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India Explores New Reverse Mortgage Product for Launch

2012-01-13T00:10:06Z

Reverse mortgages may be picking up some increased interest soon in India, as talks between the National Housing Bank (NH and government-owned Corporation Bank are ongoing, India’s Financial Chronicle reported Monday. NHB has already partnered with Life Insurance Corporation of India in order to develop a reverse mortgage product, the report states.

Reverse mortgage products already in the market in India have seen success in specific regions including the southern, western and parts of the northern part of the country, the article states. “Although people are still a little reluctant to mortgage their property in small towns, people in big cities, especially, senior citizens are looking forward to a product that assures them a steady source of funds,” it says. Currently, 10 banks and four housing finance institutions offer reverse mortgages there, with Star Union Dai-ichi Life Insurance being the only life insurance company to offer reverse mortgages, the article states.

“We expect the MoU (memorandum of understanding) to be signed very soon after which the product can be launched,” said R V Verma, chairman and managing director of National Housing Bank, according to the article.

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Americans are “Hopeful” but not Confident About Retirement

2012-01-13T00:09:08Z

Retirees use the words “hopeful” and “peaceful” to describe retirement rather than “confident” or “overwhelmed,” according to a study conducted by MIT and The Hartford, conducted in October and released in December.

Of retirees surveyed by The Hartford and MIT’s AgeLab in its Age of Opportunity study, 27% said they feel peaceful about retirement versus 11% of pre-retirees who shared the same sentiment.

The study also asked about expected activities in retirement, finding that retirees expect to travel more (32%); spend more time with family (44%); relax, read and watch TV more (38%); and work part time (9%).

Overwhelmingly, retirees and pre-retirees said that a healthy retirement is more important than a wealthy one, with 80% of retirees saying they want to live as long as they are healthy, versus wanting to live as long as they have money. Nearly all respondents agreed with the statement “being healthy after retirement is my number one concern.”

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AARP Survey Finds 90% of People 65+ Want to Stay in Their Homes

2012-01-13T00:08:03Z

Unless there are significant changes in how communities are constructed and what services are offered, many older adults will find it increasingly difficult to live in their communities and may have to consider institutional care, says an AARP state survey on Aging in Place, and that’s why it’s important to enact state policies that encourage aging-in-place initiatives.

“The great majority of older adults have a strong desire to live in thier own homes and communities,” says AARP. “However, unsupportive community design, unaffordable and inaccessible housing, and a lack of access to needed services can thwart this desire. Starting in 2011, growth of the older American population will accelerate, in part because the leading edge of the baby boomer generation will reach age 65.”

Policies for affordable housing, transportation, and land use (which can help older adults live closer to or within walking distance of the services they need) are the three major components AARP lists as ways states can enable aging in place.

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Lenders Eager to Tap into Puerto Rico’s Reverse Industry

2011-07-21T16:29:35Z

Reverse mortgage lenders in Puerto Rico say they are only scratching the surface of the industry, as stable home values, high homeownership rates, and a significant number of senior homeowners contribute to ideal conditions for a ripe reverse market. While two companies, Senior Mortgage Bankers and Money House, currently dominate the reverse mortgage scene, others, including U.S.-based reverse lender Generation Mortgage, are eager to get in on the action.

Joseph Levis, president of top-20 lender Senior Mortgage Bankers, says his company is only scratching the surface of the industry and that there’s still a huge market to be gained. And both Levis and Generation Mortgage’s Luis Alberto De Jesús Solís, who manages Generation’s newly-opened Puerto Rican branch, cite a more stable home market as a key reason for thriving business.

“In the case of home values, I think that in comparison to most of the states, values here are a little more steady, especially in home prices that range from $75,000 to $250,000 that are the great majority of reverse mortgages in Puerto Rico,” says Levis.

Last month, Generation became the first Top-10 reverse mortgage lender to open a retail branch in Puerto Rico, and Solís says that so far, the response has been very positive. Solís, who came to Generation from a career with Senior Mortgage Bankers, says this is partly because Puerto Rican home values weren’t hit as hard as those in the States.

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Homeownership Remains “Deeply Embedded” in American Culture

2011-07-21T16:20:30Z

Homeownership rates may have bottomed out, but they may see a slight future decrease before rebounding, says a study by the Mortgage Bankers Association’s Research Institute for Housing America. U.S. homeownership has dropped from its all-time high of 69.2% in 2004 to 66.4% in Q1 2011, a drop which the study describes as falling from an unsustainable level to something closer to historical averages.

