Financial Freedom: What Next?

With the FDIC seizure of IndyMac Bank on Friday.  Questions abound for the Reverse Mortgage unit--Financial Freedom.  It appears that the Home Equity Conversion Mortgages [HECMs] will continue business as usual.  They are HUD guaranteed loans and it is likely someone may just buy them outright if IndyMac FSB does not continue to service them.  Seniors should not be concerned about access to funds if they have this type of Reverse Mortgage.

The proprietary account, known as the Cash Advantage Account, may have a diffferent story to tell.  Generally for homes over the FHA lending limits, IndyMac had problems marketing them to investors and had announced the program would be discontinued.  What does this mean to those seniors?  It could mean limited access to remaining equity while this is sorted out.  It could mean that the change in HECM limits and procedures may make a refinance into that program a possible option.  The key is to not act too quickly.

Answers are more likely to come later this week.  I will cite these stories addressing Financial Freedom here on the blog as a service to my clients who have obtained a HECM loan.  And to any mortgage officers who are in a similar position.

Comments

[Taylor - Reverse Mortgage Information]

During these days of unprecidented upheaval in the financial markets, your comment above that advises folks not to act too quickly, is a great recommendation.

The other point that I would like to emphasize is that the current market turmoil really brings home the fact that the FHA insurance premium that reverse mortgage borrowers must pay, is worth every penny.

So often, the big negative surrounding a reverse mortgage is that they cost too much. The FHA insurance premium is one of those fees that seems expensive when you puruse the list of closing costs.

If the lender that holds your reverse mortgage becomes insolvent, FHA is the entity that steps in and makes sure that you continue to receive your loan benefits, (that is, if your loan is an FHA/HECM reverse mortgage.)

I would venture to say that anyone that has been receiving their HECM reverse mortgage loan benefits through the servicing department of IndyMac/Financial Freedom, is breathing a sigh of relief right about now.

I would also venture to say that those same folks today, do not consider the cost of the FHA insurance premium to have been too expensive.