The end of 1st quarter 2019 has arrived; here are some interesting new items that have popped up in reverse mortgage lending:
- The Housing and Urban Development Agency (HUD) increased the recognized home value for a reverse mortgage loan in California from a maximum of $679,650 to $726,525. For homes valued above $726,525 RM proprietary jumbo loans are available with a home value maximum of 4 million.
- Purchase RM loans are increasing in popularity; however the need to plan early for a RM purchase loan pre-approval, before putting the current home up for sale, is imperative. As with all loans, there is income documentation, credit scoring, and for RM loans the addition of the HUD mandated reverse mortgage counseling, all documentation should be completed with a reverse mortgage loan officer before being caught in the panic of: “Yikes, our home sold so fast, we need to put an offer in on another home, but have no reverse mortgage loan officer pre-approval letter to go with a purchase offer”.
- HUD RM rules do not allow for short term rentals of a “granny” unit, formal name: accessory dwelling unit (ADU) if the home owner has a RM loan. However, traditional longer term rentals of an ADU are allowed, such as a 1 year lease. I’ve met with several clients who rely on ADU income from a short term VRBO or Airbnb rental arrangement, and have declined to move forward with a RM credit line loan to further increase their retirement income because they wanted to keep the short term rental option of their ADU. Other clients concluded their short term rental was a hassle; they had trouble with partiers, and the final straw being the need to stick around and not travel in case the short term tenant couldn’t seem to get the heater working. These clients stopped short term renting and used the RM credit line income to supplant the lost rental income. (On March 26th, 2019 the County of Nevada moved to ban the use of ADU’s for short term rentals in Ordinance SR-19-0157 with a few exceptions).
- The HECM program (“HECM” Home Equity Conversion Mortgage is the formal name for a reverse mortgage loan) is designed to be budget-neutral, without reliance on Congressional appropriations. Recent conservative changes to the RM program have moved it to be self sustaining and generating a positive cash flow.
Hello, for more in depth reverse mortgage information from Shawna McDonald, Reverse Mortgage Loan officer serving Grass Valley, Nevada City, Penn Valley and Alta Sierra, the author of this newspaper article, visit my website SierraFoothillsReverse.com or better yet call for an appointment, I’m all about anything reverse mortgage !
Shawna McDonald, Reverse Mortgage Loan Officer, for 10 years has specialized exclusively in reverse mortgage loans & successfully completed hundreds of them. She is available by appointment in her downtown Grass Valley office for a no-obligation consultation. If you move forward, TLC guaranteed throughout the loan process. Sierra Foothills Reverse Mortgage (530) 497-3010. NMLS #271335 | CalDRE #00585530 Borba Investments Inc. Company NMLS #76801 |Company CalDRE # 01446165 These materials are not from, and were not approved by HUD or FHA