The homeownership rate increase was most pronounced among the under-30 age group, and coincided with looser credit conditions and less-risk averse buyers, the study found.

“The question of why homeownership rates are falling now is really a question of why they were so high during the middle of the last decade,” said Stuart Gabriel of UCLA’s Anderson School, and one of the study authors. “From the late 1960s to the mid-1990s, U.S. homeownership rates were relatively stable between 64 and 65%. Our findings suggest that the boom and bust in homeownership rates over the last decade was driven in part by an initial relaxation of credit standards followed by a tightening of credit with the onset of the 2007 financial crash.”

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87% of Older Americans Would Prefer to Receive Long-Term Care at Home

2011-07-21T15:53:37Z

A recent Sun Life Financial survey found that a growing number of Americans aged 50 and older are concerned about future long term care, Sun Life Financial Inc. recently revealed. This prompted the corporation to introduce Sun Care Whole Life (WL), which it describes as a single premium whole life insurance policy with a linked benefit that owners can apply to long-term care costs, including for in-home care, assisted living, and nursing home facilities.

The policy, which is currently available in 39 states, may provide a long-term care benefit equivalent to as much as three to seven times the value of the policy owner’s single premium, depending on factors such as the riders selected, age, gender, and smoking status, says Sun Life Financial.

“According to the US Department of Health and Human Services, an estimated 70% of people over 65 will eventually need long-term care, often for daily activities, such as eating, bathing, or getting dressed,” Janet Whitehouse, Senior Vice President and General Manager of Sun Life’s Individual Life Insurance Division, said in a statement. “We want to help people prepare, so if they ever need long-term care—they have more freedom to pick the level of care that suits their needs, and the costs don’t have to erode their retirement savings or estate assets.”

The policy will also provide an income tax-free death benefit for beneficiaries of policy holders who pass away without using their long-term care benefits. And, if the policy holder so chooses, Sun Care WL also offers an optional return-of-premium feature, for an additional fee, which would allow the insured to recoup the value of their original premium.

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Hong Kong, Bank of East Asia Launch Reverse Mortgage Program

2011-07-13T22:34:10Z

Bank of East Asia will serve as a pilot bank in a reverse mortgage program launching in Hong Kong, the company announced today. The program, introduced by the Hong Kong Mortgage Corporation, has begun to accept reverse mortgage applications, following a signing ceremony held by the HKMC.

“We are pleased to announce BEA’s participation in the Reverse Mortgage Programme as a pilot bank,” said Adrian Li, deputy chief executive of the Bank of East Asia. “We fully support the Programme, which provides eligible homeowners with a ready source of additional funds to meet their ongoing financial needs,” he added.

Across Europe and Asia, several countries have recently explored options and have launched programs for reverse mortgages, including Poland earlier this year and Korea, which has seen an increase in reverse mortgage volume in 2011.

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Bernanke's Dilemma: Hyperinflation and the U.S. Dollar

2011-07-13T22:33:15Z

Ben Bernanke, Chairman of the US Federal Reserve, faces a Sisyphean task because US banks are experiencing debt deflation and, because lending is now at much lower levels, monetary deflation is encumbering the domestic US economy as existing debts continue to be serviced. Government deficit spending can only offset lower consumer spending to a degree, and the mushrooming debt of the US government raises the question of whether the US can repay or roll over its debt obligations, given that tax receipts are likely to fall.

Despite deflationary pressure, the value of the US dollar is in a downtrend trend pointing to higher prices for imported goods and energy. Devaluing the US dollar will reduce the value of debts in real terms, thus it can make debt levels sustainable, but higher prices will exacerbate debt defaults, worsening the condition of US banks. Mr. Bernanke’s dilemma is how to salvage the balance sheets of US banks without sparking high inflation or unleashing hyperinflation.

Where the US dollar is concerned, opinions on hyperinflation range from the view that hyperinflation of the world reserve currency is impossible in principle (because, for example, the values of other currencies are linked to that of the US dollar), to the view that hyperinflation of the US dollar has already happened and that all that remains are the consequences.

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WSJ: Retirees May Want to Consider HECM for Purchase

2011-07-13T22:24:13Z

Is it logical—or even possible—for a 69-year-old to get a mortgage? a prospective home-buyer wonders in a recent Wall Street Journal column. The short answer is yes, it’s possible, although there are other options to be considered, including a reverse mortgage—or specifically, a HECM for purchase, WSJ says.

