The Incredible Journey Revisited

Today was one of those days – filled with one weird difficulty after another. But late in the afternoon my phone rang. It was Lisa Thomas, inviting me to her grandmother’s 88th birthday party.

It has been a couple years since I have thought deeply about what came to be called The Thomas Project. But hearing Lisa’s voice made me track down the piece that originally ran in a Loudoun County publication. The intervening years have made the story seem even more remarkable than it did at the time.

Loudoun County Area Volunteers Assist Elderly Couple

September 2011

In 1952 when Ed Thomas and his bride Virginia bought a home on the outskirts of Leesburg they were young, full of expectation, and looking forward to life together.

It was in this small wooden home that Ed and Virginia raised their children, played with their grandchildren, and experienced the joys and hardships that make up the fabric of life.

But by 2009, both Ed, now ill with cancer, and Virginia, suffering from diabetes, had had extensive medical procedures and were hospitalized. They wanted nothing more, however, than to live out their days in the home they had shared for more than fifty years.

The home, however, was now uninhabitable: the toilet had partially fallen through the floorboards, an exterior bearing wall had major damage, the chimney had collapsed, there was no central heating, and the front steps had rotted and fallen off the porch. Both the home and yard were filled with decades’ worth of cast-offs belonging to extended family. Restoring the home to a livable condition was beyond their reach.

Beyond their reach, that is, until the Thomases’ granddaughter, Lisa Thomas, contacted Laurie MacNaughton, reverse mortgage specialist with Wells Fargo Home Mortgage. MacNaughton, after fruitless calls to multiple local organizations, contacted Round Hill United Methodist Church of Round Hill, Virginia, which counts several contractors among its members. Professionals from the congregation inspected the home and agreed to take on the project.

“Our goal, plain and simple, was to repair the Thomases’ home to habitable condition. They spent their entire married life there, and understandably they want to spend their final days together in their home. There are those of us in the Leesburg area with the professional skills necessary to carry out this project, and the determination to make it happen,” says Steve Simons, area manager of Handyman Matters.

Manpower for the ground-up renovation was provided by professionals and volunteers from Round Hill United Methodist Church and the local community. The Home Depot in Leesburg supplied building materials, and McCrea Heating and Air provided an HVAC unit. Thousands of man-hours over the course of more than two years, and overseen by Handyman Matters’ Simons, went into the reconstruction.

“I am so overwhelmed and blessed that there are actually people in this world willing to help,” says Lisa Thomas, granddaughter of Ed and Virginia. “For a year I tried to help my grandparents get back into their home, but I didn’t have the resources to make it happen. All my grandparents wanted was to be together again. Round Hill [Methodist Church] has done a wonderful thing. Steve [Simons] has been amazing. And none of this could have happened without Laurie [MacNaughton]. Honestly, I have to keep pinching myself to be sure is really happening.”

“This entire journey has been one of a church’s and a community’s generosity, love, and remarkable perseverance,” says MacNaughton. “I think of it as ‘NIMBY’ in reverse. This community came together and said, ‘We simply are not going to know about this kind of suffering in our own backyard and just turn our back. As long as we have the ability to remedy this, we are putting our hand to the plow.’ I only wish Mr. Thomas had lived to see this day.”

The Thomas home is now fully complete, and has all the charm associated with a grandmother’s cottage. It has been outfitted with handicapped-accessible amenities, including a roll-in shower, transfer toilet, wide doorways, and a specially designed kitchen.

On September 28^th the extended Thomas family, along with members of Round Hill Methodist Church and the community, will welcome Virginia Thomas home with a ribbon-cutting ceremony and celebration.

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com ·  www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

55+ Housing Market Posts Strong Gains

The National Association of Home Builders (NAHB) reported Thursday that the 55+ single-family Housing Market Index (HMI) showed the strongest gains since 2008, the first year numbers for this specific market were tracked. This represents the sixth consecutive quarter of improvement in this sector.

According to Robert Karen, Chairman of the National Association of Home Builders, the strong upward trend demonstrates continuing demand for homes that meet the needs of the senior homebuyer.

David Crowe, chief economist with NAHB, says builders’ confidence in the 55+ market corresponds with an overall recovery in the housing market. He goes on to say, however, “While demand for new 55+ housing has improved due to a reduced inventory of homes on the market and low interest rates, builders’ ability to respond to the demand is being limited by a shortage of labor with basic construction skills and rising prices for some building materials.”

Read more about builder confidence in 55+ communities at  http://www.homechannelnews.com/article/builder-confidence-55-housing-market-grows-q1.

Laurie

Laurie Denker MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

Reverse Mortgage Myths Abound – Know the True Truth

Reverse Mortgage: The True Truth

Years ago I heard the term “true truth,” as in, “there are many truisms, but here’s the true truth.”

I love this concept, and it applies nowhere as well as it does to my field, Reverse Mortgage.

If there is anything anyone “knows” about Reverse Mortgage – technically called the FHA HECM – it’s that closing costs are high. I want to take a couple minutes to address this perception by comparing the HECM’s closing costs with closing costs of conventional forward home loans.

