The borrower is still responsible for: - ANSWER-taxes, insurance, and upkeep
Non-recourse - ANSWER-Borrower has no obligation to pay back more than the
... [Show More] value of the home
Types of Reverse Mortgages - ANSWER-Single-purpose, federally insured, proprietary
Eligible Homeowners - ANSWER-Age 62 and over (non-borrowing spouses may be younger), occupy home as primary residence, own the home
Eligible Properties - ANSWER-Single family, 1-4 owner occupied dwelling, FHA approved condos, manufactures homes after June 15th, 1976, planned unit developments
Not eligible: mobile homes, cooperatives
Payment Options for Borrowers - ANSWER-Tenure, term, line of credit, modified term, modified tenure, single lump sum (fixed only)
When does a HECM have to be repaid? - ANSWER-When the last surviving borrower dies, sells the home, or moves
T/F All closing costs can be financed - ANSWER-True
What type of Hazard and Flood insurance is required? - ANSWER-Replacement coverage
How is the origination fee calculated? - ANSWER-2% of the home value up to 200k plus 1% of any value over 200k. Minimum $2500 Maximum $6000
How much is the upfront mortgage insurance premium? - ANSWER-2% of the maximum claim amount
What is the annual mortgage insurance premium? - ANSWER-0.5% of the loan balance
What are the servicing fees for HECMS? - ANSWER-Monthly charges, if not included in interest rate cannot exceed $30 for annual or fixed rate HECMS or $35 for monthly adjustable HECMS
Annual adjustable rate cap - ANSWER-2 points per year, or 5 points over the life of the loan
Monthly adjustable rate cap - ANSWER-Determined by lender, often 10%
What happens if the lender defaults? - ANSWER-HUD takes over and continues to make payments to the borrower
What are the borrower obligations? - ANSWER-1. Continue to maintain, insure, and pay taxes
2. Continue to occupy the property (where at least one borrower lives the majority of the year) 12 month absence allowed for health reasons
When can HECM loans be assigned to HUD? - ANSWER-When the total loan balance equals 98% of the maximum claim amount
If there is a spouse who is under 62, do they need to be removed from the title for the HECM to proceed? - ANSWER-No, they can remain on title as a non-borrowing spouse
Are non-eligible owners required to sign the mortgage and agree to the terms? - ANSWER-Yes. But they are not entitled to any loan funds.
Are non-borrowing owners required to live in the home? - ANSWER-No
When is outstanding federal debt okay? - ANSWER-When the person has a payment plan and has been making on-time payments. The HECM may also be used to pay federal income tax debt.
T/F A financial assessment of the borrower is required to determine eligibility for a HECM - ANSWER-False, a financial assessment is required to determine if the borrower has the capacity to pay taxes and insurance
Can a HECM be done on a property where the borrower has a life-estate interest? - ANSWER-Yes, as long as the owners of the remainder interest agree and sign the mortgage. The owners of the remainder interest do not need to be eligible for the HECM and do not need to be removed from the title.
When is property held in a living trust eligible for a HECM? - ANSWER-When the current beneficiaries are eligible HECM borrowers.
How much will the lender set-aside for repairs that need to be done after closing? - ANSWER-150% of the estimated cost
Principal Limit - ANSWER-Total HECM loan amount or maximum balance at any given time
What factors determine the borrower's principal limit? - ANSWER-1. The value of the home, up to a cap
2. The age of the youngest borrower
3. The cost of the loan (expected interest rate)
National Limit for Mortgage Loans - ANSWER-$765,600
If a home is worth more than the national limit, is it ineligible for a HECM? - ANSWER-No, this just limits the amount of home value used to determine the loan advances.
Maximum Claim Amount - ANSWER-Home value up to the mortgage limit, whichever is less.
Why is it called the maximum claim amount? - ANSWER-It is the maximum amount that HUD will pay on a lender's claim for reverse mortgage insurance benefits if the borrower owes more than the home is worth
How do you determine the principal limit? - ANSWER-Maximum claim amount multiplied by the principal limit factor = principal limit
What rate is used to calculate the principal limit? - ANSWER-the expected rate
Principal Limit Factor - ANSWER-the percentage of the home's value that can be borrowed
T/F Origination fees cannot be waived - ANSWER-False
Minimum and maximum for orginiation fees - ANSWER-$2500-$6000
The upfront mortgage insurance premium is based off of _____, while the annual premium is based off of _____ - ANSWER-home value (maximum claim amount), loan balance
Set-aside - ANSWER-loan funds reserved for a specific future purpose
Fully-funded LESA - ANSWER-required for borrowers who have shown an unwillingness to pay bills on time. Used to pay their taxes and insurance
T/F A borrower can request a fully-funded LESA even if the servicer does not require it - ANSWER-True, but they may not change their mind later
Partially-Funded LESA - ANSWER-Money disbursed to the borrower to pay their taxes and insurance (only available for adjustable rate loans)
Initial disbursement limit - ANSWER-60% of the principal limit or the sum of all mandatory obligations plus 10% of the principal limit [Show Less]