A Decade of Change

When I entered the reverse mortgage business back in 2003, I thought it was a great program that would never change…Then 2008 happened.

When I entered the reverse mortgage business back in 2003, I thought it was a great program that would never change…Then 2008 happened.

Change began slowly in 2009 with a small change to the amount the government would allow us (lenders) to loan. This is called the “principal limit”
(PL). The PL is calculated using a “principal limit factor” (PLF). The PL is calculated using by multiplying the value of the home (up to the maximum
value allowed by HUD, called the Maximum Claim Amount [MCA] ), by the PLF. In order to do this, the lender needs to know the age of the youngest
spouse (even if not a homeowner), the value of the home (up to the HUD limit, or more accurately, the MCA), and the interest rate.

In 2009 HUD changed the amount they allow us to lend by changing the PLF tables. This lowered loan amounts. This small change foreshadowed numerous
changes that would occur over the next decade.

2010:

HUD started the decade off with a very busy year. They introduced a new reverse mortgage option called the HECM Saver (HECM stands for Home Equity
Conversion Mortgage – This is just the name of the FHA insured reverse mortgage program). The HECM Saver dramatically lowered the upfront costs
of the HECM by lowering the Initial Mortgage Insurance Premium from 2.0% of the MCA to 0.01%, by allowing homeowners to borrow a much lower amount.

The Federal Housing Administration (FHA) also made two changes to the HECM program in 2010:

1. The increased the ongoing mortgage insurance premium (MIP) from 0.50% of the loan balance per year to 1.25% per year.

2. They lowered the interest rate floor from 5.50% to 5.06%

2013:

HUD announced it is removing the HECM Saver option and instituting a tiered Initial MIP. The new Initial MIP will be 0.50% of the MCA if the homeowner
takes out less than 60% of the PL in the first 12 months. Or 2.50% of the MCA when the homeowner takes out more than 60% of the PL in the first
12 months (to pay off an existing mortgage, for example).

HUD also begins limiting the amount a homeowner is allowed to withdraw during the first 12 months of the reverse mortgage to 60% of the PL, unless
it is used to pay off a mortgage or other home related lien. In the case where an existing lien exceeds the 60% limit, the homeowner is allowed
to borrow enough to pay the lien, plus 10% of the PL.

They also reduced the PL by another 15%, lowering the amount available to the homeowner.

2014:

HUD addressed the Non-Borrowing Spouse (NBS) issue. An NBS is a person who is married to a reverse mortgage borrower, but not signed on the reverse
mortgage loan. HUD rules state that when the last remaining “borrower” permanently leaves the home, the HECM loan becomes due and payable. This
was a problem for spouses who were not on the HECM loan. They had to pay the reverse mortgage off but did not have the means to do so without selling
or losing the home to foreclosure.

HUD ruled that the due and payable status of a Non-Borrowing Spouse will be deferred for as long as the NBS continues to live in the home and satisfy
the loan conditions (continue to pay property taxes and homeowners insurance as well as maintain the home and keep their name on title). However,
no additional advances of proceeds will be available to the NBS.

2015:

The big news in 2015 was Financial Assessment. This rule requires lenders to analyze a potential borrowers’ income sources and credit history to determine
whether or not they can meet their financial obligations after the reverse mortgage is closed. If they fail either the willingness (credit), or
capacity (income), test, they could be required to have a mandatory set-aside of funds from the proceeds of the loan to cover the property taxes
and insurance premiums. This is called a “Life Expectancy Set-Aside (LESA).

The reason for this rule is that HUD, as well as the lenders and homeowners, want the reverse mortgage to be a sustainable solution for the homeowner.
A reverse mortgage needs to leave the homeowner with the ability to pay their property charges and monthly bills now and in the future.

2016: Hud increases the MCA (this is the maximum value a lender can use for calculation of loan amounts), from $625,500 to $636,150. This is first
increase since 2009 and begins a trend of increases for four years in a row.

2017:

Hud announced another change to the Initial MIP charged to borrowers. They eliminate the tiered system and go back to the 2009 rules of a flat 2.00%
of the MCA. It does not matter if you are taking all the proceeds at closing or very little.

They also increased the MCA from $636,150 to $679,650.

