With an Fha loan, however, cancellation occurs exclusively from borrowers paying down.
Private mortgage insurance also
can provide important options for
borrowers who face financial difficulties. Some private mortgage
insurers offer job-loss protection
— paying for or otherwise assisting
with qualified borrowers’ mortgage
payments for several months in the
event that they involuntarily become
unemployed.
Similarly, many private insurers offer homeowner-assistance programs,
which aim to keep families in their
homes in times of financial hardship
by providing a range of workout options. although the specifics of these
options will vary from insurer to insurer, they often will include the option for borrowers to modify their plan
structure, conduct a short sale of their
property or pursue a deed in lieu of
foreclosure.
Whatever the specifics may be,
these workout options can give consumers a multitude of ways to remain
in their homes even through periods
of financial difficulty. To further assist
consumers with staying in the clear,
some private mortgage insurers offer homebuyer-education programs
to ensure that buyers make prudent
purchasing decisions. These educational programs may even come with
« OP TIONS continued from page 22
a discount on the borrower’s insurance rate.
Today, private mortgage insurance
arguably is more competitive than ever
with the Fha. Not only that, but the in-
dustry seems well-positioned to take
on new risk. although they already
have paid billions of dollars in claims
to lenders and investors, private mort-
gage insurers as a whole likely still
have the capital to support anticipated
mortgage origination volumes in the
course of the next few years.
at a time of high unemployment
and abundant foreclosures, brokers
and originators have many reasons to
discuss private mortgage insurance
options with their customers. Not only
has private insurance become more
cost-competitive, it also includes a
number of features designed to pro-
tect lenders from inadvertent mis-
takes and, in this way, it helps to
keep owners in their homes.
although Fha-insured loans are still
an excellent option for many consum-
ers, including those who have been
affected by disaster or otherwise are
looking to rehabilitate their proper-
ties, privately insured mortgages may
be a good fit for more consumers than
many brokers realize. regardless,
maintaining a diversified portfolio
that includes privately insured loans
can serve as an effective counter-
balance to the taxpayer risk of Fha-
insured loans. •
are not allowed. If borrowers want to
continue owning their current home,
they must be prequalified to ensure
adequate debt-to-income ratios. and,
of course, borrowers must maintain
the new property, keep it insured and
pay all property taxes.
other factors
Because reverse mortgages can have
a significant origination cost, hUD
and Fha have introduced the hEcM
Saver program, which can drastically
reduce costs. This product may make
hEcMs all the more enticing to clients
who are looking for less significant
funding and lower fees.
To serve as another safeguard
against problematic investing, hEcM
borrowers are required to speak
with a reverse-mortgage counselor
who is approved by hUD and is not
connected to the lender. This counseling session must be completed
before the loan-application process
can move forward. a reverse-mortgage specialist can provide the borrower with any information that may
be needed for this session.
• • •
as the baby-boomer generation con-
tinues to ease into retirement, more
brokers and originators are finding cli-
ents who are interested in hEcMs and
related programs. hUD continues to
modify and revise hEcM products, so
it’s advisable that brokers and origina-
tors have a reverse-mortgage profes-
sional on their list of referral partners.
regardless, it’s up to mortgage professionals to continue fulfilling their
clients’ interests and needs, and the
hEcM for Purchase may indeed prove
to be an ideal financing option for the
right kind of client. •
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at scotsmanguide.com
