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FHA Makes More Reverse Mortgage Proceeds Available for Older Borrowers

 The Department of Housing and Urban Development is making more proceeds available for some reverse mortgage borrowers under new principal limit factors (PLFs) released on June 23 via Mortgagee Letter 2014-12.  New factors will go into effect as of August 4, 2014.

Definition of Principal Limit (PLF) - Principal Limit is the maximum lifetime amount an age 62+ borrower can take out on a reverse mortgage.  Calculation of the Principal Limit is a formula that uses the age of the youngest borrower, the maximum claim amount (the lesser of the house's appraised value or the FHA's national $625,500 maximum loan amount for a reverse mortgage),and the expected average mortgage interest rate. 

 
The new table raises PLFs for certain borrowers, meaning they can now access more funds with a reverse mortgage than before in today’s low interest environment.
 
Here is a summary of the changes:
 
  • Younger primary borrowers (ages 64 to 77) will see a modest increase (up to 4.9%) in their PLFs until the Expected Interest Rate reaches 5.37% and higher.
  • Older borrowers (ages 78 – 90) will see a substantial increase (up to 13.0%) in proceeds until the Expected Interest Rate is 7.0% and higher.
  • The new Principal Limit Factors go into effect for FHA case numbers assigned on or after August 4th, 2014.
  • Borrowers who have not closed their loans and have FHA case numbers prior to August 4th may opt to use the new PLFs.
  • The table for younger non-borrowing spouses (18-61 years old) only applies if at least one borrower meets the minimum HECM age requirement of 62. Proceeds will be based on the age of the youngest spouse.
Please feel free to share this information with your family members who may be considering a reverse mortgage.  These changes could be beneficial to them.  We would be happy to meet with them to discuss how these changes may impact their own personal situation.  Please call RoseMarie at 310-374-3436 x316 for information. 

The Department of Housing and Urban Development is making more proceeds available for some reverse mortgage borrowers, under new principal limit factors (PLFs) released June 23, 2014.   


SECURITY BULLETIN - Broadcast Text Phishing

 

Fraudulent text messages are being sent to consumers in an effort to steal personally identifiable information. Financial institutions have reported an increased volume in these attacks since May 22, 2014 -- although no reports have been made identifying South Bay Credit Union as a target. Mass text broadcasts are commonly used by fraudsters to reach large audiences of potential victims. This scam is quite common and often operates simultaneously in multiple states. 
 
SCAM DETAILS
  •  Automated texts are being broadcast that warn consumers to call certain numbers to reactivate their payment cards.
  • A recent text example: "Federal Credit Union ALERT: Your CheckCard has been temporarily LOCKED. Please call Card Services line (407) 574-2992". 
  • Text messages do not reference a particular issuing brand but they may vaguely refer to a credit union or bank.  
  • Additional originating text numbers for this recent scam include: 786-300-2335 and 971-208-9936. All numbers referenced in this Alert Bulletin have been disbanded. New originating numbers will most likely be created and used in the future.  
  • Text messages may also originate from Jamaican area code 876 which is easily confused by consumers with a toll free number.
BEST PRACTICES
  • Never call a potentially fraudulent number. Law enforcement and local communication companies may be in the middle of an investigation that will be compromised if the fraudsters become suspicious. 
  • Instruct your customer service staff to collect as many details as possible if they speak with a customer who is reporting an incident. Full telephone numbers including area codes are essential for any telephony scam investigation. 
  • Be aware that a series of numbers are often involved in telephony scams. This scam may not be entirely limited to the number(s) referenced above

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