However, HUD dropped a bomb on the industry and future borrowers by dramatically reducing the PLF table, lowering the amount a homeowner can receive
from the HECM by about 20%. They also lowered the interest rate floor from 5.06% to 3.00%

2018:

HUD begins Collateral Risk Assessment on a temporary basis. Mortgagee Letter (ML 2018-06), states the following:

“For all HECM’s, FHA will perform a collateral risk assessment of the appraisal submitted for use in the HECM origination. Based on the outcome of
the assessment, FHA may require a second appraisal be obtained prior to approving the HECM.” The Letter continues, “Where a second appraisal is
required by FHA and provides a lower value, the mortgagee must use the lower value of the two appraisals in originating the HECM.”

What this means is that all Home Equity Conversion Mortgages (HECM) will have the appraisal reviewed by FHA. They have a computer system called an
Automated Valuation Model (AVM), that reviews the appraisal. This is similar to what Zillow and other on-line valuation web-sites use. If the actual
appraisal falls outside of certain data points (we don’t know what these are), FHA will require a second appraisal.

On a more positive note, HUD also increased the MCA from $679,650 to $726,525.

2019:

HUD introduces “Single Unit Approvals” for non-FHA approved condominiums. In theory, this allows condo owners the ability to get their individual unit
approved by FHA for an FHA insured loan. However, in practice, it has turned out to be a dud. The process is just as cumbersome and difficult as
getting the entire complex approved.

HUD makes the collateral risk assessment program permanent and they increase the MCA once again from $726,525 to $765.600.

Whew! Just about every year HUD makes one change or another and I’m sure it’s not going to slow down anytime soon. Stay tuned and keep your seat belt
buckled for the next 10 years.

Bruce Simmons

Bruce Simmons

I absolutely love what I do - working with senior homeowners to help them live a more comfortable, flexible and secure retirement. I have the absolute best customers in the world, and even though I worked in the forward mortgage business for a number of years, I could never go back to doing conventional loans. I'm a 100% reverse mortgage specialist.

5.0

I was hesitate about getting a reverse mortgage until Bruce Simons put my mind at rest. He is easy to work with, extremely knowledgeable and efficient. Things get done and he will make sure that you understand every part of the process. I interviewed several other people and he was hands down.....The only choice.

Doing a Reverse Mortgage is a major decision, when working with Bruce he came out personally to go over every thing in detail, there was no pressure to finalize the transaction, I had even put the loan on hold for awhile even though I had locked in my rate, I had called Bruce off and on for a few weeks to ask questions that I had concerns about and he was always available to talk to me. In the end it gave me time to feel comfortable about my decision to move forward with the Reverse. Bruce was very pleasant to work with and would certainly recommend Bruce if you are going to consider a Reverse Mortgage.

Bruce Simmons at American Liberty is one of the best in the reverse mortgage industry. I have known and worked with him for years and he always does a great job. You are in good hands with Bruce and know that he will take good care of you or your loved ones every step of the way.

Best thing I ever did! Bruce Simmons at American Liberty Mortgage is the best. He is always there to answer your questions, and can easily explain the whole idea of a Reverse Mortgage. He takes the time and goes through the entire process with you. It worked out so well for me. Thank You Bruce!

We had researched Reverse Mortgages for 5 years and after hearing about Bruce Simmons and meeting with him, we finally decided to move forward with the Reverse Morgage. It has been over a year now and we are still very pleased with our decision. We think Bruce is very professional, knowledgeable and honest. Thank you, Bruce, for all your help.

I first met Bruce Simmons 2017. I found him on the internet. I was looking for someone local. I called him and explained I was only looking into doing a reverse mortgage, so I did not want him to think this was something I was ready to do. Bruce was friendly, very open about the basics of a reverse mortgage. Bruce came to my home and presented the figures and other details that he could offer. The first thing that impressed me was this was not a hard sell, more of a informational meeting. He was very open about all of the details, and answered my questions without hesitation. What really was evident was he was establishing a relationship with me, and I realized he knew I would not take the loan at that time. There was not enough equity in my home, and I would have to bring money to the table. Although I was not ready to do a loan, Bruce assured me he is always available for questions. Four years later, I finally did do a reverse mortgage, and I couldn't be happier with having done it. I have done away with a mortgage payment which allows me to fund my retirement account with that mortgage payment. We did some much needed landscaping with our cash out transaction, and will move on to improvements inside of the house. My reverse mortgage has a line of credit, and I feel sense security knowing it is there if I need it. Bruce explained that a reverse mortgage is not for everyone, but I feel certain that he paved the way for a strategy that worked for me. I will definitely do a refinance when the time is right. I will check in with Bruce to be sure what the benefits are when I do it again.

