It is said that 90% of reverse mortgages are HECM’s
(Home Equity Conversion Mortgage). Will the meltdown in home values affect
holders of HECM FHA-backed reverse mortgages? HECMs come with a Federal Housing
Administration guarantee that protects the lender and the homeowner from
falling property values. Therefore, if the loan balance exceeds the value of
the property, the homeowner is fully protected by the insurance policy that was
paid for in the closing costs. Gray Panthers can rest assured that if the
borrower chose a lifetime monthly payment, they will still receive a monthly
check for life, even after the loan balance exceeds the property value. The
lender or bank cannot take the property if the borrowers outlive the loan. The
lender doesn't own any part of your home and cannot call in the loan as long as
you and/or your spouse choose to live in it, pay the property taxes and keep it
up. Your heirs will not be forced to sell the home. They may choose to keep it,
refinance and pay off the outstanding balance, which ordinarily will be less
than the house is worth. But there are other options open to seniors needing
money. Check out http://www.latimes.com/business/investing/la-re-lew11-2008may11,0,4115068.story
Impounds…An impound account (also known as an escrow
account) is still the borrower’s money, although the lender uses them to
make the payments on homeowner's insurance, property taxes, and mortgage
insurance (whichever is applicable). Each month, in addition to the mortgage
payment, additional funds are deposited into the impound account with the goal
being for the lender to always have sufficient funds to pay the bills as they
come due. It is rumored that starting Monday Wachovia will require impounds
on all loans.
Franklin American will no longer accept Triad Guaranty
Insurance as an acceptable provider of mortgage insurance for loans
purchased by FAMC on or after June 2nd. Additionally, they will no
longer accept Triad as an approved contract underwriter for loans purchased by
FAMC on or after June 2nd. They also increased their underwriting
fees after this date for conventional loans by an additional $75 per file, from
$150 to $225 per loan.
Following MGIC’s changes, effective with MI
applications received June 1st (“The following will no longer be
eligible for MGIC mortgage insurance:
Expanded Criteria / A-minus loans, Reduced Documentation /
Alt-A loans, Investment properties, Cash-out refinances, 3- to 4-unit
properties, loans with potential negative amortization, Non-warrantable
condominiums (per GSE definitions) & Condotels.”), HSBC joined
in…
HSBC addressed mortgage insurance
issues, and announced that “effective June 1, 2008 the following will no
longer be eligible for mortgage insurance (loans with LTV greater than 80%):
Expanded Approval loan (full doc and stated), Reduced Documentation / Alt-A
loans (full doc and stated), Investment Properties (full doc and stated),
Cash-out refinances (full doc and stated), 3 to 4 unit properties (full doc and
stated), and Non-warrantable condominiums (full doc and stated).
Taylor Bean & Whitaker announced the
release of their Freddie Mac Conforming Jumbo product.
Thornburg, expected to “get
going” again in mid-June, announced that, “We no longer allow the
Stated Income exception on non-owner occupied properties. All non-owner
occupied properties must fall within our current credit guidelines, with no
exceptions allowed.”
At least mortgage prices are doing well today – so
far better by roughly .125-.250 versus yesterday afternoon.
Yesterday, pre-CPI number, rates were worse, but then improved after a
favorable CPI report showed inflation grew at a slower than expected pace in
April. Gradually, however, stocks began to rally in spite of rumored bad
news coming from bond insurance companies, and numerous investors had rate
changes for the worse. This morning the number of workers filing claims for
initial jobless benefits rose to 371,000 last week, up slightly from the
365,000 for the prior week – as expected. The four-week moving average of
new claims fell to 365,750 in the week ended May 10 from 366,750 in the prior
week. Later this morning we have Industrial Production and Capacity
Utilization, expected -.3% and -.4%, the “Philly Fed” survey, along
with several more Fed speakers.
At 85 years of age, Wally married Anne, a lovely 25-year
old. Since her new husband is so old, Anne decides that after their
wedding she and Wally should have separate bedrooms, because she
is concerned that her new, but aged, husband may over-exert himself
if they spend the entire night together.
After the wedding festivities Anne prepares herself for bed
and the expected “knock” on the door. Sure enough the knock comes,
the door opens and there is Wally, her 85 year old groom, ready for action.
They unite as one. All goes well, Wally takes leave of his bride, and she
prepares to go to sleep.
After a few minutes, Anne hears another knock on her bedroom
door, and it's Wally again and he is ready for more “action”.
Somewhat surprised, Anne consents for more coupling. When the newlyweds are
done, Wally kisses his bride, bids her a fond goodnight and leaves.
She is set to go to sleep again, but, Wally is back again,
rapping on the door, and is as fresh as a 25-year-old, ready for more
“action”!
And, once again they enjoy each other. But as Wally gets set
to leave again, his young bride says to him, “I am thoroughly impressed
that at your age you can perform so well and so often. I have been with guys
less than a third of your age who were only good once. You are truly a great
lover, Wally.”
Wally, somewhat embarrassed, turns to Anne and says,
“Huh? You mean…I was already here?”
Rob
