Michael Pinter's Reverse Mortgage Blog

Nice Reverse Mortgage Piece on Marketwatch

First Meridian Mortgage — Tue, 29 Jun 2010 17:56:08 -0700

It is always good to see or read fair and balanced media portrayals about Reverse Mortgages. Unfortunately there are not enough. Yesterday, Amy Hoak wrote a very fair article in Marketwatch about Reverse Mortgages. It is a worthwhile read. Here is the link to it:

http://www.marketwatch.com/story/reverse-mortgages-now-a-less-costly-lifeline-2010-06-28

Another Presentation to Help Your Reverse Mortgage Understanding

First Meridian Mortgage — Tue, 29 Jun 2010 13:23:53 -0700

Here is a presentation from Genworth (a division of GE that bought Liberty Reverse Mortgage a few years ago for $50 million dollars) that gives some basics about Reverse Mortgages. In my opinion, it is not as good as the guide I posted last week ("Your Reverse Mortgage Guide" which you can get here: http://activerain.com/blogsview/1709741/my-first-reverse-mortgage-giveaway) but it can be helpful with many of the basic questions and issues that surround Reverse Mortgages. I know it's redundant, but I want to explain how Reverse Mortgages work to as many people in the world as I can because I believe that the more people that understand a reverse mortgage, the more people that can be helped by them.

Change your life with a Reverse Mortgage

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In the spirit of Reverse Mortgage giving....

First Meridian Mortgage — Mon, 28 Jun 2010 14:37:01 -0700

Here is a presentation I gave several times to people in the insurance industry (mostly Long-Term Care Insurance, but Life insurance, too) I think it's a great explanation how Reverse Mortgages work and some great, real-life examples of how Reverse Mortgages can help insurance agents and their clients. I reiterate that I believe that Reverse Mortgages are the most misunderstood financial products in the world and I am doing whatever I can to explain them to as many people as I can because I know that the more people that understand how a Reverse Mortgage works, the more people can be helped by them. Reverse Mortgages let you hold on to the things you love, especially your independence.

Reverse mortgage to financial planners (insurance)

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Another great Reverse Mortgage Giveaway

First Meridian Mortgage — Fri, 25 Jun 2010 12:14:45 -0700

Here is a presentation that I have given at seminars about how Reverse Mortgages work. It is a little wordy and I am working on changing many of the slides, but if you read it, it gives a lot of useful information.My favorite part is about the misconceptions that people have about Reverse Mortgages. I still cannot believe how many intelligent professionals, many of whom serve the senior community, such as elder law attorneys and financial planners, still don't have a clue about how a Reverse Mortgage works. I can't tell you how many of them have told me that the lender keeps the Reverse Mortgage borrowers home. I still believe that Reverse Mortgages are the most misunderstood financial product in the world and I am trying to explain it to as many people as I can. Here is the presentation:

Reverse Mortgage Truth

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A few Great Examples of TERRIBLE Reverse Mortgage information

First Meridian Mortgage — Thu, 24 Jun 2010 10:29:05 -0700

Before I start giving away more great stuff about Reverse mortgages, I wanted to give a few examples of completely worthless, and sometimes incorrect stuff that is out there about Reverse Mortgages, if you should happen to search for them.

The first one is an article called "The 5 Key Reverse Mortgage Facts Before You Decide". Here is the link if you want to waste some time: http://www.articlesnatch.com/Article/The-5-Key-Reverse-Mortgage-Facts-Before-You-Decide/1269993

In fact almost none of the five things are remotely important in the decision to make about whether a Reverse Mortgage is right for you or not. "Take the counseling seriously" Are they serious? How about looking into what your financial needs are and whether a Reverse will satisfy them.

