/PRNewswire/ -- The U.S. Department of Housing and Urban Development HUD recently implemented new regulations for the HECM (Home Equity Conversion Mortgage) loan, increasing the federal insurance of that product. As a result, the FHA now will be insuring their reverse mortgage loans at a higher loan limit than before. Generation Mortgage Company(TM) has responded and is pleased to announce an increase in its lending limits.
Earlier this month, the U.S. Department of Housing and Urban Development, through the new regulation, established that the Federal Housing Administration will insure HECM mortgages with a lending limit up to $417,000 nationwide.
"Through the new regulation, the Federal government continues to acknowledge the importance of reverse mortgages to seniors and their families and is giving them greater freedom to take advantage of the equity they have worked so hard to build in their homes, with the safety of federal insurance," said Jeff Lewis, Chairman of Generation Mortgage Company.
A reverse mortgage is a loan available to senior homeowners (62 and older in the United States) and is used to release the equity in the property. Whether one lump sum, line of credit or monthly payments, the homeowner's obligation to repay the loan is deferred until the owner ceases to occupy the home as a primary residence, whether they pass away, sell the home or enter into managed care.
Mr. Lewis continued, "People are living longer and thus their adult children are finding themselves bearing the burden of managing the finances for their aging parents. A reverse mortgage gives them an option to leverage the least liquid yet most valuable of their assets. Homeowners can receive amounts based on a simple formula related to age, home value and the FHA expected interest rate."
Unlike a conventional mortgage, with reverse mortgages, there are no monthly mortgage payments. When the borrower leaves the home, the heirs may either refinance the loan and keep the home or sell the residence and retain the difference between the sale price and the loan balance. If the house is worth less than the mortgage amount due, the FHA will insure the difference.
He concluded, "Reverse mortgages have made a difference in the lives of many retirees affected by the recent economic crisis. The Federal government's increase of the amount which can be obtained through this product will hopefully resonate well with those who need money now. It is our goal at Generation Mortgage to educate seniors and the community about the safety and value of the reverse mortgage product so that more can take advantage of it."
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Wednesday, November 19, 2008
Generation Mortgage Offers Additional Peace of Mind to Senior Home Owners
Monday, October 6, 2008
Two-Thirds of Struggling Homeowners Meet Key Criteria for Housing Bill Relief, According to Survey by CCCS of Greater Atlanta
PRNewswire/ -- Almost two-thirds of homeowners who called Consumer Credit Counseling Service (CCCS) of Greater Atlanta for foreclosure prevention counseling in recent months appear to meet the threshold requirements for relief under the new federal housing bill that took effect Oct. 1, according to a recent survey of those homeowners.
Of 591 people surveyed in late September, 381 of them, or 64.6 percent, said they met five key eligibility criteria for the mortgage refinancing program.
On July 30, President Bush signed the Housing and Economic Recovery Act of 2008. The law created a new program called Hope for Homeowners intended to help families save their homes from foreclosure. Mortgage lenders participating in the program can allow "at risk" borrowers to refinance their current mortgage into a new fixed-rate loan insured by the FHA. Lenders' participation in the program is voluntary.
"Our survey results indicate this new FHA program holds the potential to help a large number of Americans struggling to pay their mortgage," said Suzanne Boas, president of CCCS of Greater Atlanta. "Not everyone will be able to meet the terms. But if someone meets the basic criteria laid out in the housing bill, it would be worth a phone call to their lender to ask about the FHA program."
Homeowners must meet several requirements to be considered for the program. People who called CCCS of Greater Atlanta in July and August trying to avoid foreclosure were surveyed about these requirements by email from Sept. 19-23.
To be counted among the 64.6 percent of survey takers who appear to meet the threshold criteria, people needed to indicate that they live in the home with the problem mortgage; their mortgage was originated before January 2008; they didn't have an existing home equity line or other second mortgage; they did not own another home and they spend at least 31 percent of their gross monthly income on mortgage debt.
From those surveyed, the top challenge to participation in the FHA program is paying off a home equity loan or second mortgage. Thirty-five percent of respondents reported that their home secures more than one loan.
