JUMBO REVERSE MORTGAGES

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Jumbo Reverse Mortgages

FOR HIGHER-VALUE HOMES

The proprietary Reverse Mortgage program (sort of a jumbo loan) called HOME SAFE has a minimum home value starting at $500,000. The maximum loan amount is $4,000,000 and covers homes valued up to $10,000,000. This is an incredible program for higher-value homes as it enables borrowers to tap into more of their home equity.

For many retirees, home equity or housing wealth is one of their greatest assets. Homeowners age 62 and above with high-end properties have turned to proprietary “jumbo” reverse mortgages to unlock this valuable source of housing wealth and for a variety of reasons.

The majority of reverse mortgages available on the market today are Home Equity Conversion Mortgages (HECM), which are insured by the Federal Housing Administration, FHA. While many American retirees have successfully utilized these products, conventional HECMs are not always practical for higher value homes.

Here are three reasons to CONSIDER a jumbo reverse mortgage.

1. Your home value is greater than $1,249,125.
FHA insures HECM reverse mortgages on properties valued up to $1,249,125 so the maximum amount of loan proceeds you may be eligible to receive from a HECM is capped. (Of course, it's also based on the age of THE YOUNGEST BORROWER and current interest rates). If your home exceeds the FHA lending limit, you may be better served by a “jumbo” reverse mortgage loan. Or if your home is worth $650,000 or more, you might consider the "jumbo."

2. You can access more funds.
Proprietary jumbo reverse mortgages are privately insured by the companies that offer them. These products are often called “jumbo” loans because they allow borrowers to access significantly higher loan amounts compared to traditional HECM reverse mortgage. The best part? There is NO up-front or ongoing mortgage insurance premium as is charged with the FHA HECM loans! This means significant savings in closing costs. (FHA mortgage insurance is 2% of the appraised value.)

3. You may tap into your home equity if you reside in a condominium.
Retirees living in condominiums may also take advantage of reverse mortgages. Borrowers with condos may receive single-unit approval rather than having the entire condominium approved. Your condo will be required to complete paperwork and submit documents in order to obtain condo approval from the lender for your unit. A condo questionnaire form is usually filled out by the Homeowners Association (HOA) board of directors or it can be the property management company. The HOA has information about the building's financial records, insurance coverages, and other pertinent info.

How to Qualify for a HomeSafe® Jumbo Reverse Mortgage:

* The homeowner must live in the property as their principal residence at least 6 months per year and continue to pay property charges including property taxes, homeowner's insurance, HOA fees, and maintain their home.

* Much like the HECM program, the jumbo reverse mortgage has several safeguards in place to protect borrowers. One safeguard is reverse mortgage counseling which is required so that borrowers understand the program as well as their obligations on the loan.

* Borrowers are required to undergo a financial assessment to ensure their ability to pay property charges and have adequate funds left each month after expenses.

The HomeSafe® for Purchase-A Great Solution - This program is perfect for homeowners who are looking to relocate or right-size to a new home. It allows borrowers to increase their purchasing power while moving to a home that requires no monthly mortgage payments.

A HomeSafe® for Purchase may be used to purchase a primary residence without having to waste the cash flow associated with traditional financing. This allows home buyers age 62+ to purchase a home and obtain a reverse mortgage in a single transaction. If selling their current home to purchase a new one, they can put down less money on the new home and retain a portion of the sale money! The HomeSafe® for Purchase can eliminate costs, hassle, and time and makes it easier for retired homeowners to relocate. It also increases the buyer’s purchasing power by allowing the lender to finance a portion of the sales price! HomeSafe® for Purchase helps homeowners with these goals:

Many senior homeowners want to RELOCATE to be closer to family members or to live in a more comfortable climate.
Many senior homeowners wish to DOWNSIZE to homes that match their present needs.
Many senior borrowers would like to UPSIZE to their dream home for their retirement.

The HomeSafe® is a non-recourse loan, and the borrower as well as their heirs will have no personal liability for repayment of the loan. Lenders cannot collect the debt from investments, stocks, or other properties but only from the collateral which is the home. Borrowers sign the security instrument at closing, the deed of trust, which is the NOTE, the MORTGAGE and the LOAN AGREEMENT. In the documents, borrowers are assured:

a) The house stands for the debt.

b) The home alone is the only collateral used for the reverse mortgage debt as the debt is limited to the property itself.

a) Borrowers can never owe more than the house is worth. This information is contained in the reverse mortgage security instrument.