Another example is called "A Clear Picture Of What A Reverse Mortgage Is" Its is accurate, but not very helpful. Any explanation of a Reverse Mortgage that starts out with "With the reverse option you get a payment sent to you." is not really getting to the point, especially when in teh vast majority of Reverse Mortgages, it is not true. Here's the link: http://articles.directorygold.com/Article/A-Clear-Picture-Of-What-A-Reverse-Mortgage-Is/442579

There are so many examples of bad articles, confusing pieces and in most cases they are written by someone who either does not understand the product or is just unable to explain it clearly. What I am trying to do is undo these and explain Reverse mortgages in a way that ANYONE can easily understand them. This is not easy, but I will do it.

My First Reverse Mortgage Giveaway

First Meridian Mortgage — Wed, 23 Jun 2010 15:18:46 -0700

This is, in my opinion, the finest written report on how a Reverse Mortgage works. I think it is the clearest written, most descriptive explanantion of most of the details about a Reverse Mortgage. I believe that Reverse Mortgages are the most misunderstood financial product in the world. I belive that complicated financial derivatives are easier to explain and enjoy less misconception by the public than Reverse Mortgages do. I am making it my mission, my purpose, to explain how Reverse Mortgages to as many people as possible because I believe that the more people that understand Reverse Mortgages, the more people that will be helped by them. Here's the report; you can download it if you click on the link:

Your reverse mortgage guide

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I've decided to give away as much Reverse Mortgage information as possible

First Meridian Mortgage — Tue, 22 Jun 2010 17:27:06 -0700

I am making my number one priority to educate as many people about Reverse Mortgages as possible.

I am going to give away, to anyone that asks for it, what I believ to be the finest written report about Reverse Mortgages that I know of. I have already posted three Reverse mortgage presentations on SlideShare and i will put more on there shortly.

I give this information freely because I believe that the more people that understand Reverse Mortgages, the more people can be helped by them. I believe that Reverse Mortgages are the most misunderstood financial product in the world today. Most professionals that serve seniors (e.g elder law attorneys, financial planners, etc.) don't understand them and this ignorance is hurting people throughout this country.

I will post much of what i am giving away on this blog, so stay tuned.

It's Easy To Get Frustrated Helping People With Reverse Mortgages

First Meridian Mortgage — Wed, 16 Jun 2010 15:30:48 -0700

I thought this would be a lot easier. I know how much Reverse Mortgages help people. I have saved dozens of people from certain foreclosure. I have helped people who could not put food on their table, I have helped people help their children and I have helped people sleep at night, just by knowing that if an emergency comes up, they will have the money to pay for it.

No matter how much I help people and no matter how much I know and believe that I am doing the right thing, I still get frustrated every time I hear the same negative remarks about Reverse Mortgages: "They're no good" "Isn't that when the lender gets the home" "Aren't those the things where the borrowers get kicked out of their homes" and so on.

In every case, these remarks are made by people that have little to no understanding of how a Reverse Mortgage works.

I am going to dedicate my self to educating as many people as possible about Reverse Mortgages. I am going to giver away what I think is the best written report on Reverse Mortgages to as many people as I can, because I believe that the more people who know about Reverse Mortgages, the more people can be helped by them.

I'm still frustrated, but at least I'm trying to do something about it.

Great Piece in SmartMoney Today about the Reverse Mortgage Tax Implications

First Meridian Mortgage — Thu, 27 May 2010 17:38:38 -0700

Bill Bischoff wrote stoday in SmartMoney that the tax benefits of a Reverse Mortgage for the heirs of the borrower may be much greater than the costs of the loan.

His summary of what a Reverse Mortgage is and how it works is very well-written and he wrote that a Reverse Mortgage can possibly cause the stepped-up tax basis to eliminate or reduce the capital gains tax that they may have to pay.

Here's a link to this short and excellent article:

http://www.smartmoney.com/Personal-Finance/Taxes/would-a-reverse-mortgage-affect-my-taxes/

Wow! Bank of America is starting to cover the biggest Reverse Mortgage closing cost on certain loans

First Meridian Mortgage — Fri, 07 May 2010 15:02:04 -0700

It's no secret that fixed-rate Reverse Mortgages have been getting a much better execution in the secondary market. This means that the lenders are getting much more money when they sell the loans after they close.

