Reverse-Mortgage-Truth.com

In response to the National Housing Act (HR 3221), most Reverse Mortgage lenders have announced that they will NOT allow payment of referral fees to mortgage brokers. This means that non-FHA approved brokers will no longer be able to receive the common application assistance fee, which in reality is a referral fee.

This is good news for seniors who have been marketed to by mortgage brokers who know little or nothing about reverse mortgage programs. Seniors need solid answers from experts in reverse mortgages, not “yes, we do reverse mortgages . . . I’ll get back to you”.

The good news is that this same bill will increase the FHA 203(B) (HECM reverse mortgage) lending limit. This means that senior homeowners, whose homes are currently worth more than the lending limit for their area, will likely see an increase in the amount of money available to them under the FHA HECM reverse mortgage. The new limit is expected to be $417,000 and will take effect in November of this year.

The Southern California region is known for its high cost of living. From home maintenance, to uninsured medical bills, to prescription drugs, and even at home care, seniors are finding that it can be difficult to afford all the necessities on social security alone. That’s why many senior homeowners have turned to California Reverse Mortgages to help cover their expenses. And many of these seniors end up with plenty of leftover money to pay for enjoyable things, beyond the necessities as well. Many seniors are now able to take advantage of their home equity to enjoy a higher standard of living using this payment-free home loan.

Over the past 5 years reverse mortgages in California have grown into an accessible and increasingly popular way for seniors to increase their financial means during retirement. Across all areas of California seniors have utilized reverse mortgage programs to accomplish worthwhile purposes such as ridding themselves of their mortgage payment by paying off existing mortgage debt; to make improvements to their home or cover maintenance expenses with a lump sum of cash; to enjoy a more comfortable lifestyle by increasing their monthly stream of income. Seniors have found practically endless uses for the additional funds from a reverse mortgage.

The minimal requirements for reverse mortgages in California have made them relatively easy to obtain. Seniors need only adequate equity in their home to qualify – credit scores, income and other assets do not matter. However, due to declines in the real estate market this past year seniors in some parts of California no longer have the certainty of adequate equity in their homes. As the real estate market in California is now firmly established on a declining path, it is more difficult to qualify for a reverse mortgage because the amount of home equity that seniors have is diminishing. Some parts of the state, however, are faring better than others.

Next we'll focus on San Diego reverse mortgages.

In the last two years we have seen lots of new reverse mortgage programs introduced to the marketplace. Countrywide Bank started offering both the government-backed reverse mortgages and their own version of the jumbo reverse mortgage to compete with Bank of America and Financial Freedom.

Earlier this week, they stopped taking applications for their jumbo reverse mortgage. The decision was probably driven by investor sentiment as reflected in their stock price and of course, mortgage-backed securities overall. Countrywide rocketed up the ranks to become the top lender for reverse mortgage loan volume for the month of March so their loan volume was probably not the issue.

Countrywide will likely continue to offer the FHA Reverse Mortgage, known as the Home Equity Conversion Mortgage (HECM). The HECM is sold to Fannie Mae, though the lender usually retains the servicing, so there is no lack of funds available for the program.

The loss of Countrywide's program to California reverse mortgages will be felt across the state. With fewer programs available, the existing programs will be in greater demand, probably resulting in a migration to less favorable terms. Still, seniors have decent choices in other California reverse mortgage lenders.