I have worked with Bruce Simmons for 15 years. Bruce is one of the best in the industry. He is extremely knowledgeable, kinds and detailed in what he does. His clients love working with him and trust him to help them with their Reverse Mortgage loans. I would recommend Bruce to anyone I know that is thinking about or wanting to do a Reverse Mortgage. He will always take very good care of the customers and make sure their needs are met! Class act and one of the best in the industry by far!

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Kathleen Mitchell
Kathleen Mitchell

Just left us a 5 star review

google
Kathleen Mitchell
September 18, 2022

I was hesitate about getting a reverse mortgage until Bruce Simons put my mind at rest. He is easy to work with, extremely knowledgeable and efficient. Things get done and he will make sure that you understand every part of the process. I interviewed several other people and he was hands down.....The only choice.

google
Mike Hoeffner
August 30, 2022

Doing a Reverse Mortgage is a major decision, when working with Bruce he came out personally to go over every thing in detail, there was no pressure to finalize the transaction, I had even put the loan on hold for awhile even though I had locked in my rate, I had called Bruce off and on for a few weeks to ask questions that I had concerns about and he was always available to talk to me. In the end it gave me time to feel comfortable about my decision to move forward with the Reverse. Bruce was very pleasant to work with and would certainly recommend Bruce if you are going to consider a Reverse Mortgage.

google
Jonathan Maiolatesi
August 22, 2022

Bruce Simmons at American Liberty is one of the best in the reverse mortgage industry. I have known and worked with him for years and he always does a great job. You are in good hands with Bruce and know that he will take good care of you or your loved ones every step of the way.

google
Ronda Giblin
August 20, 2022

Best thing I ever did! Bruce Simmons at American Liberty Mortgage is the best. He is always there to answer your questions, and can easily explain the whole idea of a Reverse Mortgage. He takes the time and goes through the entire process with you. It worked out so well for me. Thank You Bruce!

google
John Bell
August 20, 2022

We had researched Reverse Mortgages for 5 years and after hearing about Bruce Simmons and meeting with him, we finally decided to move forward with the Reverse Morgage. It has been over a year now and we are still very pleased with our decision. We think Bruce is very professional, knowledgeable and honest. Thank you, Bruce, for all your help.

google
Mary Bernard
August 19, 2022

I first met Bruce Simmons 2017. I found him on the internet. I was looking for someone local. I called him and explained I was only looking into doing a reverse mortgage, so I did not want him to think this was something I was ready to do. Bruce was friendly, very open about the basics of a reverse mortgage. Bruce came to my home and presented the figures and other details that he could offer. The first thing that impressed me was this was not a hard sell, more of a informational meeting. He was very open about all of the details, and answered my questions without hesitation. What really was evident was he was establishing a relationship with me, and I realized he knew I would not take the loan at that time. There was not enough equity in my home, and I would have to bring money to the table. Although I was not ready to do a loan, Bruce assured me he is always available for questions. Four years later, I finally did do a reverse mortgage, and I couldn't be happier with having done it. I have done away with a mortgage payment which allows me to fund my retirement account with that mortgage payment. We did some much needed landscaping with our cash out transaction, and will move on to improvements inside of the house. My reverse mortgage has a line of credit, and I feel sense security knowing it is there if I need it. Bruce explained that a reverse mortgage is not for everyone, but I feel certain that he paved the way for a strategy that worked for me. I will definitely do a refinance when the time is right. I will check in with Bruce to be sure what the benefits are when I do it again.

google
LESLIE HINES
August 19, 2022

I have worked with Bruce Simmons for 15 years. Bruce is one of the best in the industry. He is extremely knowledgeable, kinds and detailed in what he does. His clients love working with him and trust him to help them with their Reverse Mortgage loans. I would recommend Bruce to anyone I know that is thinking about or wanting to do a Reverse Mortgage. He will always take very good care of the customers and make sure their needs are met! Class act and one of the best in the industry by far!