Most lenders have been passing this on to the originators like me. Some have been covering some of the closing costs like the servicing fee or origination fee. The biggest closing cost is almost always the Mortgage Insurance Premium or MIP that is 2% of the appraised value (up to $625,500). The MIP is usually more than half of the closing cost total.

At first glance, Bank of America paying the MIP for fixed-rate Reverse Mortgages sounds great, but there are a few issues and complications that it can cause. here are three potential issues:

1) Will the huge disparity in closing costs push people to take the fixed-rate loan, which requires a full draw at closing, instead of an adjustable-rate loan that gives them much more flexibility in how they take the money out?

2) Will these new closing cost reductions cause the borrowers confusion when they see that their adjustable-rate loan had $14,000 more in closing costs than their friends fixed-rate loan? (remember that for some borrowers a fixed-rate option is the right thing and for some, an adjustable-rate option is much better)

3) If the secondary market for reverse mortgages deteriorates in the future, will we be able to start charging borrowers for the MIP when they may not want to anymore?

There Really is Nothing Else That Does What a Reverse Mortgage Does

First Meridian Mortgage — Wed, 05 May 2010 12:44:35 -0700

If all of the professionals that help Baby Boomers, Active Retirees and Seniors understood how Reverse Mortgages work, the world would be a much better place.

I hear pretty much the same story from every elder law attorney, financial planner, long term care insurance agent, daily money manager and geriatric care manager. It is:

"I understand reverse mortgages, I don't like them, they are a last resort, too expensive, there are better alternatives, they don't work for my clientele, etc."

Then, at some point in the same conversation or maybe months later, they'll say something like "The bank gets the house, right?" or "How long will the lender let them stay?" They don't understand.

Here's the truth: Reverse Mortgages are the ONLY solution for any homeowner 62 or older with significant equity and a serious financial need who wants to remain their homes indefinitely. PERIOD

99% of the above mentioned people cannot qualify for ANY OTHER LOAN!

ANY OTHER LOAN THEY WOULD TAKE WILL ONLY GIVE THEM A FINITE PERIOD OF TIME BEFORE THEY ARE FORECLOSED AND EVICTED ANYWAY

Reverse Mortgages allow them to stay for as long as they want to! Even if they live to be 150 years old. There is just nothing like it on this earth. Oh and for all of the "professionals" who tell me "they should just sell the home" Guess what? THEY DON'T WANT TO SELL

The Wall Street Journal Mentioned that Reverse Mortgages Are Getting Cheaper

First Meridian Mortgage — Thu, 29 Apr 2010 17:37:09 -0700

An Article last week in The Wall Street Journal mentioned the recent changes and that Reverse Mortgages are getting less expensive. Maybe this is he beginning of a new age of more positive media coverage.

Most professionals that help seniors (e.g. Elder Law Attorneys, Financial Planners, Daily Money Managers, etc.) that i have encountered, have very little understanding of the product and a negative bias towards it, mostly because they say it's "too expensive." If this new media attention towards less expenses will help open some of their eyes to Reverse Mortgages to help their clients, then I'm all for it.

Here's a link to the article:

http://online.wsj.com/article/SB10001424052702304628704575186211956006190.html?mod=WSJ_hpp_sections_personalfinance

Major Changes Going On in the Reverse Mortgage Industry

First Meridian Mortgage — Wed, 28 Apr 2010 09:55:24 -0700

After a year where loan amounts were cut by 10% and more cuts have been proposed (threatened) by the Department of Housing and Development (HUD) things lately have been getting better for Reverse Mortgage borrowers for the first time.

The Servicing Fee Set Aside, a difficult-to-explain amount that used to get withheld from the amount that borrowers could use, has been eliminated by all lenders for fixed-rate reverse mortgages. This gives an additional $2,000-$5,000 to many borrowers.

