Do I even need to bring up the fact that we are still in a mortgage crisis? I think its pretty part of the landscape and the papers assume people don't want to hear about it until its over.
Those taking the biggest hit, other that big backers of mortgage backed securities, have been mortgage companies offering traditional mortgages. Some of these folks are unrecognizable and other are simple out of business.
Up until now reverse mortgages haven't experienced any real hit because of all the hoopla.
I mean lets face it, the reverse has some built in positives investors in todays mortgage backed securities probably like.
The biggest being the reverse mortgage does not require monthly repayment which essentially eliminates risk of default for these loans.
Mortgage companies lend money out of lines of credit known as warehouse lines. This is the problem. Some lenders fund reverse mortgage and traditional mortgage out of the same line.
There is no clear delineation between one source of money and another. As such the money comes from the same spot.
Is it possible that some of these lines of credit or warehouse lines are somehow affected by the mess in the traditional mortgage market? What happens then?
Of course the money made of available for the reverse mortgage gets severely limited. This is currently happening.
This stinks for the institution offering the reverse mortgage but it is just as bad for the poor soul currently looking to close his reverse mortgage. Hes being told to hang in there while his file is transferred to another lender.
The problem is its taking much longer to close loans. Rates are going up and many of these folks wont realize as much money as they were originally told they would get out of the mortgage.
You see rate locks are not a reality in the reverse mortgage business and increasing lender margins will effectively reduce the amount a borrower qualifies to receive.
How can this affect someone? It can constrict the loan amount enough to the point where a borrower can no longer pay off a big bill or a forward mortgage currently sucking away most of the disposable income.
Getting a reverse mortgage thus far has been a piece of cake. This new arrival has made things a little bumpy. - 15224
Those taking the biggest hit, other that big backers of mortgage backed securities, have been mortgage companies offering traditional mortgages. Some of these folks are unrecognizable and other are simple out of business.
Up until now reverse mortgages haven't experienced any real hit because of all the hoopla.
I mean lets face it, the reverse has some built in positives investors in todays mortgage backed securities probably like.
The biggest being the reverse mortgage does not require monthly repayment which essentially eliminates risk of default for these loans.
Mortgage companies lend money out of lines of credit known as warehouse lines. This is the problem. Some lenders fund reverse mortgage and traditional mortgage out of the same line.
There is no clear delineation between one source of money and another. As such the money comes from the same spot.
Is it possible that some of these lines of credit or warehouse lines are somehow affected by the mess in the traditional mortgage market? What happens then?
Of course the money made of available for the reverse mortgage gets severely limited. This is currently happening.
This stinks for the institution offering the reverse mortgage but it is just as bad for the poor soul currently looking to close his reverse mortgage. Hes being told to hang in there while his file is transferred to another lender.
The problem is its taking much longer to close loans. Rates are going up and many of these folks wont realize as much money as they were originally told they would get out of the mortgage.
You see rate locks are not a reality in the reverse mortgage business and increasing lender margins will effectively reduce the amount a borrower qualifies to receive.
How can this affect someone? It can constrict the loan amount enough to the point where a borrower can no longer pay off a big bill or a forward mortgage currently sucking away most of the disposable income.
Getting a reverse mortgage thus far has been a piece of cake. This new arrival has made things a little bumpy. - 15224