The home-buyer in question is looking to sell his current residence in order to buy a retirement home. He says he could pay all cash for the house he’s interested in, but is thinking about taking advantage of low interest rates rather than tying up all of his money in real estate.

As long as you meet a lender’s requirements as far as income, credit, and other related factors, says WSJ, you’re eligible for a mortgage, no matter what your age, under the federal government’s Equal Opportunity Credit Act. If the borrower were to pass away before the mortgage is paid off, the unpaid balance would become a lien tied to the house, and heirs would be obligated to either make the remaining payments on the mortgage, sell the house to pay off the mortgage, or refinance the loan.

However, the article continues, another option that should be considered at the prospective buyer’s age is a reverse mortgage. Thanks to the Housing and Economic Recovery Act of 2008, says WSJ, it may even be possible for the prospective buyer to purchase the new home and get a reverse mortgage in a single transaction as long as all requirements are met. Getting a reverse mortgage allows homeowners to convert their property’s equity into cash which can be accessed through a fixed monthly amount, a line of credit, or both, the article continues.

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ABC News: Reverse Mortgage Borrowers Have “Little to Fear”

2011-06-29T22:42:49Z

ABC News is reporting today that reverse mortgage borrowers have “little to fear” in the wake of Wells Fargo’s exit from the retail business, as it follows the departure of Bank of America from the origination business earlier this year.

In an article titled “Reverse Mortgages: Customers Have Little to Fear as Wells Fargo and Bank of America, Two Biggest Players, Exit Business,” ABC speaks with one borrower with a Bank of America reverse mortgage who expressed uncertainty regarding the status of his loan, but stresses that the two large lenders will continue to service their reverse mortgage loans as usual.

Further, the ABC coverage underscores that reverse mortgages are not going away. The article expresses a similar sentiment to New York Times coverage last week following the exit of Wells Fargo from the business.

“These products will continue to play a role for the foreseeable future,” John Lunde, president of Reverse Market Insight, told ABC. People who might need such a loan should have no trouble finding one, he says, although the providers of reverse mortgages could shift toward smaller, specialized lenders, or insurance companies like MetLife.

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HUD Intends to Stand by Reverse Mortgage Program, Says Ex-FHA Official

2011-06-29T22:31:33Z

Despite a tumultuous 2011 for many who offer reverse mortgages, the products are not going away, a New York Times column reported Friday.

“People certainly shouldn’t be worried,” about the reverse mortgage program, former Deputy Assistant Secretary for Single-family Housing Vicki Bott, who left her post Friday at the Department of Housing and Urban Development, told New York Times columnist Ron Lieber.

Bott’s comment represents the first words of support from HUD since industry giant Wells Fargo exited the business last week. (A request for comment from HUD was not returned to RMD as of press time).

Lieber points to industry exits from big banks Bank of America and Wells Fargo as a juxtaposition to the fact that “reverse mortgages will help millions of people stay in their homes and pay for a variety of retirement expenses in the coming decades.”

But, he writes, both turn out to be true.

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Five of Top 10 Reverse Mortgage States See Double-Digit Growth in 2011

2011-06-29T22:28:20Z

A 3.1% national increase in reverse mortgage endorsements this year has masked volatility somewhat in the top ten states for reverse mortgages, notes Reverse Market Insight in its latest newsletter.

The “volatile” rate changes seen in some states, counties, and cities have led to the top 10 states’ growth rate remaining slightly above the national average, at 3.6%. That discrepancy, RMI notes, is likely since five of those states had endorsement rate increases in the double digits.

North Carolina’s growth rate shot up 45.9%, while Florida, on the other hand, continues its downward trend with a 26.1% decline, the largest decrease in the top ten states. Pennsylvania, New Jersey, Texas, and Virginia all posted double-digit gains, while Maryland and Washington join Florida with diminishing endorsement rates.

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Innovation - Genworth: Shifting the Focus

2011-06-21T22:20:43Z

By Shannon Hicks

The reverse mortgage industry is undergoing a transformation, a makeover of sorts. Despite falling home values and the recent mortgage meltdown the HECM has proven a stalwart product that is attempting to expand its reach. The introduction of the HECM Saver began reshaping typical cost bias in the media and
opened up some intriguing markets beyond the historical borrower. Yet there remains an untapped and unrealized potential of reaching the financial community. Our industry has just begun
to take the first steps toward reaching financial professionals. Genworth Financial Home Equity Access, for one, has begun executing a well-planned strategy to educate its financial advisors
on the reverse mortgage’s value as a retirement planning asset. Senior Vice President of GFHEA, Jim Novack gave us some insights on their strategy.

