Reverse Mortgage Summary 4/27/2024

Reverse Mortgage Myths vs Facts

Speaker: Maria Kopf, Envoy Mortgage | NMLS# 1043430

mkopf@envoymortgage.com |www.MariaKopf.com | (925) 766-1971

Overview – What is a Reverse Mortgage and who can qualify for a Reverse Mortgage?

The official name of a reverse mortgage is called Home Equity Conversion Mortgage, or HECM. It accrues interest to the principal balance of the loan. Borrower will retain ownership all the way through the life of the loan. It is an FHA insured product specifically for senior homeowners 62 or older. It allows seniors to access equity in their home. It is a non-recourse loan and has no fixed maturity date. Borrower is not required to make monthly principal and interest payments while responsible for paying property taxes, hazard and flood insurance premiums and other property related expenses including HOA dues.

HECM is a cash flow qualification loan product and NOT a Fair Isaac Corporation (FICO) score or ratio driven product. Lender is responsible for disbursing the loan proceeds according to the borrower’s payment plan. Lender is also responsible for determining whether HECM is a sustainable product for the borrower.

Are you qualified for a Reverse Mortgage?

You are qualified for a Reverse Mortgage if you are 62 or older, hold title to the property, occupying or intend to occupy as the principal residence, have no delinquent federal debt, attend required HECM counseling, signed required borrower certifications and meet financial assessment requirements.

The History of Reverse Mortgage

The first reverse mortgage was written in 1961 to help a Portland, OR widow stay in her own home. Over the next twenty some years and with some bad stories around reverse mortgages, the country became more aware of the aging population and the Congress eventually passed an FHA insurance bill called the Home Equity Conversion Mortgage (HECM) Demonstration in 1987 to insure reverse mortgages which was signed into law in 1988 by Ronald Reagan. The HECM market started to gain popularity in 2008 when the first baby boomers reached the age of 62.

Like any regular loans, reverse mortgage loan limits increased over time. Currently in 2024, the national loan limit is $1,149,825. For more information on the reverse mortgage history, visit www.aag.com/reverse-mortgage/history/.

Reverse Mortgage Myths vs Facts

Myths	Facts
The lender will own your home.	The homeowner will remain on title. The Reverse Mortgage is just a lien on title.
Reverse Mortgage requires monthly payments.	There are no monthly payments.
Reverse Mortgage has to be paid back when the borrower reaches 100 years of age or after 30 years.	Reverse Mortgages have no term and no maturity periods.
To qualify for a Reverse Mortgage, the house must be owned free and clear (no mortgage liens).	Reverse Mortgages will pay off other liens and mortgage on title as long as they are within the lending limits.
The Reverse Mortgage takes all the equity; there is nothing left for the heirs.	The heirs will inherit the home, along with other obligations that come with it.

HECM Payment Plan Options:

For adjustable rate HECMs, borrower may choose to receive scheduled monthly payments, receive payment in the form of line of credit or a combination of both.

For fixed rate HECMs, borrower will receive a single lump sum payment at closing.