Jan-Feb2020

thing to do is run the numbers and present all the options, McMinn said. “Ultimately, the decision is theirs,” McMinn added. For now, the adjustable rate still offers the best deal, they said. Fixed-rate HECMS are only two percent or three percent of industry volume, Hultquist said. “People are getting a lot more money on the ARM,” he said. “But when that changes, can we actually sell this?…Sell the fixed rate, if that is what they want.” Many loan officers also don’t adequately explain how a LESA works, which would be required if someone fails the financial assessment. First off, McMinn said, “A LESA is not a negative thing.” It provides peace of mind to know that property charges will be taken care of, he added. Borrowers need to understand, though, that the LESA might run out, and they would be required to come up with the money later. Additionally, it is a set-aside and not an escrow account. “We have to be really cautious with that,” McMinn said. Non-borrowing Spouses Confusion can surround the issues involving non- borrowing spouses after the death of the borrower. For all new loans, there is a 90-day requirement for a non- borrowing spouse to show ownership or a right to remain in the home after the borrower dies, Hultquist said. Non- borrowing spouses aren’t protected if the borrowing spouse leaves the home for a reason other than death, such as to live in a nursing home for 12 consecutive months. “Take non-borrowing spouse training,” Hultquist advised, adding that it is imperative non-borrowing spouses understand the details before a loan is taken. Understand Title Issues With Heirs A lot of issues arise if everyone isn’t clear on what happens when a borrower dies and the heirs want to get the property. If the title isn’t sorted out carefully beforehand, the heirs might pay much more than they need to, they said. For example, if an heir is added to the title before the death of a borrower, the heirs would be responsible for the full loan balance if they want to keep the home. However, if they wish to keep the home and they are not on the title before the death, they would pay the debt or 95 percent of the home value, whichever is less. That is what the requirement would be if the borrower wanted to pay off the loan. Some people think that having the heirs on the title will be better, they said. But it really depends on what the heirs wish to do with the home. If the goal is to keep the home in the family, then adding those family members to the title before the death of the last borrower could be problematic. Be part of the national conversation Reverse mortgage professionals, financial advisors, Capitol Hill staff and reporters in all media follow our industry in Reverse Mortgage Magazine . To advertise in Reverse Mortgage Magazine, contact Natalie Matter Bellis natalie.matterbellis@theygsgroup.com Rules continued from page 27 28 REVERSE MORTGAGE / JANUARY-FEBRUARY 2020