of issues around failing health, to enjoy an overseas trip or even just basic monthly living expenses. The loans allow seniors to stay in their homes and turn their equity into tax-free cash. The beauty of these loans is that seniors are not required to pay back the loan until they leave the home and it is sold. While they are occupying the home they don’t have to make any monthly payments towards the balance of the loan but they do have to keep up with homeowners insurance and property taxes.
Borrowers Cashing out Significantly Less than Before
The changes in California Reverse Mortgage loans have meant them being more pricier than ever. The changes in rules will significantly reduce the number of borrowers eligible to draw down cash against the value of their homes and to this end senior homeowners are rushing to beat the deadline.
Borrowers will no longer get out as much of their home equity as they once were able to. Borrowing costs are getting higher while the loan amount is shrinking. With the new rules, retirees will be cashing out some 10 – 15% less of their equity than HUD has always allowed. The Department of Housing and Urban Development is also wanting borrowers to undergo financial assessments and are also looking at their credit score too which means not everyone can take out a loan and they can’t just borrow any amount either.
The Amount You can Borrow is Less
The federal government, in at effort to strengthen the federal Home Equity Conversion Mortgage program, is busy reigning in on rules around reverse mortgages, making it harder than ever for seniors to get these mortgages and also reducing the amount of their home’s value that they can take out. It is time to act now because the tighter limits means that seniors are not going to find it as easy to borrow as much on a reverse mortgage as they have in the past.
Reverse mortgage borrowing limits will further be lessened when interest rates rise again, and it would be prudent to take advantage of a reduced loan origination fee and to get started on a reverse mortgage loan before the end of March 2014.
Jeffrey Bangerter NMLS# 18361 is a California Reverse Mortgage Loans Originator offering reprieve.
Don’t Waste Any Time
Reverse mortgages are somewhat more expensive than other home loans, and with the Reverse Mortgage Stabilization Act mandating fee increases , they are even more pricier than ever. Jeffrey Bangerter is currently offering a $1,000 discount on California Reverse Mortgage Loan Origination Fees and this offer continues till the end of March.
Changes have been made to the structure of the loans, but you are still able to get your loan without financial qualification. Are you looking for a better, brighter future and financial independence? A reputable, ethical and reliable California Reverse Mortgage loans provider is offering you the chance to save money with this amazing exclusive offer and to reach out to enjoy the life you deserve as seniors.
March Madness Begins Now!
I am offering a $1,000 discount on California Reverse Mortgage Loan Origination Fees for California Reverse Mortgages started from today through the end of March 2014.
There are new Reverse Mortgage products available and you can still get your loan without financially qualification. The government is still waiting to implement the financial qualification on Reverse Mortgages so now is the best time to get your loan started.
As a Sacramento Reverse Mortgage Loan provider I offer California Reverse Mortgages anywhere in California, so give me a call and let’s get you your discounted fee!
California Reverse Mortgage Myths are Efficiently Dispelled
Everybody wants to live as long as possible, but questions around having enough money to enable you to enjoy a comfortable lifestyle put a damper on this thought. The beauty about a reverse mortgage in instances like these is that they provide seniors with some kind of financial leverage when facing difficult economic hardships. These loans, available to homeowners who are 62 years or older, allow retirees to convert part of the equity in their home into cash.
The cash is often needed to pay for sudden medical expenses, but contrary to the myths one hears, there are no restrictions on how the money can be used. California reverse mortgage myths want seniors to believe that these loans also need to be paid back within a stipulated time when in fact the loan needn’t be paid back while the seniors are still living in their homes and while they are contributing regularly to their tax and insurance payments.
Dispel the Myth you Can’t Use the Cash the way You Want To
Fortunately seniors who want to look at reverse mortgages are educated first by financial brokers to ensure they ignore the myths that a reverse mortgage is similar to a home equity loan and that the home is sold to the lender. Seniors are advised to ignore all these stories and clearly understand both the benefits and risks of taking the loan from a reliable source.
There are a number of California reverse mortgage myths doing the rounds like ‘if I outlive my life expectancy, will the lender evict me?’ or ‘are these loans only aimed at low income seniors?’ or ‘I believe there are some restrictions on how I use the money I get from my reverse mortgage’.
