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Posts Tagged ‘reverse mortgage’

FHA may need Bailout After All

April 10th, 2013 Comments off

For the first time in the history of the Federal Housing Administration (FHA), with its mortgage fund a minus $13.5 billion, the agency may need a government bailout by October, as HousingWire tells MHProNews. FHA Commissioner Carol Galante said, “The President’s budget projects that FHA may need a $943 million credit from the U.S. Treasury in October to make certain sufficient reserves are on hand today to cover projected losses over the next 30 years. FHA is taking every appropriate action to reduce the likelihood that such assistance is needed.” The agency may not make a final decision until Sept. 30, and attributes the financial stress to loans insured up to 2009, and to reverse mortgage programs. Housing and Urban Development (HUD) Secretary Shaun Donovan says the projected $13.6 billion shortage in capital reserves has been reduced to $943 million as a result of FHA recovering older loans, increasing some premiums, and making changes to the reverse mortgage program.

(Image credit: HUD-Gov)

Reverse Mortgages Need an About-face

December 27th, 2012 Comments off

As a result of the housing downturn and the slow economic recovery, more seniors have turned to the Home Equity Conversion Mortgage (HECM) program (reverse mortgage), backed by the Federal Housing Administration (FHA) as an economic lifeline, but an independent audit has revealed the program is $2.9 billion in the red. As originationnews informs MHProNews, 57,500 seniors cannot afford taxes and insurance and are technically in default, a problem which can lead to foreclosure, despite $534 million from the FHA insurance fund in May 2011 to shore up the program. Several large lenders, including JPMorgan Chase and Wells Fargo no longer offer reverse mortgages because of the street rep of foreclosing on seniors. With some borrowers abandoning their homes because of the need for major repairs, HUD wants to restructure the loans, requiring lenders to do a financial assessment of the borrower’s needs, including their ability to pay taxes and insurance going forward. HUD Secretary Shaun Donovan wants to push its HECM Saver program: Instead of a lump sum payout, the borrower essentially gets a home equity line of credit. In fiscal 2012 FHA lenders originated 48,000 standard fixed-rate HECMs but only 3,800 HECM Savers. As the Baby Boomers age, the number of these loans will undoubtedly rise, more so if the economy remains sluggish.

(Image credit: seniorequityfinancial)

MetLife Selling Mortgage Servicing Portfolio

November 5th, 2012 Comments off

BusinessWire informs MHProNews JPMorgan Chase Bank, N.A. is purchasing MetLife Bank, N.A.’s approximately $70 billion mortgage servicing portfolio as MetLife continues to divest itself of its bank holding company structure, a move it began in 2011 when it decided to no longer sell residential mortgages. MetLife Bank President Jim Rose said, “ Since that time, MetLife has entered into agreements to sell MetLife Bank’s deposit business to GE Capital, sold the bank’s warehouse finance business to EverBank, (and) sold the bank’s reverse mortgage servicing rights to Nationstar.” MetLife will return to its focus on insurance and employee benefits where it serves 90 million customers. While the company’s retail banking business, including mortgages, accounted for less than two percent of its 2011 earnings, the $70 billion servicing portfolio will increase Chase’s $1.1 trillion servicing business by over five percent.

(Image credit: bankrate)

CFPB to Require more Transparency in Reverse Mortgage Market

June 29th, 2012 Comments off

NationalMortgageNews reports senior citizens, the primary target of reverse mortgages, do not fully understand its risks and features and the tradeoffs involved, leading the Consumer Financial Protection Bureau (CFPB) to plan stronger disclosure requirements. In a conference call with reporters, CFPB Director Richard Cordray said, “They may focus primarily on the amount of money they can garner in the short term, and underestimate the long-term costs and risks.” A study by the bureau last year disclosed 73% of borrowers accessed nearly all of their home equity available in the reverse mortgage, with little or no planning for taxes and insurance in the future. While the bureau does not plan to eliminate any current products, Cordray reiterated CFPB will use its enforcement authority to root out unfair and deceptive practices. MHProNews.com has learned of mailed literature claiming a reverse mortgage is a government benefit.

(Image credit: Senior Equity Financial)

Housing Counseling Grants to go on Bidding Block

December 5th, 2011 Comments off

The U.S. Department of Housing and Urban Development (HUD) announces $40 million in grants for housing counseling will be awarded competitively to HUD-approved counseling agencies and State Housing Finance Agencies across the country. Topics include avoiding foreclosure and mortgage scams, improving credit score, purchasing or renting a home, and qualifying for a reverse mortgage. HUD Secretary Shaun Donovan stresses the importance of trying to keep people in their homes. He says, “We fought hard to persuade Congress to restore funding for housing counseling in HUD’s Fiscal Year 2012 budget and I’m pleased that they did so. We will now work to make these important resources available to help families as quickly as possible.” The grants will include $36.05 million for comprehensive counseling and $4 million reverse mortgage counseling. HUD also provides financial literacy education to renters and homeless individuals and families. The application deadline for the approximately 500 grants is January 12, 2012.

(Graphic credit: HUD)