A second mortgage or home equity loan must be paid before a homeowner can qualify for the refinance program. It is possible to pay off the second mortgage through proceeds from the new FHA loan. That could be difficult if the first and second mortgage are held by different lenders because only the primary loan qualifies for the FHA program.
Also, nearly 20 percent of respondents say they don't spend at least 31 percent of their gross monthly income on their mortgage -- a threshold required by the FHA refinance program.
Borrowers who qualify for the FHA program are responsible for paying loan origination fees, as well as an insurance premium to FHA equal to 1.5 percent of the principal annually.
There are several other conditions:
-- The borrower must certify there was no misrepresentation in their application for the existing loan.
-- The borrower must agree to share both initial equity and future appreciation with The U.S. Housing and Urban Development Department (HUD).
-- The equity sharing agreement provides that if the house is sold within the first year, 100 percent of the initial equity (generally 10 percent of the value of the property at origination) will go to FHA. After 1 year, FHA is entitled to 90 percent of the initial equity. The percentage keeps dropping in 10 percent increments to 50 percent after the fifth year, where it stays.
-- In addition to the initial equity which is a fixed amount, 50 percent of any future appreciation of the property must be paid to HUD when the property is sold.
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Thursday, July 31, 2008
President Bush Signs Landmark Housing Bill into Law
RISMEDIA - Landmark housing legislation signed into law yesterday by President Bush is aimed at ending the current cyclical downturn in the housing industry, helping home buyers and strapped borrowers and strengthening the housing finance system, according to the National Association of Home Builders (NAHB).
“This milestone bill contains several provisions to get home buyers back into the marketplace, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, W.Va. “We commend Congress and the President for taking this action to provide much-needed relief to the American people.”
For the past year, NAHB has been in the forefront in pushing for legislation to address the turmoil in the financial and housing markets and to bolster the nation’s faltering economy.
“By helping Americans avoid foreclosure, cracking down on predatory lending, protecting communities from the blight of abandoned homes, and providing generous tax incentives to encourage home ownership, this legislation will help strengthen the housing market and create jobs,” said Speaker Nancy Pelosi.
Senate Banking Committee Chairman Chris Dodd (D-Conn.), a chief architect of the bill, calls it “the most important piece of housing legislation in a generation.”
Prudential California/Nevada/Texas President Ed Krafchow agreed, saying the passing of the bill signifies an important turning point in the real estate industry.
“I think [the passing of the bill] is indicative of us coming through the storm,” Krafchow said. “The best part of this is, that this is a rebuilding process and now we’re on the other side of the perfect storm that hit the industry and certainly damaged the financial part of the business and greatly impeded doing real estate transactions. I’m not suggesting we’ve hit smooth sailing, but the majority of the storm is over and we’re starting to move forward in the business and the industry as it grows. That’s the most positive piece of the signing of this bill.”
Key elements of H.R. 3221, the Housing and Economic Recovery Act of 2008, include:
- A temporary first-time home buyer tax credit. The tax credit will stimulate home buying, reduce excess supply in housing markets and shore up home prices.
- FHA modernization and expansion. A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure.
- GSE (government-sponsored enterprise) reform. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to help buyers in high-cost markets. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie and Freddie and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009.
- Mortgage Revenue Bond Program. The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans.
- Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing.
Tax Credit Centerpiece of Housing Bill
The centerpiece of the housing bill is a temporary, $7,500 first-time home buyer tax credit for the purchase of any home. The tax credit can be used for homes purchased between April 9, 2008 and July 1, 2009. It is expected to provide a significant-and temporary-financial incentive for home buyers.
“The tax credit is the best stimulative measure,” said Dunn. “It will increase housing demand, get home buyers back into the marketplace and fight falling home prices, which threaten the economy as a whole.”
The original eligibility period expired in April 2009, but following a major grassroots campaign from NAHB members, the period was extended to June 30, 2009 to enable home builders to include the credit in their sales and marketing next spring and into the early summer-the peak home buying season.
NAHB has launched a new website, www.federalhousingtaxcredit.com, which includes a set of comprehensive questions and answers about how the credit works and how consumers can put it to their advantage.