Many older people don’t contemplate a reverse mortgage because they believe in the myth that they cannot have any debt on their home in order to qualify for a reverse mortgage. It can come as a relief to know that this isn’t true and that if you have any outstanding balances on your mortgages, some of the loan can actually be used to pay for the existing loan.
A Popular Myth is that Heirs Don’t Benefit
Some of the other more common California reverse mortgage myths are that heirs will not inherit the home and that there are large out-of-pocket expenses too. Firstly, lender fees and closing costs are factored into the reverse mortgage loan, so seniors don’t have to look for additional money to pay these fees. Naturally borrowers with heirs also want to know what will happen to their home and the mortgage when they pass away. Many believe the myth that the home reverts to the bank on the death of borrower, but this isn’t the case. Reverse mortgage borrowers can sell their properties or they can leave their homes to their heirs. Yes it’s true that the reverse mortgage must be paid off, but remaining equity stays with the borrowers’ heirs.
These days it has become more important than ever to review your current provision for retirement. If you are over 62, you want one-stop financial security with tax free benefits, and this may mean dispelling all the ridiculous California reverse mortgage myths you are hearing regarding these loans.
Take advantage of the comprehensive and informative Reverse Mortgage Guides to assist you with providing sound information on your financial security so that you are not driven by fear and insecurity.
Who is eligible for a California reverse mortgage?
You and any co-owners, must be at least 62 years old and either own your home free and clear or have a relatively low remaining mortgage balance. Your home may be a single-family or 2 to 4 family unit dwelling. Units in condominiums, manufactured homes and homes on leased land may be eligible if they conform to FHA guidelines.
How much can I obtain?
The maximum amount you can obtain (your principal limit) is based on a HUD formula that includes these three factors: 1. the age of the youngest homeowner. 2. The maximum claim amount. 3. The expected average mortgage interest rate. The maximum claim amount is the total amount of equity you can obtain from your home it is the lesser of the appraised value of your house or the maximum loan amount allowed by the FHA for one family residences.
How are reverse mortgage proceeds paid to me?
With an FHA reverse mortgage, you receive your proceeds according to your choice from among five possible reverse mortgage plans: 1. Tenure monthly income for as long as you occupy the property. 2 A monthly income for a specified time. 3. A line of credit where you access your funds at any time you want. 4. A modified tenure plan combined with a line of credit. 5. A modified term plan combined with a line of credit.
Is a Sacramento reverse mortgage flexible?
The Sacramento reverse mortgage is unique in the amount of flexibility in the plan it offers borrowers. In addition to having several options to choose from, you may change plans at any time after you take out your reverse mortgage, and as many times as you wish. You may also receive a lump sum at closing to repair or improve your home, or for other needs. This flexibility allows you to reshape your plan as your circumstances change.
Am I protected in any way?
A significant feature of the FHA reverse mortgage is that it is insured under the government’s Federal housing administration insurance program. This program ensures that you will receive all proceeds due to you as long as you live in your home it also ensures that your lender will receive full repayment of your loan balance, even if it is greater than the value of your property. The FHA insurance premiums that you pay as a borrower create a reserve fund to cover any losses that occur. The FHA insurance on a reverse mortgage also protects homeowners and lenders against the risk that the loan balance might, at sometime, exceed the value of the home.
This means that as long as you occupy your property as your principal residence, you cannot be forced to sell or vacate your home even if the loan balance exceeds the value of your home or you have received all of your available proceeds. FHA insurance also protects you against the possibility of lender default. Should your lender fell to make payments to you as agreed in the loan, the FHA will continue making loan advances directly to you.
How is the balance determined?
Your reverse mortgage balance represents the total amount you owe in principal, interest and financed costs. Your reverse mortgage balance increases over time because it grows larger with each loan advance you receive, and because interest and other charges accrue each month on the total funds advanced to you.
What fees are charged?
Basic charges on a California reverse mortgage include four types of fees: an origination fee, initial and monthly mortgage insurance premiums and other closing costs. Some of these fees are payable at closing and some are added monthly to the loan balance.