The adjustable-rate borrowers are still stuck with it. The reason for this is that secondary market execution (the amount that the lenders get when they sell the loan) has improved for fixed-rate reverse loans lately.What is scary is that this can change at any moment and we are marketing and promising borrowers things that are legitimate today, but can be pulled back tomorrow.

Some lenders are even reducing or eliminating the origination fees because of the increased payout on the "back end" for fixed-rate reverse mortgages. This is also dangerous for the above mentioned reasons, also, because the adjustable-rate reverse mortgages enjoy none of these benefits, it can get confusing for borrowers.

Hopefully, more improvements to the product and more proceeds to the borrowers will be a continuing trend.

Here's a great example of someone with no understanding of how a Reverse Mortgage Works

First Meridian Mortgage — Tue, 27 Apr 2010 12:12:36 -0700

I have no idea who Harold Groves is, but he posted on a Stock market Review Blog, his opinion about how a Reverse Mortgage works. This would be good, if he had any idea what a Reverse Mortgage was.

The easiest answer is "it's just the opposite of a regular mortgage!" I make payments to the lender with a regular mortgage, so a reverse must mean that the lender makes payments to me!

The truth is that only a fraction of reverse mortgage borrowers receive monthly payments for a few reasons:

1) Most reverse mortgages are paying off an existing loan and the amount that is left for monthly payments is limited or non-existent in many cases.

2) More than two-thirds of current borrowers are taking a fixed-rate loan because of the assurance of where the rate will be and because it gives more proceeds that the adjustable rate option. Monthly payments are not an option for the fixed-rate loan.

3) The line of credit option has always appealed to borrowers more than monthly payments for three reasons A) The unused portion of the line grows over time B) If the proceeds stay in the line, they cannot affect Medicaid or any other needs-based programs C) No interest accrues on what's available until it's used.

So the simple, ignorant answer is not really accurate. At least he didn't knock the product like so many other people who don't understand how Reverse Mortgages work, but just assume that they must be "bad."

Here's the link to the blog post:

http://www.stockmarketsreview.com/realestate/2010/04/11/reverse-mortgage-what-you-need-to-know-about-it-by-harold-groves/

Pretty Good Reverse Mortgage Piece on CBS this morning

First Meridian Mortgage — Tue, 27 Apr 2010 09:08:49 -0700

I had heard that this clip portrayed Reverse Mortgages in a bad way, but I thought it was pretty fair and not too bad. Rebecca Jarvis talks about the pros and cons of a Reverse Mortgage and besides the ominous first slide that shows that the government has "taken over" $381 million in Reverse Mortgages this year (notice they don't mention how much the government has received in premiums from Reverse Mortgages) I thought it was not bad at all. Here is the link to the video:

http://www.cbsnews.com/video/watch/?id=6436208n&tag=contentMain;contentBody

Great, Short Video About Reverse Mortgages

First Meridian Mortgage — Wed, 24 Mar 2010 16:52:16 -0700

Consumer Credit Counseling Services (CCCS) of Greater Atlanta is a large ccounseling agency that is now offering Reverse Mortgage counseling for free. Most other providers are charging $125. Third Party, independent counseling is required before a borrower can proceed with a Reverse Mortgage loan.

In the four minute video, several counselors discuss some pros and cons of a Reverse Mortgage. I thought it was extremely well done.

Here is the link to the video:

http://www.screencast.com/t/ZWE4MDVmYzc

I'm not the only one getting impatient about Reverse Mortgages for Co-ops

First Meridian Mortgage — Tue, 23 Mar 2010 13:31:21 -0700

There was a letter to "Dear John" in the New York post on Monday by an impatient borrower waiting (almost two years now, since the law as passed) for the Department of Housing and Urban Development's (HUD) Federal Housing Authority (FHA) division to adopt the law that was part of the Housing and Economic Recovery Act (HERA, August 2008) that allowed the Home Equity Conversion Mortgage (HECM) for Co-ops. (Enough acronyms for you?)

