Reverse Mortgage Info
Programs
Click Below For Details
- FHA Home Equity Conversion
Mortgage (HECM)
The oldest and
most popular reverse mortgage product with 90-plus percent of the total market
is the FHA Home Equity Conversion Mortgage (HECM). Available since 1989, HECMs
are insured by the federal government through the Federal Housing Administration
(FHA), a part of the U.S. Department of Housing and Urban Development.
The
amount of money you get from a HECM depends upon your age, appraised home value,
and current interest rates. The older you are and the more valuable your home
(and the less you owe on your home), the more money you get.
You and your
heirs are protected by the mortgage insurance premium (MIP). This insurance premium
guarantees that if the company managing your account – commonly called the loan
“servicer” – goes out of business, the government will step in and make
sure you have continued access to your loan funds and you and your heirs will
never owe more than the value of your home when the HECM must be repaid.
- Fannie
Mae Home Keeper
Headquartered in Washington,
DC, Fannie Mae is the nation's largest investor of home mortgages and a major
investor of reverse mortgages, including the federally insured Home Equity Conversion
Mortgage (HECM). In 1996, Fannie Mae developed its own proprietary Home Keeper®
reverse mortgage as a conventional market alternative to the HECM. The Home Keeper
was developed to address unmet needs that could not be served by the HECM program,
such as individuals with higher property values, condominium owners, and seniors
wishing to use a reverse mortgage to purchase a new home. Home Keeper loans can
be larger than HECMs because Fannie Mae’s maximum mortgage limit – $417,000
for 2006 – is larger than the locally applied FHA maximum mortgage limit.
- Cash
Account "Jumbo" Loan
Financial Freedom
administers a "jumbo" proprietary reverse mortgage product called Cash Account
that has traditionally benefited homeowners living in higher-priced homes valued
above the FHA and Fannie Mae lending limits.
In July 2006, Financial Freedom
introduced a new version of its "jumbo" product, called Cash Account Advantage
that enables homeowners living in properties valued between $450,000 and $750,000
to access greater amounts of equity. The Simply Zero Cash Account™, is the first-ever
reverse mortgage loan to eliminate all up-front costs. With the Simply Zero Cash
Account, borrowers are required to draw 100% of their maximum available benefit
at loan closing. Currently, the program is offered in most states, but not all.
What's Next?
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Here For Details
Calling for Parents/Friend/Client?
- Learn
More
ADULT CHILDREN
We,
as adult children, find ourselves in the position of navigating the Internet and
other sources in an attempt to help our parents find the resources available to
them as senior citizens for everything from the best doctor in the area to changes
in the Medicare program.
Academy Mortgage can help you understand the Reverse
Mortgage program and how it will enable your parents to live independently in
their own home. The Reverse Mortgage is designed to give senior homeowners financial
stability and emotional security.
Imagine … the money they had to use
for their mortgage payment is now freed up and can be used as additional income
so that they can make home repairs, pay for home healthcare or take advantage
of things that bring them joy. A Reverse Mortgage can bridge the gap between a
challenging life and a comfortable one.
Call us to discuss the Reverse Mortgage
program and how it can help your parents enjoy their retirement years. We will
meet with you and your parents in the comfort of their home to answer your questions.
Let us show you how the Reverse Mortgage will enable your parents to achieve economic
stability, while you, as an adult child, will gain the peace of mind knowing your
parents are free from financial worry.
If you have a Power of Attorney for
your parents, please provide us with a copy of the document to determine that
the correct language in included to facilitate timely processing. Our on-site
title company will review the document for you.
FRIENDS
We
can provide you with the general information you may need to discuss the program
with your friend. Please understand that we cannot discuss the financial specifics
with you unless instructed by the senior homeowner.
CLIENTS
Please
complete the Custom Analysis with the necessary fields and your client’s contact
information. We will need to get your client’s approval to discuss the financial
specifics before providing you with the information. Call us to discuss the program
and how to address the program with your clients.
Reverse Mortgage Terms/Definitions
Click
for Definitions
- Annual
Percentage Rate - APR
- The cost of
a mortgage stated as a yearly rate; includes such items as interest, mortgage
insurance, and loan origination fee (points).
- Annuity
- A
monthly cash payment you get from an insurance company for the rest of your life.
- Closing
- A
meeting where documents are signed to “close the deal” on a mortgage; the
time a mortgage begins.
- Credit
Line or Line of Credit - LOC
- A
credit account that lets a borrower decide when to take money out and also how
much to take out.
