Reverse Mortgage

Because of changing financial situations that we seniors are encountering some of the following, but not limited to:

A. The death of a spouse - resulting in loss of income B. Money needed to pay expenses

The list goes on and on. Along comes a method for us to have money needed called a Reverse Mortgage (RM). It’s not a financial hand out but a legal and acceptable way for us to access equity in our homes. Simply put it’s a GOOD THING. So I’m writing this article and ask that you read it with an open mind and then decide if it’s something you are interested in now or in the future.

RM’s have been around for decades now. US government sponsored reverse mortgages originated in 1989 President Reagan signed Senate Bill 825 (Federal Housing Administration's Reverse Mortgage Legislation). Since then, government sponsored RM’s are fast approaching the 500,000 mark so you can be assured your not the first. Reverse mortgages allow borrowers to receive monthly tax-free payments from a lender, borrowing against the equity on the home. It does not affect Social Security or Medicare.

Basically there are 3 types of RM programs offered by lending institutions only one of them is sponsored by the US Government. HUD The most common reverse mortgage is formally called a Home Equity Conversion Mortgage (HECM). This type is backed by the federal government's Department of Housing and Urban Development (HUD). The other types are called a proprietary reverse mortgages and are backed by private companies that are not federally insured. Each program has their advantages but in this writing we will be discussing the version sponsored by the federal government. (HECM & HUD).

Who qualifies? Home Owners that are 62 or older own their home, with or without a loan against it and live in it 50% of the time. Single family, Duplexes, 4 family and some manufactured homes built after June 15, 1976 that conform to the Manufactured Home Construction Safety Standards and HUD certification label and are on a permanent foundation as required by HUD

As with any program there are negative stories that have festered - sad stories of seniors who have been taken advantage of. These problems were not the fault of a RM program but caused by people and/or companies who have abused the programs for selfish gains.

Be as informed and knowledgeable about the benefits and pitfalls of RM’s. Some good and safe ways to accomplish this are:

1. Understand and learn as much as you can before you begin the application process or talking with a lending institution.

2. If you wish one can proceed by the do-it-your-self process. Some good, safe and FREE sources are:

a. The website of AARP, you do not have to be a member to read articles, at http://www.aarp.org/ - search - “Reverse Mortgage” NOTE anything prior to 10/1/08 may be old information or call them at 1-800-209-8085. NOTE see their RM application calculator.

b.Go to the web site of HUD at http://www.hud.gov/ - search “Reverse mortgages”

c. If you are financially strapped go to National Foundation for Credit Counseling (NFCC) (http://www.nfcc.org/ 866-698-6322 – should have a chapter here in Titusville.

3. Shop around and save. Understand HUD certified financial institutions must follow the guidelines as spelled out by the US government & HUD but, their cost to you can very. Tell them you are shopping around.

4. Seek the advise of and talk with a “Certified Reverse Mortgage Counselor” CRMC (SEE * BELOW)

In my next weeks article my discussions will concentrate on the positives, Pros & Cons and some of the myths.

* A CRMC has completed the necessary education, received certification and has committed to “standards of practice”. Bill “BJ” Johnson is certified by the Institute of Consumer Financial Education (ICFE) as a (CHECMS) often called reverse Mortgage Counselor. His specialization is Pre Reverse Mortgage Counseling.

I am a TGO resident and please feel free to contact me, Bill Johnson at 321-268-9662 or at cpsrms@cs.com .

The US Government through HUD has established the hourly rate of $125.00/hour for counseling fees.

To the TGO family I offer reduced rate of $35.00/hour for phone consultations originating from my phone. Yes, through the use of a “Magic Jack©” phone system I will pay for the long distance charges within the USA.

Equally important I will offer a FREE 1 time consultation period generally limited to the first 15 min.

Please Note Bill Johnson is NOT affiliated with any lending institution. He has committed to the confidentially and ethics codes required for a CRMC (Certified Reverse Mortgage Counselors.

Would you be interested in attending a free seminar, with experts in their respective fields, here at TGO? If so let me know at 321-268-9337 or e-mail cpsrms@cs.com. I would require a sponsoring group or 5 people to help me with the seminar.