posted by N. Sioris
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The National Reverse Mortgage Lenders Association (NRMLA) is one of the major watchdogs overseeing the reverse mortgage industry. NRMLA was originally established in 1997 to enhance the professionalism of the reverse mortgage business. NRMLA is also an educational resource for seniors seeking information about reverse mortgages. It helps train lenders to be sensitive to senior's needs and enforces a code of ethics and best practices for its member associates.
As reverse mortgages become more popular they are attracting a lot of attention in the media and from mortgage companies and loan officers that are feeling the pain of the credit crunch in the "forward" mortgage market. Some lenders, not previously involved in the reverse mortgage market, are now entering this niche market. According to the NRMLA website; "The good news is that we've been discovered. Being discovered brings broader consumer awareness and an increase in loan production."
"Growth, however, attracts a broad range of individuals and companies into a field, including some who may not fully understand the intricacies of this market, the challenges and respect required in dealing with an elderly client base."
The National Reverse Mortgage Lenders Association is committed to keeping the industry and those that participate in the reverse mortgage market "squeaking clean". They do not believe in cutting corners or circumventing necessary but complicated disclosure policies.
If you are considering a reverse mortgage, one of the things you may want to look for when choosing a lender or a loan agent is whether they are a member of NRMLA. Their membership in NRMLA speaks to their ethical commitment and their desire to put your best interest ahead of their own personal gain.
posted by N. Sioris
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Just two short days after chairing a Senate sub-committee on Aging, Democratic Senator, Claire McCaskill, introduced legislation designed to protect seniors from predatory and aggressive lending practices, when they apply for a reverse mortgage.
The Reverse Mortgage Proceeds Protection Act, which is endorsed by AARP , will allow FHA/HUD Mortgage Insurance Premium money to help fund independent reverse mortgage counseling services. Independent, government-approved HUD counseling is required whenever an applicant wishes to apply for a reverse mortgage. There is no charge to the senior for the counseling services. In the past, HUD provided about 3 million dollars per year for counseling, which is considered inadequate. Counseling agencies charge about $100. per session. Currently reverse mortgage lenders are allowed to fill the funding gap for the counseling services. Since lenders stand to profit from the origination of a reverse mortgage, allowing them to pay for counseling could compromise the integrity and independence of the counseling that is provided.
Additionally, The Reverse Mortgage Proceeds Protection Act, will require HUD to author new regulations to protect senior homeowners from aggressive and predatory marketing tactics. Specifically, it requires new regulations to ensure that seniors are not pressured or mislead into purchasing unsuitable financial products, such as annuities, life insurance, or long term care insurance.
The proposed legislation will also permanently repeal the unimplemented provision waiving the Mortgage Insurance Premium (MIP) if the proceeds of the reverse mortgage are used for long term care insurance. This provision was never implemented and is unanimously opposed to by senior advocates and AARP. The concern if this provision were to be implemented, is that seniors will be targets for overly aggressive insurance agents selling long term care as a "government approved" product.
As with any financial decision, education is the key to avoiding problems and future regrets. The HUD website has a list of the top ten things to know if you're interested in a reverse mortgage.
posted by N. Sioris
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On December 13, 2007 Democratic Senator Claire McCaskill of Missouri, chaired a senate sub-committee hearing to discuss reverse mortgage industry practices and the potential for abuses within the industry. Specifically the hearings revolved around the U.S. Department of Housing and Urban Development's federally insured reverse mortgage, the HECM loan (Home Equity Conversion Mortgage).
HECM reverse mortgages were first introduced twenty years ago, but have only recently seen a surge in origination volume and interest from the public as baby boomers approach retirement age.
With the recent interest in this loan product, the industry has attracted the attention of many major lenders, previously not originating reverse mortgages, as well as loan officers or loan originators that worked in the "forward" mortgage market in the past. In addition, this market has attracted attention from financial planners and insurance product sales persons as well.
Senator McCaskill's emphasis during the hearing was to address the potential for abuses to senior homeowners and to find ways to protect seniors that can truly benefit from getting a reverse mortgage. The hearing included testimony from reverse mortgage industry professionals, HUD, AARP, and family members of seniors that had been negatively affected by certain sales tactics used by reverse mortgage loan originators.