Will an FHA reverse mortgage affect other benefits that I receive?
Reverse mortgage benefits that you receive will not affect your Social Security or Medicare eligibility because these programs are not based on need. If you receive supplemental security income, Medicaid or Medi-Cal benefits these may be affected by your reverse mortgage benefits. To determine whether reverse mortgage payments would affect your particular situation, you must consult your local offices for SSI, Medicaid, Medi-Cal and other programs from which you receive benefits, or a specialist in such benefits through your local area agency on aging or the nearest legal services office.
When do I repay the reverse mortgage?
Your reverse mortgage must be repaid when you sell or convey title to the property to another party, upon your death or the death of the last surviving homeowner, or when it’s no longer the principal residence of at least one borrower. You or your heirs may choose to refinance your home or sell it. There is no pre-payment penalty.
What if I need more cash than an FHA reverse mortgage can provide?
FHA reverse mortgages are just one of the reverse mortgage programs available. There are certain limitations with reverse mortgages, such as maximum loan amounts, that limit homeowners to very specific guidelines. We offer reverse mortgages with flexible benefits that extend well beyond the limits of a traditional reverse mortgage. You may qualify for larger advances, more cash up front and alternative rate programs, depending on your circumstances.
Are there restrictions on how I spend the money?
There are absolutely no restrictions on how you use the cash. Pay off credit card debt, travel, make home repairs, buy a new car, take care of your health care needs, pay for in-home help, you choose how to spend the money. Additionally, the money is tax free, and you don’t make a single payment for as long as you live in the home.
What if I change my mind?
Federal law provides you with a three-day right of rescission, that is, the option to cancel the contract without penalty within three business days from the day you sign the final loan documents. Your proceeds are not paid to you until after the end of this period.
It is all very well to be living longer these days. but what happens if, as a senior, you are battling financially, you are suddenly bombarded with new medical expenses, you are too old to be considered for a job, and your retirement savings are no longer sufficient. Reverse mortgages are being looked upon as a lifeline to retirees in these situations, and a reputable and trustworthy Sacramento reverse mortgage lender helps seniors in understanding how the HECM (Reverse Mortgage) Program works, helping anyone anywhere in California. Clients are provided with the most recent information on reverse mortgages and the one which is ideally suited to their circumstances. It can be a relief for homeowners knowing they can access the equity of their homes and still remain in them as well.
Your financial security is important and you want your finances dealt with a Sacramento Reverse Mortgage Lender who is licensed and who is Investment Advisor Representative registered, who has the right credentials, who adheres to strict ethical standards and who had more than 35 years in the financial services industry and is highly experienced.
Who is a Reverse Mortgage for?
Anyone over the age of 62 can apply for a HECM; even those who never purchased their home with an FHA-insured mortgage. Some people are nervous because they believe that the bank then owns their home, however the title remains with the borrower. When the house is sold, the lender is paid the cash received from the reverse mortgage and any remaining equity goes to the heirs or remains with the homeowner.
The money isn’t limited to what you can use it for and many older people use it for much needed medical attention, they fix up their homes or take a longed-for trip. The beauty of these reverse mortgage loans is that, unlike other loans, you don’t have to pay them back immediately.
How Does it Actually Work?
A Sacramento Reverse Mortgage Lender will help you ensure that as a retiree you can be assured of being able to reach your dreams. Once the home is sold during the homeowners lifetime or after their death, the sale price of the house will pay back the loan. Because these reverse mortgages are backed by HUD, even if there is a short sale, lenders won’t be able to consider the homeowners other assets, and heirs won’t have to pay out of their own pockets to settle the difference.
The amount of money borrowed is determined by certain factors such as the age of the homeowner, the current interest rate and the value of their home. In this instance the credit scores of the owner are not considered. If the owner however fails to pay property taxes and insurance, the reverse mortgage is in default and then the homeowner won’t be able to benefit. A huge benefit of the reverse mortgage is that they are recession-proof and if the home is worth less than the amount of the reverse mortgage during sale, then the homeowner doesn’t suffer.