The first thing to note is that closing costs on the HECM are regulated by HUD. This is not true of conventional mortgages, where the lender can charge handling fees, points, and back-end fees, to name a few.

Let’s start by looking at fees that are part of any loan.

The first set of fees are called “third-party fees,” and include things like transfer taxes, title search, recording fees, and appraisal fees. These fees are not determined by the lender – which is why they are called “third-party” fees.

The table below compares fees for a home in Virginia valued at $350,000.00. These numbers come straight off actual settlement statements.

Third Party Fees	FHA HECM	Conventional	Forward FHA
Appraisal	$450	$450	$450
Credit Report	$19.00	$19.00	$19.00
Lender’s Title Insurance	$1,194	$995.00	$1,194
Settlement Fee	$395.00	$395.00	$395.00
Deed	$112.00	$56.00	$56.00
Local Recording Fee	$437.50	$437.50	$437.50
State Recording Fee	$1312.50	$1312.50	$1312.50
Release Recording Fee	$100.00	$100.00	$100.00
Flood Certification	$19.00	$19.00	$19.00
Mortgage Release	$56.00	$56.00	$56.00
Title Search	$250.00	$250.00	$250.00
Title Exam	$495.00	$495.00	$495.00
Document Preparation	$95.00	$95.00	$95.00
Courier Fee	$75.00	$75.00	$75.00
Counseling Fee	(Up to) $125	N/A	N/A
Total	$5,135.00	$4,755.00	$4,953.00

The second fee, if we’re looking at FHA loans, is the Mortgage Insurance Premium, or MIP. This is not a lender’s fee, but rather is collected by the lender on behalf of the FHA. For the FHA HECM, the MIP is 2% of the appraised value of the home. For a forward FHA loan, it is 1.75% of the loan amount.

When people state that reverse mortgages are expensive, it is the cost of the MIP they are referring to – even if they don’t realize this is the cost they are referring to.

However, the MIP is arguably the most important part of any FHA HECM. It is the MIP that creates the “Four Nevers” of Reverse:

1)     Homeowners never give up title to their home;

2)     Homeowners never have to move;

3)     Homeowners NEVER can get upside down on their Reverse;

4)     Homeowners never have to make a payment, as long as the home remains their primary residence.

Even were the home to fall in value, or were the homeowner to live to extreme old-age, there is never a shortfall assessed to the homeowner, his children, heirs, or estate, or to any other entity. Just as we all pay into automotive insurance but not everyone will wreck his car, every reverse mortgage holder pays into the MIP pool – but not everyone will outlive his actuarial table. The MIP is there to protect the homeowner, his heirs and his estate from the possibility of owing more than the home can repay, once the senior homeowner no longer needs the home.

The MIP also plays a remarkable role in the case of the monthly stipend product: it guarantees that the monthly stipend will continue to come in, EVEN IF the homeowner lives to be, say, 135 years old. Now that’s pretty cool.

There is also a newer FHA HECM product line called the FHA Saver. These have greatly reduced MIP costs. The tradeoff with the Saver is that it makes available a smaller loan amount. The deciding factor between choosing the HECM Saver or the HECM Standard comes down to suitability: the product needs to fit the homeowners’ long-term needs.

The final fee is the origination fee. This is a lender’s fee, and it covers the lender’s overhead costs. However, unlike other loan products, HUD controls what can be charged in the way of the origination fee: it cannot go above $6,000.00 no matter how high the appraisal comes in. Here in the greater Washington, DC region, many of our property appraisals come in well above the national average. However, the origination fee is still capped by the feds at $6,000. On forward loan products, there is no such cap on lender’s fees.

The formula for calculating the origination fee is the following: 2% of the first $200,000 of the home’s appraised value, and 1% of any additional value, up to a ceiling of $6,000.

Unlike forward loan products, including forward HELOCs, closing costs for a Reverse are enfolded into the loan amount. This means there are not out-of-pocket closing costs, and the senior does NOT bring money to closing.

Let’s step back and consider what all of this means to older homeowners:

1)     For decades they have pumped money into their home. But now they’re approaching retirement, or have already retired. They need more cash flow to cover daily needs, and they cannot continue working indefinitely, or cannot realistically go back to work. HOWEVER, they now can draw funds as needed, and use them to cover unexpected expenses, meet financial goals, provide for the needs of extended family, pay down debt, buy a second home, or for any other use.

2)     Unlike other financial products, they never make a payment as long as they remain in the home. This is of HUGE benefit to seniors – no payment to meet means no payment to fall behind on. It also means they can use their income to meet daily needs, rather than to service a loan.

3)     They are fully protected from liability. As long as they use the home as their primary residence, remain current on their property taxes and homeowner’s insurance, and maintain upkeep on the property, they can stay in the home as long as they wish.

4)     Because this is a financial product designed specifically to meet the needs of seniors – and address the realities they face – there are no credit or employment requirements.

So this, then, is the true truth about the FHA HECM. As the daughter of an elderly mother, and as a professional in the field of Reverse Mortgage, I can categorically state there are few products, services, or programs available that provide as profound a benefit to the senior homeowner.

Call me with questions – I always love hearing from you, and I love talking about how the FHA HECM can benefit those you love.