One of the topics that was discussed at length, was the use of reverse mortgage proceeds to purchase annuities. Senator McCaskill read an employment ad for a company looking for sales people to sell reverse mortgages along with annuties. The essence of the employment ad was that there is a ton of money to be made by selling the combination of a reverse mortgage and an annuity at the same time. The ad even went so far as to say "this will be the easiest money you ever make." Well if that doesn't smack of predatory lending, I don't know what does.
Kudos to Senator McCaskill for bringing this practice to light and for her commitment to introduce legislation to head off these predators before the reverse mortgage market ends up in the same predicament that the conventional forward mortgage market is experiencing right now.
Reverse mortgages can be a life saver for people that really need them. It would be a tragedy if predatory practices erode the good reputation that the reverse mortgage industry has worked so hard to obtain over the past twenty years.
If you are considering a reverse mortgage, do a lot of research, get an AARP reverse mortgage comparison, get free HUD counseling, and run - do not walk - from any sales person that suggests you purchase another "investment" with your loan proceeds from a reverse mortgage.
posted by N. Sioris
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A reverse mortgage, as many consumers are finding out, has many uses and benefits. During these recent months of turmoil in the mortgage market and the decline in home values, some homeowners are literally saving their homes from foreclosure with the use of a reverse mortgage.
If a senior homeowner is having difficulty keeping up with their mortgage payments, but they have substantial equity in their home, they can take out a reverse mortgage to save their home from falling into foreclosure. The way it works in a situation like this is that the reverse mortgage replaces the original "forward" or conventional mortgage. The forward mortgage is paid off completely by the reverse mortgage. The reverse mortgage is now the first lien on the property, with the senior homeowner still on title to the property as the owner.
The difference however, is HUGE. The reverse mortgage requires no monthly mortgage payments as long as the senior(s) continue to live in the home as their primary residence. Effectively, the homeowner has realized an increase in their monthly income by the amount of their old mortgage payment. And, in some cases, even more, depending on how much excess equity is in the home beyond what was used to pay off the old mortgage. Most importantly, they have saved their home from foreclosure.
Because the reverse mortgage requires no monthly payment EVER, there will never be a danger of facing foreclosure again in the future. Additionally, there are no credit or income qualifications to be approved for a reverse mortgage. For your complimentary evaluation contact us today.
posted by N. Sioris
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Because of the current credit crises in the conventional "forward" mortgage market, many loan originators that normally would not be involved with reverse mortgages, are now eyeing the reverse mortgage market as a ripe opportunity to make money.
In the past, reverse mortgages were thought to be the "antidote to predatory lending practices," according the the popular book; "Reverse Mortgages For Dummies." Reverse mortgage loans take a lot more effort to sell and explain to the consumer, the selling cycle is usually much longer because the products are complicated, and many seniors wish to have adult children or other advisers sit in on the meetings and help with the decision. HUD counseling is required before an application can be taken, and the fees are capped and regulated by HUD. Therefore, in the past, the unscrupulous mortgage brokers stayed away from selling this product. For them, reverse mortgages were too much trouble,
took too much time, and commissions were considered low.
However, now that the traditional mortgage market has all but imploded, there are droves of mortgage originators out there looking for other products to sell. Seniors need to be aware of this fact and make sure that the representatives that they speak with, truly have the senior's best interest at heart... not the sales commission.
Some things to ask before you do business with a loan originator are:
1. How long have you been selling reverse mortgages?
2. Do you sell other types of mortgage products? (you want a representative that sells ONLY reverse mortgages.)
3. Are you a member of NRMLA... (National Reverse Mortgage Loan Association)
Fortunately for seniors, there are a lot of safeguards in place to protect the consumer. However, it is still a good idea to be cautious, ask a lot of questions, get several comparisons, take your time to make your decision, and most of all never allow anyone to pressure you into a decision if you are uncomfortable.
If you are interested in getting a personalized reverse mortgage comparison from a reverse mortgage originator that ONLY works in the "reverse" market, please request your free analysis here.
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