You and Your Financial Future in Good Hands
It isn’t a good idea to just go willy nilly into a reverse mortgage to secure your future. One needs to carefully consider and weigh up the advantages and disadvantages. It is critical to choose a tried and tested, reliable and reputable lender if you want to be completely sure that you are getting the best advice. A Sacramento Reverse Mortgage Lender helps you make provision for the future, asses your current position and offer assistance, assuring that your largest asset, your home, is in good hands.
The Benefits & Dangers of Reverse Mortgages
The reverse mortgage is a wise beneficial move for people who think they want to access the equity of their home and still remain in their home. Reverse mortgages are beneficial, but come with financial issues worth watching out for.
Reverse Mortgage Basics
A Reverse Mortgage allows borrowers to access their home equity in payments as a lump sum or as a credit line. The amount of the money borrowed is determined by prevailing interests, age of the homeowner and the value of the home and the credit scores of the owner are not considered. The homeowners are allowed to live in their home so long as the insurance premiums and the property taxes are paid as well as the home is kept in good condition. The mortgage is due in full when the owners die or the home is sold.
In most cases, freeing up the equity of the home through a reverse mortgage can make your retirement program a little more comfortable. It is unlike equity home loans where the seniors cannot qualify for the home loan, reverse mortgage home loan is available to such people regardless of their income. There are no monthly payments for the home as repayments are only done when the home is sold or when the homeowners die. One benefit of the reverse mortgage is that they are recession or economic downturn proof in that even if the home is worth less than the amount of the reverse mortgage during sale, then the homeowner does not have to suffer consequences.
The reverse mortgage has its own drawbacks that can make it dangerous for the homeowners to enjoy their stay in the property. One of the dangers of the reverse home mortgage is that you can lose your home in the event that you are needing care in a nursing home for a lengthy duration of more than twelve months. Since they work on the policy that your home is no longer your primary residence, they might call the loan due.
In summary, it is essential to consider the advantages and disadvantages of the financial tool if it is either right or wrong for you. It is essential to choose a reputable lender such as Jeffrey Bangerter your Sacramento Reverse Mortgage Lender for the best advice in reverse mortgage deals.
The Huffington Post had this great article about Family and Retirement “The Elephant In The Room When It Comes To Family And Retirement” I think that the Reverse Mortgage can be a solution for many of the problems that this article talks about. As a Sacramento Reverse Mortgage Lender I provide my services anywhere in California and I see how the Reverse Mortgage makes a major difference in the lives of the people I work with. Yesterday I received an Email form a client that received her first monthly check for over $900.00 that she will get each month for the rest of her life. It was more than she thought it would be and is making her life more comfortable now that she gets it.
If you know someone that would like a California Reverse Mortgage, give me a call, I will be happy to help.
The Consumer Financial Protection Bureau last Friday released a guide for seniors and others in the process of choosing a financial adviser, warning that similar to planning for retirement, it can be much more challenging than it sounds.
The “Know your financial adviser” guide helps consumers ask the right questions when shopping around to ensure the person they select is qualified.
Just because someone calls themselves a senior adviser doesn’t mean they know anything about reverse mortgages or Social Security Benefits or even retirement planning in general.
Maybe they have an insurance license or securities registration, but a single license does not guarantee a professional is equipped to advise every consumer, or those with specific needs.
When evaluating a financial adviser’s title or credentials, consumers are advised to think about how much training went into obtaining that title and whether or not the adviser has been qualified through a training program that holds its members to strict ethical standards. I just finished 27 hours of my required continuing education for my IRS Enrolled Agent License and 8 hours for my Mortgage Originator License. These along with my Securities Registrations, Insurance license, Real Estate License and Investment Advisor Representative Registration along with over 35 years in the financial services industry make me uniquely qualified to assist seniors in determining if a reverse mortgage is right for them.
The CFPB tells seniors to find out if the adviser has background and experience in working with specialized groups, like retirees, that is the main focus of my business and has been for over 20 years.
“Most financial advisers have worked hard to earn the knowledge and skills required to help you. But credentials and promises alone don’t guarantee expertise or the quality of someone’s training,” says the blog post. “It’s up to you to look closely at the training, background, and quality of service when picking someone who promises to help you protect and grow your well-earned nest egg.”
