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Something good for a change - Max Fees for Reverse Mortgages

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Riick

Thread Starter
Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
For Reverse Mortgages:

Fee Cap: The new housing bill will cap origination fees at 2% for the first $200,000 and 1% for any amount over that, up to a maximum of $6,000.

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‘‘(r) LIMITATION ON ORIGINATION FEES.—The Secretary shall establish limits on the origination fee that may be charged to a mortgagor under a mortgage insured under this section, which limitations shall—

‘‘(1) be equal to 2.0 percent of the maximum claim amount of the mortgage, up to a maximum claim amount of $200,000 plus 1 percent of any portion of the maximum claim amount that is greater than $200,000, unless adjusted thereafter on the basis of an analysis of
‘‘(A) the costs to mortgagors; and
‘‘(B) the impact on the reverse mortgage market;
‘‘(2) be subject to a minimum allowable amount;
‘‘(3) provide that the origination fee may be fully financed with the mortgage;
‘‘(4) include any fees paid to correspondent mortgagees approved by the Secretary;
‘‘(5) have the same effective date as subsection (m)(2) regarding the limitation on principal obligation; and
‘‘(6) be subject to a maximum origination fee of $6,000, except that such maximum limit shall be adjusted in accordance with the annual percentage increase in the Consumer Price Index of the Bureau of Labor Statistics of the Department of Labor in increments of $500 only when the percentage increase in such index, when applied to the maximum origination fee, produces dollar increases that exceed $500.’’
 

Kevin A. Spellman

Senior Member
Joined
Aug 30, 2003
Professional Status
Certified Residential Appraiser
State
Massachusetts
The last reverse mortgage I appraised the LO stated he received a $60,000 commission. The applicant stated he owns in excess of 30 million dollars of properties and will take the revenue stream from the reverse mortgage to fund a life insurance policy to keep the multi-million dollar properties in his family. The life insurance policy is to pay the estate/inheritance taxes from his demise. If property values continue in the same direction he may be over-insured.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I would presume that a major part of that $60,000 broker fee was for ignoring the fraud involved in taking a reverse mortgage on a non owner occupied house.

How many of you would commit fraud if the bribe was high enough? Just think about it: you would not have to work for a year or more if you were thrifty. With student loans you might even be able to go to law school full time in order to defend yourself in court!
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
A reverse mortage was just reported in my local newspaper as being a means of saving a couples home for them which had entered foreclosure.
Reverse mortgages, as best as I can tell, can be a very good tool for those over 62 who desire income, a lump sum, or the means of paying off an existing mortgage. Predictions are these will be very powerful tools in the coming years as our generation ages.
 

Kevin A. Spellman

Senior Member
Joined
Aug 30, 2003
Professional Status
Certified Residential Appraiser
State
Massachusetts
The owner lives 185+/- days in MA, the remaining days are in the Caribbean. The $60,000 LO flew down to the Caribbean to get the signatures to close the deal. He stated it was the last jumbo reverse mortgage to close with a mortgage company just bought by the Bank of Amigo.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I thought reverse mortgages were limited to $200,000 loan amount no matter the value of the home?
 
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