posted by N. Sioris
Stumble It!
Hooray! The landmark housing bill (H.R.3221) has finally passed and was signed by the President earlier today. The Housing and Economic Recovery Act of 2008 has provisions in it that will improve the federally insured reverse mortgage program and will benefit senior homeowners that want to access home equity to help finance retirement.
The long awaited housing bill allows for a National loan limit for HECM (Home Equity Conversion Mortgages) of $417,000. and up to a maximum of $625,000. in high cost areas. Currently, loan limits vary between counties and range from a low of $200,160. to a maximum of $362,790.
This is welcome news for seniors that will benefit from higher loan amounts and access to more of their home equity.
Other amendments included in the bill that will affect reverse mortgages are:
* The ability to use an FHA insured reverse mortgage to purchase a home.
* Co-op properties are now eligible for a HECM.
* Reduced origination fees.
* Prohibitions on requiring the purchase of annuities and other financial products.
* Restrictions around cross selling other financial products.
* Requirements on counseling protocols, funding and practices that promote independence and quality in counseling.
It is estimated that HUD will take approximately 60 days to provide detailed interpretation of the changes and that the changes will more than likely not take place until January, 2009.
posted by N. Sioris
Stumble It!
Late yesterday, July 23rd, The House of Representatives passed H.R. 3221: The Housing Economic Recovery Act of 2008. The vote was 272 yes to 152 no. The bill will now go back to the Senate for yet another vote. If the bill passes in the Senate, it will then go the White House for final approval.
President Bush previously threatened to veto this bill, but with urging from the Secretary of the Treasury, Henry Paulson, the president is expected to sign the bill.
The bill provides for an increase in the loan limit for FHA insured HECM reverse mortgages. It calls for a single national loan limit of $417,000. However, this limit may be increased in high cost areas to as much as $625,000.
If this bill finally passes, it will be welcome relief for many senior homeowners that need access to a larger amount of their home equity than what is allowed at the present time. Let's hope that Congress can finally get its' act together and pass this long awaited reform for higher HECM loan limits.
posted by N. Sioris
Stumble It!
The long awaited housing bill, which includes amendments to the HECM Reverse Mortgage, may finally see the light of day. The House and Senate have been debating various versions of H.R. 3221 for what seems like eons, without ever coming to an agreement and passing a revised bill.
On July 11th the Senate passed a version of H.R. 3221 and sent it over to the House of Representatives. Naturally, the House now wants to make more revisions that will include financial support and supervision for Fannie Mae and Freddie Mac. On July 23rd, the House is expected to vote once again on its' revised version of the bill. If it passes, which it is expected to, it will again go back to the Senate. If the Senate finally manages to pass the bill it will then go to the President, possibly by the end of the week. Barring a veto by the President, we may actually see the passage of H.R. 3221, by the end of July.
If the bill passes, one of the key components that will affect HECM reverse mortgages, will be an increase in the maximum loan limit. Possibly we will see a uniform national loan limit, rather than variances from county to county. This will be welcome news for reverse mortgage borrowers, especially those with high value homes.
Let's all hope that FINALLY Congress will get around to doing the People's work and pass this badly need bill with the appropriate amendments intact.
posted by N. Sioris
Stumble It!
Federal Reserve Chairman, Ben Bernanke testified before Congress this week. Among the topics he addressed were inflation, economic growth and interest rates. He said that for the time being, interest rates would remain where they are. Although he did not signal that further rate cuts are anticipated, he did say that the current low rate environment will probably be with us for the next several months.
Bernanke said that although the weak dollar is driving costs up and inflation is on the rise, the Federal Reserve does not feel that they can raise interest rates at the present time. Bernanke seems to feel that whichever way the Fed chooses to act, inflation is going to continue to rise and consequently tightening of credit is not warranted.
For seniors living on a fixed budget and depending on interest earnings this is bad news. However, for the many senior homeowners that are currently considering a reverse mortgage, low interest rates are a good thing.
Senior homeowners can lock in their expected interest rate on the government insured HECM (Home Equity Conversion Mortgage) at the current low rates. The low rate environment is an advantage because the expected rate is one of the components that determines how much money a homeowner qualifies for. The lower the rate, the more money the borrower can receive from his reverse mortgage loan.
If you would like to see how much money you can qualify for, use our free reverse mortgage calculator. Then request a complimentary reverse mortgage loan quote.
posted by N. Sioris
Stumble It!
This past week was unprecedented for the banking and financial sectors of the US economy. IndyMac Bank was taken over by the FDIC on July 11, 2008. It was only 4 short days earlier that the CEO of IndyMac announced massive employee layoffs and plans for restructuring the company. However, by Friday of the same week, there had been such a run on the bank's deposits by people scrambling to withdraw their funds, that the FDIC had to step in and take it over.
According to the FDIC, IndyMac's collapse is second only to the 1984 failure of Continental Illinois National Bank. The FDIC estimates that its takeover of IndyMac will cost between $4 billion and $8 billion.
IndyMac's failure came the same day that financial markets plunged as Wall Street investors and traders tried to determine whether the government will have to step in and either takeover or infuse massive amounts of liquidity into Fannie Mae and Freddie Mac.
So what does all of this turmoil mean to senior borrowers who all ready have reverse mortgages? In particular what does it mean for reverse mortgage borrowers that have their loans through Financial Freedom, an IndyMac owned company?
The answer is simple if you have a HECM (Home Equity Conversion Mortgage) loan, insured by FHA and backed by HUD. Nothing happens to you in this case. You will continue to receive your benefits even if your loan has to be transferred to another loan servicing company as a result of IndyMac's demise.
One of the reasons that the HECM has been the loan of choice for the majority of reverse mortgage borrowers, is precisely because they are government insured and backed by HUD. If a lender becomes insolvent HUD can take over the loan and direct another loan servicer to administer your benefits.
Often sited as one of the negatives for getting a reverse mortgage is that the costs are high. One of the largest costs for obtaining a reverse mortgage is the 2% FHA insurance premium that every HECM borrower is charged. Well, this week's disruption in the financial markets should illustrate in no uncertain terms that sometimes the so called "high costs," are not so high after all.
So for those of you that have IndyMac/Financial Freedom HECM reverse mortgages, you can sleep easy tonight. You are not in any danger of losing your loan benefits. Your life will go on as if none of this ever happened.
The cost argument is one of many misconceptions surrounding this great financial tool for seniors. This week's events really hit home about how misguided some of the naysayers are, especially if they are not well informed and simply spread mis-information.
Get the real facts. Read more about the myths of reverse mortgages.
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