I have posted a lot about how ridiculous it is that we are still waiting for this to come to fruition. John really doesn't understand how it works, but he gives an answer. I wish I had an answer.

Here's the link to the Post:

http://www.nypost.com/p/news/business/seniors_angered_over_reverse_mortgage_LJPYRXkcQ4eyVkjIOL4YdM

Security One started offering Fixed-Rate Reverse Mortgages with no Servicing Fees, and now everyone is jumping on the bandwagon

First Meridian Mortgage — Thu, 18 Mar 2010 14:02:00 -0700

First a quick explanation of what a servicing fee is and how it affects Reverse Mortgage loans.

Reverse Mortgages do not require the borrower to make monthly payments so until now, at closing, there was a Servicing Fee Set Aside (SFSA) that was taken out of the available proceeds. This was about ten years of monthly servicing fees (depending on age and about $35 per month) for a total of about $4,000 to $5,000.

This money was just "set aside." It was not an actual fee so if the loan was paid off in a year, only the twelve months (12 X $35 = $420) would get taken and the rest would be refunded.

However, it did reduce the amount that borrowers could use and it was always a source of confusion.

Now, Security One announced that they will do away with it and Bank of America and Genworth have announced the same. I think it is great. In light of the recent 10% cut to loan amounts, any increase that we can give to people who genuinely need it is welcome.

The Home Economic Recovery Act was enacted in July of 2008! We are still waiting for the Reverse Mortgage Provisions to go into effect

First Meridian Mortgage — Tue, 16 Mar 2010 16:07:32 -0700

It is mind boggling to me that Reverse Mortgages for Co-ops are still not in effect. I get at least one phone call or e-mail PER DAY asking me for help. I don't know what to say anymore, it has been almost twenty months and the Department of Housing and Urban Development (HUD) to get the program into place.

I understand that this is a big undertaking for HUD because HUD has not allowed Co-ops for any of its other loans, but COME ON! Isn't a year and half enough time?

There are thousands of people who need this right now. Hopefully, they will get their act together and it will happen soon.

I'm disgusted at the Government for continuing to cut the Reverse Mortgage loan amounts

First Meridian Mortgage — Fri, 12 Mar 2010 13:40:11 -0800

David H. Stevens, Assistant Secretary of Housing for the Federal Housing Administration testified to Congress that the Reverse Mortgage program is important "The need for this type of program is greater now than it's ever been, due to increasing medical costs, declining employment/incomes, and less "savings" in various types of pension funds/retirement accounts," said Stevens.

However, he then said that limits (loan amounts) need to be cut further, even if Congress appropriates $250 million dollars to the program.

A few important details; the government insured Reverse Mortgage program has been around since 1989, even though nobody paid much attention to it until 2002. Since then it has NEVER needed one penny, it was always self-sufficient, by collecting insurance premiums on every loan at closing and every month to cover the possible shortfall of the loan terminating (due to the death of the last borrower or the sale of the property) with a higher balance than the property is worth.

Now, some guys at the Congressional Budget Office, have decided that since Real estate values have dropped, the program might run it's first loss in 2010.

Pardon me, but that is RIDICULOUS! No one knows when any of these loans will terminate and certainly no one knows where the real estate market will be when they do. This is all based on complete conjecture! Ther is just not enough data to accurately predict how long these loans will last.

Loan amounts got cut by 10% across the baord last year and it looks like the people that need help from Reverse Mortgages are going to have a tougher time getting it if another round of cuts go into place.

