BREAKING NEWS: New Changes to HECM Reverse Mortgage Program

On Tuesday, August 29th, 2017 the Department of Housing and Urban Development (HUD), surprised the reverse mortgage industry by formally announcing new changes to the Home Equity Conversion Mortgage (HECM) program.
New Changes to HECM Reverse Mortgage Program

On Tuesday, August 29th, 2017 the Department of Housing and Urban Development (HUD), surprised the reverse mortgage industry by formally announcing new
changes to the Home Equity Conversion Mortgage (HECM) program.  HECM is the name for the FHA reverse mortgage program which encompasses about 95% of the reverse market.  HUD cited concerns about the strength of the reverse mortgage program and taxpayer losses.
These changes will take place October 2, 2017.

What is a HECM Reverse Mortgage?

A reverse mortgage is an FHA insured loan specifically designed for homeowner’s age 62 and above, that allows you to convert a portion of the value of
your home into tax free money, without having to sell your home, give up title or obligate yourself to a monthly mortgage payment.

It is just a loan against your home. The lender has a lien against the title just like every other mortgage product. You are still charged interest,
just like any other loan, however, you do not pay it on a monthly basis. There are no monthly payments because the interest is deferred to
the end of the loan.  You have the benefit of no mortgage payments, but every month, the interest that is charged is added to the loan balance,
so the balance continues to grow over the life of the loan. This is truly a 100% negative amortization loan.

The loan only comes due when they last homeowner permanently leaves the home or passes away.  You do have to live in the home as your primary residence,
pay the property taxes and homeowners insurance as well as maintain the home, but you do that now anyway.

What Are The Changes?

  1. HUD is changing the Initial Mortgage Insurance Premiums (IMIP) to a flat 2.00% of the value of the home, up to maximum value of $636,150.  Under
    the current program, if you took out less than 60% of the amount available from the HECM, you would only be charged 0.5% of the value of the home
    up to $636,150.  If you had to take out more than 60%, to pay off an existing lien on the home for instance, you would then be charged 2.5%
    of the value. Under the new rules the fee will be the same regardless of the initial draw amount – 2.0% of the value of the home up to $636,150.

    Because the loan balance can increase, all HECM loans are required to have mortgage insurance.  The mortgage insurance premium protects the
    lender in case the balance of the loan exceeds the value of the home.  If this were to happen, the bank can never come back to you, your estate
    or your heirs to collect the loss.  The mortgage insurance covers the loss, but the lender charges you by adding the IMIP to your closing
    costs and ongoing mortgage insurance to your loan balance. (see #3 below)

  2. HUD is also changing the amount of money available under the HECM program.  The amount of money that you can receive from a reverse mortgage is
    based on the age of the youngest homeowner, the value of the home and the interest rate. The changes HUD is implementing will reduce the amount
    available by approximately five to ten percent.  For example, if you qualify today to receive $150,000 from a reverse mortgage, you will now
    get between $7,500 and $15,000 less on October 2nd .*

    This could be the change that has the biggest impact on people.  For example, if you qualify today to receive $150,000 and this is just enough
    to pay off the existing loan on your home but  you wait until October 2nd to start the application, you would then only qualify to receive
    $135,000 – $142,500*, which would not be enough to pay off the loan balance.

  3. There is one positive change in that HUD is lowering the monthly mortgage insurance premium from 1.25% of the loan balance to 0.5%.  You do not
    pay this out of your pocket but it is added to your loan balance along with the interest on the loan.

    For example, if you have a loan balance of $100,000 today, the ongoing mortgage insurance premium is 1.25%.  This means that a year from now,
    your loan balance will be approximately $1,250.00 larger.  Because you were charged this fee, but are not paying for it directly, it is added
    to your loan balance and will be paid when you sell the home or pass away.

    If you get your reverse mortgage in place after October 2nd, this fee will only be 0.5%.  With the same scenario above, under the new rules,
    you would only be charged $500.00 instead of $1,250.00.  However, the initial mortgage insurance premium could be larger and you will qualify
    for less money.

Why Are These Changes Taking Place?