Genworth Financial Inc. is no stranger to the public as a trusted brand for life insurance and financial products. Genworth entered the reverse mortgage world officially in 2007 with its acquisition of Liberty Reverse Mortgage, which was rebranded as Genworth Financial Equity Home Access, Inc., or GFHEA.
A major player in reverse mortgage production, Genworth ranks 4th in wholesale and 7th in retail sales (Reverse Market Insight: February YTD 2011). As a financial services provider, the transition to reverse mortgages seemed a natural progression in its continued mission to deliver financial security to senior clientele. They see the reverse mortgage as an opportunity for retirees to discover a new product that provides liquidity, retirement cash flow and a safety net.

A specific and structured plan to communicate with advisors and broker-dealers has already begun by Genworth with printed and electronic media and also the opportunity for professionals to complete courses as part of their continuing education. To help make the connection between a reverse mortgage and retirement they have created illustrative scenarios for specific financial situations. Beyond mere education Genworth is also stressing the importance of compliance and suitability with its internal financial advisors. They have taken the unique approach of not only covering the basics of a reverse mortgage but also how the
advisor can utilize a reverse mortgage to retain assets under management as their clients age.

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Lack of Retirement Funds Is Americans' Biggest Financial Worry

2011-06-21T22:03:15Z

Concern about being able to maintain standard of living at a new high

by Elizabeth Mendes

WASHINGTON, D.C. -- More Americans are worried about not having enough money for retirement (66%) than are worried about seven other financial matters Gallup asked about. Majorities of Americans, however, are also very or moderately worried about not being able to pay medical costs for a serious illness or accident and about not being able to maintain their standard of living.

In the April 7-11, 2011, poll, Gallup's annual survey on the economy and personal finance, Americans were least likely to be worried about not making minimum credit card payments (24%) and not being able to pay for their housing costs (36%).

Gallup has tracked Americans' worries about these eight financial items annually since 2001, and has found that the top three concerns have consistently been retirement, medical costs related to a serious illness or accident, and maintaining their current standard of living.

While the order of Americans' worries has generally stayed the same over time, concern about each individual item increased at least somewhat during the recession, and all are up significantly from 2001.

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Senior Population Sees Rising Debt

2011-06-21T22:01:42Z

A trend for the upcoming generation of borrowers eligible for reverse mortgages shows higher debt levels than 62-year-olds from ten years ago, a National Mortgage News article reports. Alex Farber, an experienced originator who has a reverse mortgage business with fellow originator Mario Martirano, tells National Mortgage News that this might affect the future volume of reverse mortgage endorsements among Baby Boomers.

Farber notes that many borrowers who are becoming eligible for reverse mortgages belong to the “sandwich generation,” meaning they may still be paying to put a child through college while simultaneously needing to care for elderly parents. Lenders need to adapt to this trend of higher debt levels, and Farber says that while consumers must be held accountable, the burden is on the lenders to make sure things are done right.

Farber and Martirano, the current senior vice presidents of Residential Home Funding’s reverse mortgage division, are about to become lenders, and Farber says they’re in the process of getting their direct endorsement approval to underwrite. The two originators told National Mortgage News about the necessity of ensuring borrowers are aware of the implications of a reverse mortgage.

“Besides the counseling, we also have a secondary check, an internal compliance system where actually Mario or myself will call clients on loans and ask, ‘Just what are you trying to accomplish and is this something that may work for you, understanding at the end of the road you’re going to be eating away a little bit of the equity? Are you comfortable with that and not being able to give it to your children?’” Farber said.

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Social Security and Medicare to be Exhausted Earlier Than Expected

2011-06-14T22:16:09Z

by Elizabeth Ecker

The U.S. Social Security Trust Funds will be exhausted in 2036, and Medicare HI (hospital insurance) Trust Funds will reach exhaustion in 2024, according to a report released last week by the Social Security and Medicare Board of Trustees. The Social Security projection is one year sooner than previously estimated, and for Medicare the projection is five years earlier than previously thought.

The Social Security funds together include the Old-Age and Survivors Insurance and Disability Insurance (OASDI) funds. When they are exhausted in 2036, there will be sufficient non-interest income covering 77% of scheduled benefits.