CBS MoneyWatch.com picked up on the future need for more Reverse Mortgages

First Meridian Mortgage — Wed, 10 Mar 2010 14:09:20 -0800

I posted a few days ago about a very informative report from the Center for Retirement Research. The post can be seen here:

http ://activerain.com/blogsview/1529114/interesting-report-from-the-center-for-retirement-research-shows-that-reverse-mortgages-will-be-needed-more-than-ever-in-the-coming-years

Carla Fried, on the Retirement Beat for CBS Moneywatch.com, picked up a few great points from the report.

She points out the increased retirement risk seen in the chart below:

and the risks with and without a Reverse Mortgage:

My favorite quote of hers is: "the fact is that many homeowners are still sitting on plenty of equity, and that asset will likely need to become part of the retirement planning conversation"

Here is he link to the article: http://moneywatch.bnet.com/retirement-planning/blog/retirement-beat/boomers-will-need-to-tap-home-equity-not-bequeath-it/432/

I'm not sure why Golden Gateway thinks that Reverse Mortgage prospects home values are going up

First Meridian Mortgage — Wed, 10 Mar 2010 13:13:14 -0800

Golden Gateway is a Reverse Mortgage Lender and their website vistors seem to be inputting higher values lately, so they assume that their home values are rising. They announced that "average home values for older Americans have halted their slide after remaining flat or declining for seven consecutive quarters."

The problem is that most people have no idea what their home is worth and in many cases the person using the calculator may not even be the home owner at all (and have even less knowledge of the actual value.) It would be great if "older Americans" home values had stopped their decline, but why would "older Americans" properties be any different than the rest of the country?

Here is their data:

It is always great to debunk Reverse Mortgage Myths

First Meridian Mortgage — Tue, 09 Mar 2010 17:12:37 -0800

I found a very well written piece on SeniorJournal.com from last summer about the top ten Reverse Mortgage Myths. I've seen a few versions of this and I've posetd about them in the past, but it's always good to debunk the most common myths.

Obviously the biggest myth is that the lender "gets" the house. All regular readers of my blog know that this is not true. The borrower retains ownership and the reverse mortgage is the same as having a regular "forward" mortgage on the property. The lender has no intention of ever taking posession.

The second biggest myth is that at some point the owners can be "kicked out" of their home. This is riduclous, in fact, a reverse mortgage many times is the only way to guarantee that the owners can live there for as long as they want to.

Here is the link to the piece with the eight others:

http://seniorjournal.com/NEWS/ReverseMortgage/2007/7-08-09-TopTenMyths.htm

Interesting Report from The Center for Retirement Research shows that Reverse Mortgages will be needed more than ever in the coming years

First Meridian Mortgage — Fri, 05 Mar 2010 11:31:11 -0800

Thanks to Reverse Mortgage Daily for finding this great report from Boston College. The report looks like it is long (9 pages), but the end note stake up four pages and the whole report is about four pages long.

The report is about the results of a recent survey of workers who are getting close to retirement. Obviously much of their retirement savings were wiped out in the past few years. What was obvious was that many of them planned to work longer and save more, but what was interesting was that most of them were not actually savings any more than they had before. Many had cut back on their spending and felt that they would be in a better position when they retired because their standard of living would be lower.

Here is the link to the report:

http://crr.bc.edu/images/stories/Briefs/ib_10-3.pdf

Great Reverse Mortgage Article in the Herald

First Meridian Mortgage — Thu, 04 Mar 2010 14:33:45 -0800

Unfortunately, it was the Snohomish County,WA Herald. It was called: Some retirees use reverse mortgages to pay for affluent lifestyle and it mentions several people who are using their Reverse Mortgages to maintain their lifestyles.

What I liked about it was that it shows that Reverse Mortgages are not a "last resort" which is how they are portrayed so much in the media. Also, it fairly explains the differences between a Hoem Equity Line of Credit (HELOC) and a Reverse Mortgage. Too often, teh media explains that a HELOC is better allternative (and in some cases it may be) without explaining the basic differences between the two (HELOC's require monthly payments, etc)

Here is the link to the article:

http://www.he

raldnet.com/article/20100228/BIZ/702289923/1005