Why Your Reverse Mortgage May Have Been Transferred in Process
At this point its almost boring to discuss the mortgage crisis. I'm not even sure if it will make the Monday morning paper today.
Those institutions offering forward or traditional mortgages have changed dramatically. If they are still in business without the help of government bailout money they are doing pretty well.
Up to this point those companies offering HECMs (reverse mortgages) have not seen any real issues.
I mean lets face it, the reverse has some built in positives investors in todays mortgage backed securities probably like.
The biggest being the reverse mortgage does not require monthly repayment which essentially eliminates risk of default for these loans.
Where we are seeing trouble, however, is in the fact that some companies who lend reverse mortgage money also lend traditional mortgage money out of the same warehouse line.
There is no clear delineation between one source of money and another. As such the money comes from the same spot.
Is it possible that some of these lines of credit or warehouse lines are somehow affected by the mess in the traditional mortgage market? What happens then?
Naturally, reverse mortgage take a hit and through no fault of their own.
This stinks for the institution offering the reverse mortgage but it is just as bad for the poor soul currently looking to close his reverse mortgage. Hes being told to hang in there while his file is transferred to another lender.
How Joe Blow gets hurt in all of this is by getting hit, because the closing takes an additional two or three weeks, by higher interest rates thereby reducing how much he cashes out of his mortgage.
Time is of the essence for reverse mortgages more so than under normal market conditions. Increasing lender margins effectively limit borrowing power if the loan doesn't close before the rate increase.
This can have the net effect of hugely damaging plans to pay of a large medical bill or mortgage currently eating away what little income some of these folks have.
Word to the wise when getting a reverse mortgage, plan on a few bumps in the road and don't assume anything.
Those institutions offering forward or traditional mortgages have changed dramatically. If they are still in business without the help of government bailout money they are doing pretty well.
Up to this point those companies offering HECMs (reverse mortgages) have not seen any real issues.
I mean lets face it, the reverse has some built in positives investors in todays mortgage backed securities probably like.
The biggest being the reverse mortgage does not require monthly repayment which essentially eliminates risk of default for these loans.
Where we are seeing trouble, however, is in the fact that some companies who lend reverse mortgage money also lend traditional mortgage money out of the same warehouse line.
There is no clear delineation between one source of money and another. As such the money comes from the same spot.
Is it possible that some of these lines of credit or warehouse lines are somehow affected by the mess in the traditional mortgage market? What happens then?
Naturally, reverse mortgage take a hit and through no fault of their own.
This stinks for the institution offering the reverse mortgage but it is just as bad for the poor soul currently looking to close his reverse mortgage. Hes being told to hang in there while his file is transferred to another lender.
How Joe Blow gets hurt in all of this is by getting hit, because the closing takes an additional two or three weeks, by higher interest rates thereby reducing how much he cashes out of his mortgage.
Time is of the essence for reverse mortgages more so than under normal market conditions. Increasing lender margins effectively limit borrowing power if the loan doesn't close before the rate increase.
This can have the net effect of hugely damaging plans to pay of a large medical bill or mortgage currently eating away what little income some of these folks have.
Word to the wise when getting a reverse mortgage, plan on a few bumps in the road and don't assume anything.
About the Author:
Learn the most prevalent seven myths regarding the California Reverse mortgage here. Also, the twenty commonly asked California reverse mortgage questions answered at this website.
posted by Debt Consolidation Loan at
2:19 PM
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