Today’s seniors, who make up the fastest growing segment of the population, can now enjoy the benefits of having their home pay them back for all the years they spent paying their mortgages.
According to FannieMae's "Guide to Understanding Reverse Mortgages":
"Reverse mortgages enable eligible homeowners to access the money they have built up as equity in their homes. They are primarily designed to strengthen seniors’ personal and financial independence by providing funds without a monthly payment burden during their lifetime in the home. If you are a homeowner age 62 or older, you might be interested in talking with a lender or counselor about reverse mortgages."
Reverse mortgage products offer a way to borrow against one's home equity to create a regular and tax-free source of income or a significant source of ready cash, while they continue living in their home. And, they don’t repay any part of the loan as long as they occupy their home and don’t violate any terms and conditions of the reverse mortgage — unlike regular home loans.
Click Here to Download money_from_home_fnma__reverse_mortgage.pdf
According to HUD/FHA's Appraisal and Property Requirements (Sec. 255)
Home Equity Conversion Mortgages (Reverse Mortgages, a.k.a. HECM) allows a borrower aged 62 and older to borrow against the equity in a property that has limited outstanding debt. The subject property under this program must be an existing one-to four-unit dwelling in which the mortgagor occupies one of the units. It may be a condo if it is in a FHA approved project or it may be a manufactured home if the home complies with outstanding FHA guidelines for manufactured homes.
HUD Appraisal & Conditions
The appraiser must perform the appraisal with the same standards and forms expected in an FHA single-family appraisal. This includes noting the same deficiencies and repair items. In certain instances, the borrower is not required to treat any defective paint surfaces after closing for properties built before 1978.
Please see: HUD Handbook 4235.1, Rev-1, Section 3 for Reverse Mortgage (HECM) requirements of appraisal and property.
The HECM FHA insured reverse mortgage can be used by senior homeowners age 62 and older to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the home.
The loan, commonly known as HECM, (pronounced "Heck-um") is funded by a lending institution such as a mortgage lender, bank, credit union or savings and loan association. To assist the homeowner in making an informed decision of whether this program meets their needs, they are required to receive consumer education and counseling by a HUD-approved HECM Counselor.
To help appraisers and reverse mortgage lenders connect, Len Fishman, a professional real estate appraiser based out of Sacramento, CA, came up with the idea of developing an appraiser management database. The main goal of Reverse Mortgage Appraisers (RMA) is to allow lenders to search for appraisers that meet their criteria.
The RMA site graphically displays the geocoded search results, and gives an idea of the distance between clients and appraisers, on a Google Map.
According to the site developer: The site allows every search result to be sorted by several criteria crucial to appraisers including: zip code, proximity to lender, street address, name and approved lender.
Alternatively, every search result returned can also be filtered based on user specified criteria. A different interface is also available to users who would rather search by geographic territory.
Additional information on reverse mortgages can be found at the National Reverse Mortgage Lenders Association (NRMLA). The NRMLA site has a very good "Reference Section" dealing with lending, senior issues, strategic relationships, processing/underwriting, and legislation. If you're serious about getting involved in the reverse mortgage process, the NRMLA may be a good organization to join!
Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.
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