Ask The Underwriter
Thursday, 31 July 2008 16:00
Time to review the mailbag and inbox. We thank you for your support of the Ask the Underwriter column and look forward to your future questions.
Q If a Borrower currently has a reverse mortgage, but is not vested as a life estate, could they now change the vesting to a life estate? I do believe to re-convey a deed while having a reverse may not be permitted, but does that pertain to conveying into a life estate? Will this create a re-fi situation due to the fact that ownership of the property would actually be changing?
A (In “Layman’s Terms”) vesting/property changes in many cases do not precipitate a refinance. If you consult the Mortgage and/or Deed of Trust as well as the servicing information provided by the Lender’s servicing agent, you will find in most cases that, as with many “forward” vesting and property issues, changes to the real estate collateral vesting may result in acceleration of the note without the prior permission of the Lender. The key operative words are “without the prior permission of the Lender”.
The true answer to your question must be determined by the Lender servicer. In an effort to assist your Borrower(s) be aware that privacy issues will have an impact as to the amount of assistance you can provide. I would first suggest that the Borrower consult with an attorney to discuss the nature of any changes in vesting. To facilitate this conversation you may wish to direct the Borrower which documents from their closing package would be best to provide at the time of this meeting. Additionally, providing appropriate servicing center contact information will allow for the direct contact by the Borrower and or their representative.
Caution is offered to Originators. Our innate ability to “want to help” is sometimes a very difficult behavior to control. Borrowers should never be guided to make important changes to their property ownership without the benefit of legal representation. You are an originator, not an attorney.
Q My Borrowers live in several homes around the country. Is it the home they spend most of their time in that determines their principal residence?
A Principal residence means the dwelling where the Borrower maintains his or her permanent place of abode, and typically spends the majority of the calendar year. A person may have only one principal residence at any one time. In most cases, at least one Borrower must occupy, establish, and use the property as Borrower’s principal residence after the execution of the Security Instrument. In most cases the Borrower shall continue to occupy the property as Borrower’s principal residence for the term of the Security Instrument. In most cases the Borrower’s failure to maintain subject property as principal residence will be considered a maturity event under the terms and conditions set forth in the Security Instrument and could result in a demand for repayment of the reverse mortgage.
There is no limit on the number of other financed properties a Borrower may own as long as the subject property is the Borrower’s principal residence.
In the case where an eligible property is a one to four family dwelling units, a multi dwelling unit, one unit must be the Borrower’s principal residence.
Occupancy verification is one of the major issues Underwriter’s are concerned with daily. Do not be surprised in some cases if you are requested to provide additional back-up documentation to verify occupancy, if the “major” Borrower identification documentation does not clearly provide evidence of the Borrower primary residence address.
Additionally, do not confuse HECM primary residence guidelines with other proprietary reverse mortgage products currently offered in the market. Non-FHA insured programs may provide variations of primary residence definition including the permissibility of second home financing.
Q I just received a completed application package from one of my Borrowers via the mail. Upon further inspection I noted that the documents are all signed, but some of the dates are different. What should I do?
A In considering senior behavior, more than likely the senior read and/or reviewed the documents at different times. Also likely, would be the possibility that the forms which were confusing for your Borrower were reviewed or shown to a trusted advisor prior to signing. That being said, the best fix for this problem is to inquire with the Borrower as to the reason for the various dates. Commit that explanation to an original written “Processors Certification” to be included in the file at the time of submission to underwriting.
Q My recent underwriting submission for my Borrower was pended due to lack of a medical doctor letter to attest competency. I already provided the POA document for review. Why is this needed?
A My suspicion is that your certificate of counseling lacked evidence of the Borrower being counseled and/or the application was completed by the Attorney-In-Fact. The doctor’s letter is required to verify in fact that both the Borrower was competent at the time the POA document was executed and/or the Borrower is not competent at the present time and unable to undertake the actions and responsibilities of the reverse mortgage transaction.
Q One of my Borrowers is a non-permanent resident alien. Am I able to continue the application process?
A A non-permanent resident alien is eligible for financing under the same terms and conditions offered to U.S. citizens and permanent resident aliens. Borrowers with diplomatic immunity are not eligible. Permanent/non-permanent resident aliens with an Alien Registration Card (“Green Card”) who are at least 62 years of age at the time of closing are eligible for a HECM Reverse Mortgage Loan. In the case of multiple Borrowers, all Borrowers must be at least 62 years of age at the time of closing. Verification that the Borrower meets the age requirement by obtaining a reliable source of age verification must be in file.
Typically this would be one of the following:
• Social Security Authorization Form
• State issued identification card
• Valid Driver’s License
• Valid Passport
• Certified Copy of the Birth Certificate
Other reasonable reliable sources of age verification may be accepted upon the approval of the Underwriter. If the Borrower is a permanent resident alien, the file must contain evidence of lawful permanent residency.
A note about our subject matter expert: Mr. Rosynek has been involved in mortgage lending for over 30 years with the last 5+ years exclusively providing reverse mortgage lending solutions. To contact Mr. Rosynek or to learn more about 1st Reverse Financial Services, please visit www.1streverse.com or call 877-574-1000.
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