FIT for Reverse Mortgage Lenders, Part 1

Last Updated on Thursday, 29 July 2010 17:20 Written by Atare E. Agbamu Thursday, 29 July 2010 17:11

FIT Is All about Questions

It is a new day in HECM counseling (and lending) in America.

Beginning in September 2010, HUD is mandating a series of extra questions HECM counselors must ask reverse mortgage prospects during the mandatory counseling session before the loan application interview with a lender. These questions and processes are packaged as Financial Interview Tool or FIT.

Along with FIT, HUD is also requiring HECM counselors to do a benefits audit for seniors, using a national online resource called BenefitsCheckUp (BCU). Across the country, there are public and private benefit programs for seniors with limited means. For those who qualify, these programs could supplement reverse mortgage cash or render it unnecessary altogether, preserving it for when it is really needed.

Read more: FIT for Reverse Mortgage Lenders, Part 1

Understanding Reverse Mortgage Prepayments: Focus on HECMs

Last Updated on Thursday, 29 July 2010 17:21 Written by NewView Advisors Thursday, 29 July 2010 17:06

Part I: Mortgage Prepayment Risk in Reverse

Mortgage investors spend a great deal of time and effort analyzing prepayment risk, and with good reason. The mortgage borrower usually receives a valuable option: the ability to prepay at any time in whole, or in part, without penalty. This is sometimes easier said than done, especially in the current economic climate, but nonetheless the mortgage investor is short this option. Mortgage borrowers refinance to reduce their monthly payment and/or to cash out home equity that, under normal conditions, rises as the loan balance decreases, and the home value increases. Compounding the investor’s uncertainty is the fact that prepayments rise when interest rates fall (when reinvestment rates are lower), and prepayments fall when interest rates rise (when reinvestment rates are higher). As a result, mortgage investors must analyze the key drivers of forward mortgage prepayment rates: the mortgage interest rate, current mortgage rates, loan seasoning, the volatility of interest rates, and the available equity and refinancability of the underlying property.

Read more: Understanding Reverse Mortgage Prepayments: Focus on HECMs

$92 Million RMBS to be Sold

Last Updated on Thursday, 29 July 2010 17:23 Wednesday, 28 July 2010 19:04

Bank of America Merrill Lynch will sell a $92 million bond backed by troubled reverse mortgages insured by the federal government.  760 HECMs support this bond and the borrowers are all in distress, including foreclosure.  Wall Street is trying to revive a private issuer market, so the residential mortgage-backed security has come around.  In the past two months, Wall Street dealers have securitized distressed home loans, and the liquidation value has supported the bonds.

Read more: $92 Million RMBS to be Sold

Americans Outliving Retirement Savings

Last Updated on Thursday, 29 July 2010 18:30 Wednesday, 28 July 2010 18:40

The Employee Benefit Research Institute found that ½ of seniors saving for retirement are likely to outlive their savings, and not have enough to cover living expenses.  Now, those individuals nearing retirement, or planning for it, need to create and utilize more aggressive savings plans to close the gap.  Pension plans and Social Security are no longer reliable savings plans, so here are some strategies for making the most of retirement:

    1.    Budget for Reality
    •    Do your research, and don’t simply listen to friends and family.  Understand what will happen with inflation, taxes, and living costs, and don’t underestimate how much money you will need when you stop working. 


Read more: Americans Outliving Retirement Savings