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FAQ's of Reverse Mortgage Settlement

By Chris Breck,

Title Insurance with Advantage Title Company - Nationwide

February 12, 2008 04:24 AM

We all know that Reverse Mortgage Settlements can be tricky. You need an experienced closer that is patient and professional. Advantage Title's Reverse Mortgage Team has closed hundreds of reverse mortgage transactions. We have put together the 5 frequently asked questions that arise during the settlement. Your borrowers will feel more comfortable if these are addressed prior to closing:

Why are there 2 Deeds of Trust? The first Deed of Trust represents your lenders lien on the property. The second represents HUD as they assume the second position because HUD is insuring that the homeowner will continue to receive loan payments in the event that the lender becomes incapable of making these payments.
Can I add/remove persons from title after the closing? Consult your loan officer first! The loan amount is based on the borrower's age, life expectancy, and value of the home. Changing title can make the loan become due.
Why is the loan amount on the Deed of Trust more than the maximum lending limit ? Since there is no maturity date on the loan, HUD calculates the loan amount by increasing the amount on the deed of trust by 1.5 times the maximum claim amount or appraised value, whichever is less.
Why is a Mortgage Insurance Premium collected? A mortgage insurance premium is collected and paid to HUD because they are insuring the loan in case the lien surpasses the homes value or if the lender can no longer make payments.
Why is the title insurance so high? The amount of title insurance on a Reverse Mortgage required is based on the maximum lending limit or appraised value, whichever is less.

Please let me know of any other FAQ's that arise during your settlements...

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Spokane Real Estate Agent Spokane Realtor

Spokane Real Estate Agent.org - Spokane, WA

Good info... thanks for the post :)

Feb 12, 2008 04:52 AM

David Gold

Pantheon National Title - Orlando, FL

in regard to the MIP, there are actually a number of reasons and benefits:

1.It enables the loan to be non-recourse where neither the borrower nor their heirs are personally responsible for any debt over the value of the collateral.

2. In the even the lender becomes insolvent or can no longer manage the loan, HUD steps in and continues managing the loan - also why the second lien in favor of HUD

3. Because of the MIP, lenders are able to offer the HECM at extremely low rates - T-Bill + 1.5 (or lower) is a fantastic rate in almost any market.

4. it insures that the borrower will continue getting their tenure payments and/or access to their credit line regardless of value of property or market conditions

in regard to the title insurance, it usually insures the amount of the mortgage which, as explained above, is at 1.5 times the claim limit.

hope this helps

Feb 14, 2008 04:33 PM

Anonymous

Kelly Robertson

Excellent post Chris - great info David! I have a Facts Sheet that I give to my borrowers/potential borrowers and will update today with some info that I clearly missed.

All the best,

Kelly Robertson, President, LoanSigner101, www.SigningAgentCoach.com

Feb 14, 2008 11:39 PM

Alan 'AJ' Nisen California Contra Costa Mortgage Officer

A Large Bank in America - Lafayette, CA

Thanks Chris. Your blog did get reference in a "Mortgage News Clips" email letter. Great information. I do not know if it makes a difference but I sent in to AR about you receiving the reference. AJ

Feb 15, 2008 07:29 AM

Chris Breck,

Advantage Title Company - Nationwide - Baltimore, MD

Advantage Title Company

Thanks for the info David, that will help.

Kelly, I think a fact sheet is a great idea and I am glad I could help

Thanks for the reference AJ

Feb 18, 2008 01:47 AM

Gita Bantwal

RE/MAX Centre Realtors - Warwick, PA

REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the information. Reverse mortgages may become popular .

Feb 20, 2008 10:20 PM

Chris Breck,

Advantage Title Company - Nationwide - Baltimore, MD

Advantage Title Company

Yes Gita, I think they will to. 8000 People become eligible for one every day!

Feb 21, 2008 12:24 AM

Marlene Calderon

Luimar Investments and Loans - Torrance, CA

Very good information. Thanks for taking the time to share with us!

Feb 27, 2008 01:23 PM

Lisa Kimmel

Central Wisconsin Notary - Stevens Point, WI

Mobile Loan Closer - Notary

Excellent information! Nicely put and in plain english. I am actually in the process of learning these loans to better present them to the borrowers. There is a lot to learn with RM's. Thank you for sharing.

Feb 29, 2008 01:19 AM

Christine Thierry

Sterling Home Mortgages - Narberth, PA

CRMS

Thank you. I have my 1st RM closing coming up.

Mar 05, 2008 02:51 AM

Pamela Knight

Urban Knight Enterprises, Inc. - Phoenixville, PA

Hello Chris,

I specialize in taking the applications and performing the closings. Can you add me to your list of closers? Please feel free to take a look at my profile...Thanks!

Mar 11, 2008 11:40 AM

John Doe

Pittsburgh, PA

Reverse mortgages are where its at. Granted, the pipeline is much longer due to the counseling requirements and what not, but the baby boomer generation are all approaching retirement and these mortgages are going to continue to increase in number, especially since they are government backed. Good post Chris, a lot of people are still a little confused by the whole reverse mortgage thing. One of my largest customers specializes in reverse mortgages, so if anyone has any questions, I can perhaps help out as well.

Mar 20, 2008 05:46 AM

Anonymous

Rogan McGillis

Chris,

thanks for the info on these issues. We get these questions a lot and I'm glad you put this up here!

Rogan McGillis

www.reversemortgagecity.com/blog

Mar 25, 2008 04:00 PM

#13

Liisa Small

Small Transactions - Reno, NV

I think the biggest hurdle in this type of market is educating the public. I wasn't in the biz back in the 80's but apparently there is a bad taste in the mouth of seniors because of the way they were back then. If we can just educate the public that this is a totally different program, I think it will take off like we have never seen.

Apr 17, 2008 05:25 PM

John Thomas

Primary Residential Mortgage Inc. - Newark, DE

First Time Home Buyer Expert

Great Post, I have just started doing reverse mortgages this year. I find them very valueable for some of my clients. I find the most resistance from the children not the client.

John Thomas - Certified Mortgage Planner

May 03, 2008 12:42 AM

Anonymous

Ron Wiley, Jr.

I note NY title insurance law apparently requires title insurance for the GREATER of the maximum loan amount or appraised value, not the LESSER.

Jun 06, 2008 02:24 AM

#16

Kathy Anderson

Arizona Luxury & Lifestyle Living - Cave Creek, AZ

Arizona Homes For Sale

I have some clients that decided to do a reverse mortgage. I told them to make sure they understood all of the ramifications before signing. It can be good for some and not so good for others, such as the lady in the above post.

I don't understand them enough to advise on anything myself though.

Jun 20, 2008 02:22 AM

Anonymous

Shammua Mekonnen

Hi Chris,

My Sister who is a paralegal here in Barbados, just opened up her own firm Summit Corp Consultants. Here in Barbados, reverse mortgaging is being implimented, reaserch ffrom our end is being done. Can you send us a copy of a reverse mortgage deed, we need to see how it is put together.

Respectfully,

Shammua Mekonnen

Jun 01, 2010 06:23 PM

#19

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