Without going into too much detail, the mortgage insurance premiums that are charged on reverse mortgages go into a pool and any losses are taken from
that pool to pay the claims.  Unfortunately, since 2009 there have been a lot of claims from the HECM reverse mortgage program. 

HUD secretary Ben Carson stated the reasoning in an e-mail to an industry blog called Reverse Mortgage Daily, “Given the losses we’re seeing in the program,
we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers.   Fairness dictates that
future HECM loans do not adversely impact the overall health of FHA’s insurance fund, which supports the financing needs of younger, mostly first-time
homeowners with traditional FHA mortgages.”

Mr. Carson also stated, “We’re taking needed and prudent steps to put the HECM program on a more sustainable footing so it can remain a resource for senior
borrowers.&rdquo

What Should You Do Now?

The first step you should take is to do your homework and learn the facts about reverse mortgages to see if it is something that might work for your situation.  Contact a local reverse mortgage specialist and get all your questions answered.  If it looks like this is something that you want to move forward with, work with the reverse mortgage specialist
to compare the benefits of moving forward before October 2nd to the benefits of waiting until after this time to decide which is right for you.

*These numbers are estimates only.

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

My wife and I are retired and had a mortgage that was quite high. We contacted Bruce regarding a Reverse Mortgage and were pleased with his knowledge and experience. He made the whole process very easy and explained everything along the way. Since then, I have had a couple of questions and contacted him regarding the RM. Bruce has always been very responsive and returned our calls within minutes. We couldn't be happier having used Bruce for the Reverse Mortgage and highly recommend him.

Bruce has been serving my interest over and above what one might expect during the whole process of handling my reverse mortgage dating back to 2010 and continues to be available at present whenever a question may arise. He is one of the most reliable, trustworthy and knowledgeable experts regarding reverse mortgages that I have had the privilege to do business with! I would highly recommend Bruce to anyone who is considering a reverse mortgage. Thank you Bruce!

I met Bruce from a referral who just love what he did for them on their Reverse Mortgage, So I contacted Bruce and told him my story and he came up with a great Reverse Mortgage for me and my needs and now I am living good and not worrying about Finances anymore. He had it done in a timely manner. If you are looking for the MAN to help you get the best Reverse Mortgage you need to call him and hope you let him help you.

Bruce is one of the most professional, knowledgeable and efficient experts I have worked ŵith ever in any field. He is fast to answer and always ready to help...and he's a great guy!

Gerald Cook
Gerald Cook
5.0

Bruce did our original reverse mortgage and has also refinanced it twice. He works hard to get the best deal possible while making it as easy for us as possible. When our first refinance received a low initial appraisal, Bruce helped the appraiser find better information and increase the appraised value. He's the best.

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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Reverse Mortgage Guide

Reverse Mortgage Guide

This 28-page Consumer Guide will help you make and informed decision whether a reverse mortgage is right for you.

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John Addante
John Addante

Left us a 5 star review

My wife and I are retired and had a mortgage that was quite high. We contacted Bruce regarding a Reverse Mortgage and were pleased with his knowledge and experience. He made the whole process very easy and explained everything along the way. Since then, I have had a couple of questions and contacted him regarding the RM. Bruce has always been very responsive and returned our calls within minutes. We couldn't be happier having used Bruce for the Reverse Mortgage and highly recommend him.

Bruce has been serving my interest over and above what one might expect during the whole process of handling my reverse mortgage dating back to 2010 and continues to be available at present whenever a question may arise. He is one of the most reliable, trustworthy and knowledgeable experts regarding reverse mortgages that I have had the privilege to do business with! I would highly recommend Bruce to anyone who is considering a reverse mortgage. Thank you Bruce!

I met Bruce from a referral who just love what he did for them on their Reverse Mortgage, So I contacted Bruce and told him my story and he came up with a great Reverse Mortgage for me and my needs and now I am living good and not worrying about Finances anymore. He had it done in a timely manner. If you are looking for the MAN to help you get the best Reverse Mortgage you need to call him and hope you let him help you.

Bruce is one of the most professional, knowledgeable and efficient experts I have worked ŵith ever in any field. He is fast to answer and always ready to help...and he's a great guy!

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!