Review Mortgage Lenders

aarp and reverse mortgages

AARP sues HUD over Reverse Mortgages: What is a reverse mortgage ttp In this video, real estate attorney hugh Fitzpatrick from Tewksbury Massachusetts discusses the lawsuit ...

Reverse Mortgage Borrower Motives Expand as Education Spreads

Because qualifying borrowers don’t have to make monthly principal or interest payments, homeowners tend to see the products as simply an extra source of cash — whether it’s making their home wheelchair accessible, buying a home with more attractive amenities, or simply preserving more of their savings.

Originators also say that managing debt is often what drives their clients to seek out a loan. Loren Riddick, national sales manager for Fairway Independent Mortgage who has closed more than 100 Home Equity Conversion Mortgages, says that close to half of the borrowers he sees use the loan to eliminate mortgage payments and restructure debt so they can live more comfortably.

The reasons fluctuate somewhat according to demographics, originators told RMD, and the recent regulatory changes have also shifted potential borrowers’ motivations: Of those who apply for a HECM loan, fewer people qualify than in the past due to changes such as Financial Assessment, which can alter their reasons for pursuing one.

AARP Weighs in on the 'New' Reverse Mortgage Math

Lori Trawinski, director of banking and finance at AARP’s Public Policy Institute, declines to call the changes positive or negative, but does admit that higher costs might make the loan less attractive — and new principal limits might mean fewer seniors will qualify.

“If you have an existing forward mortgage, that mortgage needs to be paid off before you can get a reverse,” she says. “So if someone is counting on a certain amount of reverse mortgage proceeds to be able to pay off a forward loan, it could be that with the new principal limit factors, they may not get enough proceeds out of the loan to do that.”

Higher upfront costs might also be a disincentive to consumers, Trawinski says.

“For about three quarters of borrowers, the upfront premium went from 0.5% to 2%, so that’s a significant increase. It may dissuade some borrowers from going forward with the loan,” she says.

Amy Ford, NCOA’s senior director of home equity initiatives and social accountability, agrees that these factors might influence consumer decisions and says the changes highlight the need for effective counseling.

What are your mute-button commercials?

You know. TV ads that are so annoying that you have to dive for the mute button to avoid hearing them.

Flooring Express. Ugh.