- Expected
Interest Rate
- In the HECM
program, the interest rate used to determine a borrower’s loan advance amounts,
it equals the 10-year rate for U.S. Treasury Securities, plus a margin.
- FHA
- Federal
Housing Administration (HUD Office of Housing).
- Good
Faith Estimate
- The good-faith estimate
is a report from your lender that outlines the costs you will incur to get your
mortgage. It is based on the lender's typical loan origination costs for the area
where your home is located.
- Home
Equity
- The value of a home,
subtracting any money owed on it.
- Home
Equity Conversion Mortgage - HECM
- The
only reverse mortgage program insured by the Federal Housing Administration, a
federal government agency.
- HUD
- U.S.
Department of Housing and Urban Development
- Initial
Interest Rate
- In the HECM program,
the interest rate that is first charged on the loan beginning at closing, which
equals the one-year rate for U. S. Treasury Securities, plus a margin.
- Lump
Sum
- A single loan advance at closing.
- Margin
- In
the HECM program, the amount added to the one-year Treasury rate to determine
the initial and current interest rates, and to the 10-year Treasury rate to determine
the expected interest rate.
- MIP
- Mortgage
Insurance Premium.
- Non-Recourse
Mortgage
- A home loan in which the
borrower can never owe more than the home's value at the time the loan is repaid.
- Origination
- The
overall administrative process of setting up a mortgage, including the preparation
of documents.
- Proprietary
Reverse Mortgage
- A reverse mortgage
product owned by a private company.
- Reverse
Mortgage
- A non-recourse
home loan with no income or credit requirements that gives cash advances to a
homeowner aged 62 or older against the home equity providing cash advances to
the senior homeowner. No repayment is required until a future time, and repayment
is capped by the value of the home when the loan is repaid.
- Reverse
Mortgage Counseling
- In order to get
a Home Keeper® reverse mortgage or a Home Equity Conversion Mortgage (HECM),
you must receive counseling that explains how this financing option works. During
counseling, you will receive an estimate of your loan advances and an explanation
of your responsibilities as a borrower. Other sources of unbiased information
education may also be provided. Usually, a non-profit agency will conduct the
counseling.
- Right
of Rescission
- A borrower’s right
to cancel a home loan within three business days of the closing.
- Servicing
- Administering
a loan after closing, such as maintaining loan records and sending statements.
- Survey
- A
drawing or map showing the precise legal boundaries of a property, the location
of improvements, easements, rights of way, encroachments, and other physical features.
Your lender may require you to have a survey of the property. This process confirms
that the property's boundaries are correctly described in the purchase and sale
agreement.
- Tenure
Advances
- Fixed monthly loan
advances for as long as a borrower lives in the home.
- Term
Advances
- Fixed monthly loan
advances for a specific period of time.
- Title
Search
- A check of the title
records to ensure that the seller is the legal owner of the property and that
there are no liens or other claims attached to the property. Encumbrances include
any liens -- legal claims against a property filed by creditors as a means to
collect unpaid bills. Liens can also be filed by the Internal Revenue Service
for nonpayment of taxes. Any such claims must be paid by the seller -- this often
occurs either before or at the closing.
- Total
Annual Loan Cost Rate - TALC
- The projected
annual average cost of a reverse mortgage including all itemized costs.
History of Reverse Mortgages
1985
HUD
sponsors conference on home equity conversion
1988
FHA reverse mortgage insurance legislation signed by President Reagan on 2/5/88;
Judith V. May named to develop program
First line-of-credit reverse mortgage
developed by VA Housing
Development Authority
HUD releases proposed
regulations for FHA reverse mortgage
insurance program
Fannie Mae
announces intention to purchase reverse mortgages
insured by FHA
U.
S. Administration on Aging announces cooperative agreement
with HUD to sponsor
training of reverse mortgage counselors
1989
HUD
releases "Home Equity Conversion Mortgage" (HECM) program handbook (#
4235.1)
First FHA-insured HECM made to Marjorie Mason of Fairway,
KS by the James B Nutter Company
1990
Mark McVearry begins career with Reverse Mortgage program.
1997
National Reverse Mortgage Lenders Association (NRMLA) organized by Jeffrey Taylor
with Peter Bell as staff
Academy Mortgage established by Mark McVearry in
Baltimore, Maryland.
**Excerpts from National Center for
Home Equity Conversion (NCHEC) history