This non-recourse feature of the reverse mortgage is required by federal regulations for HECM loans, often referencing FHA insurance that covers any shortfall between the home's sale price and the reverse mortgage loan balance. Here is the wording from the reverse mortgage note:

"Borrower shall have no personal liability for payment of the debt. Lender shall enforce the debt only through sale of the Property...".

From the lender’s standpoint, non-recourse debt is a higher risk than recourse debt. This typically can make these loans more expensive and harder to obtain by borrowers than typical loans.

NOTE: With the reverse mortgage proprietary purchase, borrowers are required to move into the property within 60 days of closing.

STEPS TO GETTING A JUMBO REVERSE MORTGAGE

What are the steps to getting a Reverse Mortgage? Preparing for Your Reverse Mortgage Financial Assessment

Have you decided that you are ready to apply for a reverse mortgage? Before you complete your application, you will first you will need to take a few preliminary steps beginning with a mandatory financial assessment to make sure you are financially able to meet your loan obligations. To get ready for the financial assessment, speak to a reverse mortgage specialist to learn how the assessment will be conducted and what is required of you.

Gathering the paperwork

To move the process along, it’s helpful to gather all of the proper documents together in one place. Online applications can be used for signing or an in-person signing. Here's what you will need:

If you still work: 30-days pay stubs, 2 years W2's, and if you’re retired, income documentation. If you are collecting Social Security, the previous year's1099 or a current bank statement showing your income deposits, current Social Security benefit statement for the current year.
If using asset documentation, provide information from checking and savings accounts, independent retirement accounts (IRAs), 401k's or any other investment accounts you may have.
A credit report will be required from three credit bureaus to determine if your installment and credit accounts have been paid on time.
Homeowner's insurance phone number or agent phone number or copy of your declaration page so we can obtain the declaration page of your policy and your payment history.

If you are looking for Frequently Asked Questions, click below!

reverse mortgage faq-click here

Site Content

What is a security instrument?

A security instrument for a reverse mortgage is a legal document—typically a Deed of Trust or Mortgage which pledges the borrower’s home as collateral to the lender and securing the repayment of the loan.

How does the security instrument work?

The purpose of the security instrument is that it formally creates a lien on the home and outlines terms for loan repayment upon maturity of the reverse mortgage loan. Maturity can be the death of all borrowers, sale of the home, or a refinance of the reverse mortgage.

HECM, Home Equity Conversion Mortgage

The most common instrument for the FHA HECM, Home Equity Conversion Mortgage, is the Deed of Trust, often paired with a second Deed of Trust for the U.S. Department of Housing and Urban Development (HUD).

Financial Assessment - a Good Thing

Additional Information

Safety through financial assessment

Lenders who do reverse mortgages will follow the same Financial Assessment qualifications on Jumbo Reverse Mortgages as with the FHA HECM product. There must be a certain amount of residual income left for borrowers to access for their needs after their monthly expenses are paid (property charges such as taxes, home insurance, HOA fees, flood insurance where applicable, and monthly expenses on a credit report).

The financial assessment is a safety measure which serves the borrower’s interest. Because borrowers are still required to pay property taxes, insurance, HOA fees, and various other payments that apply to their home, the assessment and documentation helps ensure that borrowers do not end up in a poor financial situation as a result of the loan.

The jumbo reverse mortgage proposal is a free, no obligation proposal. Note: All jumbo and commercial loans are arranged through third party providers.

HECM (Home Equity Conversion Mortgage) Note and Security Instrument, the protection against personal liability is generally stated in the "Non-Recourse" clause. This clause typically appears under the "Limitation of Liability" section. Where to Find the Clause in Loan Documents

The Note: Look for a section titled "Borrower's Liability" or "Limitations on Liability". It explicitly states: "Borrower shall have no personal liability for payment of the debt. Lender shall enforce the debt only through sale of the Property...".
The Deed of Trust/Security Instrument: This document confirms that the lender's security for the loan is limited to the home itself.
HECM Loan Agreement: This outlines that if the loan balance exceeds the home's value, the borrower or their estate is not responsible for the difference.

Key Phrases in the Documents

"Non-recourse"
"Borrower shall have no personal liability"
"Lender shall enforce the debt only through sale of the Property"
"No deficiency judgments"

Important Context

What it means: The lender can only take the house to satisfy the debt. They cannot go after other assets (bank accounts, cars, other property) or heirs.
Exceptions: This protection applies only if the borrower follows all other terms, such as paying property taxes, homeowners insurance, and maintaining the property.
Legal Basis: This non-recourse feature is required by federal regulations for HECM loans, often referencing FHA insurance that covers any shortfall between the home sale price and the loan balance.

~Purchase or Refinance With a Reverse Mortgage