If you or someone you know is considering getting a California Reverse Mortgage, consider using me as your Sacramento Reverse Mortgage Lender, I do have the experience and knowledge.
FHA is putting a hold on making seniors qualify financially for a reverse mortgage.
Get your California Reverse Mortgage from your Sacramento Reverse Mortgage Lender.
No Changes this year!
Here is a short video about how the New HECM (Reverse Mortgage) Program works. As a California Reverse Mortgage Provider I can help anyone get a new reverse mortgage anywhere in California. If you live out side of California you are still welcome to call me and I can find a Loan Originator in your area that can help you. My Sacramento Reverse Mortgage office is ready to provide you with the most recent information on reverse mortgages and we have closed thousands of these loans so you can rest assured that I can help you get the reverse mortgage that is right for you.
The federally-appointed Commission concerning Long-Term Healthcare mentioned reverse mortgages so as to provide for long-term services in addition to supports amongst various other suggestions to Our elected representatives concerning how to handle the demands of the aging citizenry.
On Wed, the actual board presented the final report to Our elected representatives following a September twelve vote in favour of its guidance, which have been supposed to restore country wide discussion regarding how to take care of the difficulties and issues of the older National populace. The particular vision should be to create “a more responsive, integrated, person-centered, and fiscally sustainable LTSS delivery system that ensures people can access quality services in settings they choose.”
Right now, the federal as well as state government authorities finance 62% of paid LTSS, amounting towards in excess of $130 billion each year, the actual Commission’s statement claims.
The need for LTSS along with the expense to governing bodies will probably grow dramatically throughout the upcoming two decades with all the populace growing old, boosting the burden for currently underfunded govt health-related programs. Preparing to match the LTSS needs of the population in addition to providing sufficient financial resources is going to take time, it affirms. “The process should begin now.”
Making use of reverse mortgages as well as a capital foundation intended for long-term health care has been referred to as just one approach to strengthening LTSS capital via individual alternatives, amongst additional recommendations.
Use reverse mortgages to enable seniors to use the value of their home equity to fund long-termcare services, including while remaining in their homes, claims this document. “Enable retirees to pre-qualify so funds would be available when needed.”
The actual commission also suggested a few ways to actually tighten State Medicaid programs qualification requirements for those age Sixty two and further along in years simply by taking into account sources that happen to be at this time excluded from eligibility assessments as countable, and by eliminating possibilities meant for “gaming” the program procedures.
General public assets need to be devoted to supplying medical care to the actual needy in addition to poorer, certainly not all of the better-off families who are afterward capable to make sizeable bequests, says the report. Limiting what amount of home equity is actually allowed for Medicaid qualification could very well persuade folks to turn to a reverse mortgage.
“Limit the home equity exemption to $50,000 (this would redirect many households to use reverse mortgages to fund LTSS and discourage the game of investing otherwise countable assets in exempt homes),” the particular commission suggested.
The actual commission, created as an element of a fiscal cliff legislation that repealed the CLASS Act, may be given the job of informing Congress on how best to accomplish long-term healthcare change.
For more information on a California reverse mortgage provided by your Sacramento reverse mortgage lender, contact Jeffrey Bangerter at 916-965-1879 NMLS#18361
A Home Equity Conversion Mortgage (HECM) plan is a Government-supported mortgage program for senior home-owners. The program allows elderly people to take a mortgage on their residence under which they can draw cash in a variety of methods – in advance, monthly or sporadically as they decide – without any repayment requirement as long as they reside in the property.
The reverse mortgage product would not exist without having Federal Government assistance. The lenders who advance money for the older persons will be guaranteed payment by the Federal housing administration at the same time virtually all of the HECMs that are produced are securitized, with the securities fully guaranteed through GNMA. In an atmosphere of severe financial stringency, a question arises whether or not the program deserves Federal Government support? A number of law makers think not and several House Members have introduced regulations that would kill the program.
