At the National Reverse Mortgage Group,
we are proud of our reputation for integrity
and we adhere to the highest ethical standards
in dealing with seniors and their advisors.
As a result from demand, reverse mortgages
have become popular with senior homeowners
as a part of their retirement financial
management. The National Reverse Mortgage
Group is pleased to explain the consumer
safeguards that are implemented into today’s
reverse mortgage programs.
The interest rate is the same no matter
which lender a senior chooses. On HECM,
interest rates are adjusted either monthly
or annually (the borrower chooses) and
based on an index called the 1-year U.S.
Treasury Constant Maturity Rate published
weekly by the Federal Reserve. Both the
monthly and annually adjusted rates have
lifetime caps.
HUD regulations limit origination fees
and can be financed as part of the reverse
mortgage. A senior can expect minor out-of-pocket
expenses to get a reverse mortgage.
The Home Ownership and Equity Protection
Plan which is an amendment to the Truth
In-Lending Act requires that the Total
Annual Loan Cost (TALC) disclosure, required
by the Federal Reserve Board, is provided
to all prospective reverse mortgage borrowers.
The TALC disclosure must show the total
cost over the projected life of the loan.
This disclosure makes certain that a senior
is made fully aware of the costs associated
with obtaining a reverse mortgage.
If you decide to get a reverse mortgage,
you will need to receive independent counseling
from a HUD-approved counselor. The counseling
is free and it is designed as a protection
device to properly obtain a reverse mortgage.
The counseling takes about an hour and
at the end of your session you will receive
a completed Certificate of HECM Counseling.
No monthly payments are made on a reverse
mortgage during its term and there is
no fixed maturity date - as long as one
of the borrowers lives in the home. The
loan simply becomes repayable when the
house is sold or vacated.
If you choose to sell your home, the outstanding
mortgage balance is due and payable. You
or your estate will keep any and all proceeds
exceeding the mortgage balance. There
is no prepayment penalty on a reverse
mortgage.
After the loan closes, a senior has up
to three days to cancel the transaction,
the so-called “right of rescission,” for
any reason whatsoever.