Source: Social Security Administration

“The current Trustees Report again reflects what we have long known to be true—we need changes to ensure the long-term solvency of Social Security and to restore younger workers’ confidence in the program,” said Michael J. Astrue, commissioner of Social Security. “The report also highlights the more near-term shortfall in the Disability Insurance Trust Fund. Our disability programs are complex, and there is a long history of well intended ‘reforms’ causing unintended consequences. The President sent to Congress our Work Incentive Simplification Proposal, which would be a good start for bipartisan debate. I urge the House and Senate to review this proposed legislation carefully and schedule hearings this year.”

In 2010, Social Security paid benefits of $702 billion to approximately 54 million beneficiaries, the report found.

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Generation Mortgage Launches Reverse Operations in Puerto Rico

2011-06-14T22:08:37Z

by Elizabeth Ecker

Generation Mortgage announced this week it is expanding its retail reverse mortgage business into Puerto Rico.

Generation, a Top-10 lender and the largest privately-owned reverse mortgage company in the U.S., has opened a branch office in San, Juan, Puerto Rico, to market and service reverse mortgage loans throughout the island.

“We’re very excited about being the first Top-10 reverse mortgage lender to open a retail branch in Puerto Rico,” said Scott Peters, President and CEO of Generation Mortgage. “Puerto Rico boasts a home ownership rate of 74% versus 67% in the United States. Additionally, 29% of the households in Puerto Rico have at least one person 65 and older compared to 23% in the U.S. We’ll be providing older homeowners in Puerto Rico a safe way to access the equity in their home to obtain cash for use as they think best, and still remain in their home.”

Luis Alberto De Jesús will lead the Puerto Rico operation for Generation. De Jesús brings experience from Senior Mortgage Bankers, where he aided in expanding the reverse mortgage business to the territory.

“It’s tremendously exciting to bring to the Puerto Rican market a financial solution that could literally change the life of a senior in financial need, and Generation Mortgage has a long and proud history of being the leader in customer service in this industry,” he said.

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Gloomy Forecast for Boomers’ Retirement Security

2011-06-14T22:05:51Z

by Alyssa Gerace

Retirement for Baby Boomers and Generation Xers (those born after 1965) will be a very different experience from that of the previous generation of retirees because of the financial crisis, says Alice Munnell, the director of the Center for Retirement Research at Boston College. The Center came up with a National Retirement Risk Index that would “quantify the impact of this security crunch” and found that in 2009, 51% of households were projected to be “‘at risk’ of being unable to maintain their pre-retirement standard of living in retirement.”

The NRRI shows that even before the financial crisis, in 2004, a projected 43% of households were ‘at risk,’ and those projections increased to 48% for Late Boomers and 56% for Generation Xers by 2009.

“This gloomy forecast is due to the changing retirement income landscape,” says Munnell. These changes include living longer, falling replacement rates from Social Security, increased out-of-pocket healthcare expenses, and declines in retirement asset returns.

Munnell notes that the NRRI is based on “conservative assumptions” and that it may, in fact, understate future challenges for upcoming retirees. The index is based on the assumption that seniors will not retire until they reach the age of 65, when in fact many will retire before then. Additionally, says Munnell, the index assumes everyone will utilize their home’s equity through a reverse mortgage, although only a small percentage will actually do so.

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20% of Workers Expect to Retire Later Than Planned

2011-06-07T22:49:04Z

By Elizabeth Ecker

Twenty percent of U.S. workers say their expected retirement age has increased over the past year. An annual Employee Benefit Research Institute survey found the 20% increase in 2011 was statistically similar to 24% who said they were planning to postpone retirement in 2010.

The study, EBRI’s 2011 Retirement Confidence Survey, found several frequently cited reasons for the change. First, the poor economy was most often attributed (36%), followed by a lack of faith in Social Security/government (16%). Other reasons for postponing retirement included changes in employment situation (15%) and “can’t afford to retire” (13%).

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Reverse mortgage market set to grow

2011-06-07T22:48:05Z

By Drew Cratchley

The proportion of retirees taking out reverse mortgages will grow in the coming years, as the borrowing option becomes an income supplement rather than a way of paying for holidays, an industry body says.

Restricted to outright home owners aged over 60, reverse mortgages are loans against the equity in a home, and require no repayments until the home is sold.

After their launch last decade, there were predictions of steady growth in the product, but the global financial crisis saw a decline in the value of reverse mortgages issued by lenders.

That's now rebounding, according to new data from Deloitte.

The value of outstanding reverse mortgage loans stood at $3 billion at December 31, up from $2.7 billion 12 months earlier.

There were $322 million worth of reverse mortgage loans written in 2010 - equal to the amount written in 2008 - taking the number of loans to 41,600 at December 31, up seven per cent from a year earlier.

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