The case for support has a few justifications. The first is that the reverse mortgage is unique in transforming illiquid housing assets into spendable resources whilst permitting continued occupancy by the property owner. Really the only close substitute is some other reverse mortgage plans, but the private packages that appeared after the HECM program and had been patterned after it, vanished with the financial crisis. This occurred by the collapse of private secondary mortgage markets, upon which the private reverse home loan plans relied. Ideally, the market will reemerge at some time to back up private programs, but it is unclear when.
Another point is that the HECM system generates what economic experts term “positive externalities”, which are benefits to the community that are not enjoyed by the private companies involved in the activity. By providing a facility for transforming illiquid housing money into spendable cash, the program reduces the stress on public services of a variety of types that are directed toward senior citizens in need. Together with Medicaid, included in this are sole purpose loan programs directed toward home restoration and property taxes that tend to be made available by many states and cities; as well as an assortment of services made available through the Aging Network, including senior centers, in-home health care and nutrition support that tend to be financed through the Federal Government. The particular argument gains increasing strength since the number of homeowners retiring without satisfactory income raises while their particular life spans also grow longer.
The third point for supporting HECMs is that they provide older homeowners living mainly off of investments insurance against a sort of threat that is becoming increasingly important: the risk of outliving his or her financial resources. They guarantee against this kind of possibility simply by getting a HECM line of credit once they leave the workplace, permitting it to grow with time together with market interest rates. Typically the line is actually utilized later in life should it be necessary, otherwise their untouched equity reverts to their estate. This kind of insurance is not necessarily obtainable in the private marketplace.
The fourth argument is the fact a Federal program is needed as a model for private plans. The private plans that were around immediately prior to the financial crisis were, indeed, patterned after the HECM program, which includes several safety measures to safeguard seniors from greedy lenders. Perhaps the most crucial connected with these is the requirement that, ahead of any contractual agreement, all consumers have to be counseled by a completely independent 3rd party not connected to the mortgage company. Without the HECM design, it is extremely unlikely that this type of safeguard would have developed.
The final point for supporting the HECM program would be that the program is actually self-funding through the collection of insurance payments from HECM consumers. Some might challenge this because a recent actuarial assessment associated with the financial standing of FHA’s HECM insurance fund demonstrated a shortage. However, estimates of fund value move all-around from one particular year to the following based on predictions associated with home valuations as well as interest rates, the volume of future business, and changes in plan policies. The recent removal of the standard fixed-rate program, for example, has removed the segment of the HECM market that has resulted in the biggest loss.
The crucial point is the fact that HUD will be required to help make the program self-supporting, which it is capable of doing through manipulating insurance rates and adjusting program regulations to restrain deals that present too much risk. On July 30, the United States Senate passed The Reverse Mortgage Stabilization Act of 2013, which gives HUD additional authority “to improve the monetary safety and soundness” associated with the HECM program.
The reasons for the HECM plan are certainly not arguments in opposition to having private reverse mortgages available in the marketplace. The best scenario would be to have both, as is also the situation with regular (forward) mortgage loans. When there is apparent evidence that private reverse mortgages are saleable in the secondary market, the highest HECM loan amount, which had been increased after the financial crisis, could end up being decreased as a way of stimulating the revival of the private marketplace.
For a California Reverse Mortgage or certainly a Sacramento Reverse Mortgage, contact Jeffrey Bangerter NMLS#18361 at 800-451-2351
Congress is about to limit the amount of money you can take as an initial draw from a reverse mortgage. The bill that passed on a voice vote is designed to provide reverse mortgage borrowers with less money so the Federal Housing Administration can try to work their way out of their financial difficulty.
The new measure allows the FHA to change the terms of the new reverse mortgages that it insures so they no longer have to follow the normal rule-making process. FHA Commissioner Carol Galante said the bill would “greatly assist” the FHA’s efforts to make the program financially sound while making sure that seniors can continue their home throughout their retirement.
The bill is also designed to make borrowers qualify financially for the reverse mortgage, which I think is defeats the whole purpose of the loan. Since the program has always been intended for seniors that are house rich and cash poor; these new standards will make it less helpful for those that need it most.
If you or someone you know is considering getting a Sacramento reverse mortgage or a California reverse mortgage , don’t wait, it is not getting better. Get a quote at www.reversemortgage4u.com and if you are in California contact me and I will be happy to help.