FNMA Stops T-Bill Reverse Mortgages

On August 31, 2009 Fannie Mae (FNMA) will no longer provide CMT-indexed Home Equity Conversion Mortgage (HECM) or reverse mortgage programs. The reason is due to the significant increases in the CMT’s margins which are limiting the funding amount you receive and increasing the margin costs and interest rates of the applied loan. The interest rate and margin cost increases have been slowly impacting the reverse mortgage program and many mature Americans are wondering if they will be able to use the equity in their home to supplement their current monthly income.

Michael A. Quinn, senior vice president and single family risk officer for Fannie Mae stated, “Fannie Mae’s decision to discontinue to purchase CMT-indexed HECM’s is intended to help standardize and simplify HECM product offerings, build liquidity for the product, and encourage a market shift toward securitization.” With Fannie Mae eliminating the use of the CMT index for reverse mortgages, you will still be able to receive your maximum payout with a reasonable interest rate. The program guidelines are still the same. You and your spouse, if applicable, must be at least 62 years old, currently reside in your home and will remain in your home and have am equitable interest in the home. You still will have two generic reverse mortgage program types, adjustable interest and fixed interest rate.

The adjustable interest rate reverse mortgage programs allows for you to receive a lump sum, monthly lifetime payments, a line of credit or a combination of all three payment forms. Whereas the fixed interest rate reverse mortgage only allows for you to receive a lump sum.

Lenders and some borrowers are debating whether or not if the elimination of the CMT-index reverse mortgage program will hurt payouts for the borrower. Unfortunately, those facts cannot be determined at this time. It is known, however, that the CMT has been steadily and exponentially been increasing over a years’ time while the London Interbank offered rate (LIBOR) has been slow to increase and has been the primary choice for the reverse mortgage.

You should be sure to speak with your financial advisor, your family, or a HUD approved HECM counselor if you have any additional questions or concerns as to the impact of the elimination of the CMT index reverse mortgages. You should be mindful to ask questions and take your time when making a final decision regarding your ability to repay your reverse mortgage.

A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has earned the accolade of No. 1 reverse mortgage broker in the Southwest for three years in a row. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of “62 Senior Moments.” If you would like an information packet or would like to set up an appointment with one of our Reverse Mortgage Specialists,
Please call (866) 683-3690 or complete our online Reverse Mortgage Information

This entry was posted on Thursday, June 18th, 2009 at 7:09 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.