Explanation of Terms:
1. Statement Date: The time period that the statement represents. In the sample statement, it is displaying all of the loan activity that occurred during the month of October 2007.
2. Payment Plan: This is the current payment plan type that has been selected. In the sample statement, the borrower selected a “Line of Credit” payment plan option.
3. Loan Number: This is your reverse mortgage loan number. You will want to reference this loan number when you call our Reverse Mortgage Servicing Department for any questions on your loan.
4. Loan Balances: This box details the breakdown of your reverse mortgage loan balance. It also will display any advances or repayments on your reverse mortgage, as well as any finance charges or servicing fees for the past month. If you would like to know your loan balance as of the last day of the statement, look at the figure in the bottom right hand side of the box.
In the sample statement, the borrower’s total loan balance on 10/31/2007 was $92,092.45.
5. Set Asides: This box represents the balances and any activity that may have taken place with the set-asides on your reverse mortgage. There are several different types of set asides (Repair set asides, Servicing Fee set asides, Tax/Insurance Set Asides, etc.). These set-asides are used to designate some of your reverse mortgage funds for required purposes. As an example, if you have funds set aside to complete required repairs to your home, you will see a figure in the “Repair Set-Aside” column. Not all loan types are required to have set-asides, so you may not see any activity in this section.
6. Total Available Funds: This box displays the calculation of any remaining funds that you have available to borrow on your reverse mortgage. In the sample statement, the borrower has a total of $59,845.07 still remaining that they can borrow.
7. Line of Credit: This box displays any money remaining that is available to borrow on the line of credit, if you selected a line of credit as part of your payment plan option. If you did not select a line of credit as part of your payment plan option, then this box will be blank. In the sample statement, the borrower has $59,845.07 still remaining that they can borrow on their line of credit.
8. Interest Rate: This is the breakdown of the interest rate on your reverse mortgage during the statement period. In the sample statement, the interest for the month of October was calculated using 5.16%, and the mortgage insurance premium was calculated using 0.50%.
9. Interest Rate Change Notice: This is a notice to you of any changes upcoming in your reverse mortgage interest rate. In the sample statement, the borrower’s interest rate will be decreasing to 4.97% on December 1st.
10. Finance Charges Current Cycle: This is the total amount of interest and mortgage insurance premium that has accrued on your reverse mortgage during the statement period.
11. Total Finance Charges: This is the total amount of interest and mortgage insurance premiums that have accrued since you received your reverse mortgage. This figure includes the up-front mortgage insurance premium – if applicable – (which was collected at the time of closing), as well as all of the monthly interest and mortgage insurance premiums accrued on your loan.
12. Servicing Fees Current Cycle: This is the dollar amount of the monthly servicing fee that was added to the loan balance. This monthly servicing fee is determined at the time of closing.
13. Total Servicing Fees Accrued: This is the total amount of the monthly servicing fees that have accrued since you received your reverse mortgage.
14. Transaction Detail: If you had any transactions (line of credit advances, repayments, accrued interest, monthly scheduled payments, etc.) on your reverse mortgage during the statement period, they are listed here. In the sample statement, they did not have any activity other than the $467.17 in accrued interest, mortgage insurance premiums, and monthly servicing fee.
Additional Post Closing FAQ’s
1. How can I request funds from my Line of Credit?
If you selected a line of credit as part of your payment plan option, you may request those funds by sending in a written request to the servicing department. You will receive a Line of Credit draw request form with each monthly statement, provided that you have available funds remaining. The draw request form can either be mailed or faxed. Once received, normal processing time to deposit the funds electronically in your bank or credit union account is 2-3 business days. If you request the funds be paid by check, please allow 5-7 days for mail delivery time to receive it.
2. What should I do if I have required repairs that need to be completed?
If you have certain repairs to your home that were required as a condition of receiving your reverse mortgage, you will receive information from us that will be mailed to you within 7-10 days.
This letter will provide you with a step-by-step instruction guide, which will take you through the repair process. You do not need to wait for this information before you start the repairs to your home. It is important that you get them started as soon as possible, to ensure that you are able to complete the repairs by your required deadline.
3. How do I arrange for my payments to be deposited directly into my bank or credit union account?
If you provided a voided check at the time of your loan closing for this purpose, you do not need to do anything. If you did not provide a voided check at closing and would like to do so you can mail a voided check as well as a letter asking that your funds be sent to you via direct deposit to the servicing department.
If you would like to set up your funds to be direct deposited to a savings account, you will need to obtain a letter from your bank or credit union (on their letterhead) listing the savings account number, the bank or credit union’s routing number, and any names that are listed on the account. The servicing department will set up your direct deposit when we receive this letter, along with your letter requesting that we set you up on direct deposit. It is important to note that only the borrowers on the reverse mortgage (or financial Power of Attorney) can be listed on the account that is used to set up the direct deposit. There is no fee charged to you for the direct deposit service.
4. When will I receive my scheduled monthly payment?
If you elected to receive a scheduled monthly payment as part of your payment plan option, your first payment will be sent to you on the first business day of the month following the funding of your loan. As an example, if your loan funded in November, your first payment would be sent to you on the first business day of December. If you are set up on direct deposit, your monthly payment will be in your bank or credit union account on the first business day of each month. If you elected to receive a scheduled monthly payment and requested a paper check, it will be mailed to you on the first business day of each month. You should allow for a mailing time of 5-7 days for your check.
5. Who is responsible for paying the property taxes and insurance on my home?
Most reverse mortgage borrowers elect to be responsible for the payment of their property taxes and insurance on their home. You can contact the reverse mortgage department if you have any further questions on this issue. It is important that your taxes and insurance be kept current at all times, as they could result in a default on your mortgage if they are left unpaid. Reverse mortgage borrowers are only allowed to participate in tax deferral programs in the States of California, Oregon, and Massachusetts. However, you are encouraged to look in to local senior property tax exemption programs, which may decrease your annual property tax bill.
6. Will I receive an activity statement on my reverse mortgage?
You will receive a monthly statement on the activity of your reverse mortgage. These statements are mailed out by the 5th business day of each month. Because of mailing time, it can take up to 5-7 days after that to receive your statement in the mail. You also will receive an annual statement in January of each year detailing all of the activity on your reverse mortgage over the previous year.
If you pay your reverse mortgage in full or have actually made a payment towards interest or MIP during the past year, you will receive a 1098 mortgage interest statement by January 31st, which you may use for tax return purposes. Because most reverse mortgage borrowers do not make any payments on their loan, 1098 mortgage interest statements are typically not sent until the loan is paid in full.
8. I was told that my loan might “grow”. What does that mean?
Depending on the type of reverse mortgage you received, you may experience “loan growth” on your reverse mortgage. This credit line “growth” is simply an increase in the amount of money that you are eligible to withdraw, if you elected to have a reverse mortgage credit line as part of your payment plan option. In order to simplify this concept, “growth” is sometimes explained incorrectly to reverse mortgage borrowers as being similar to earning interest on a bank account. Please know that your reverse mortgage is not a bank account and does not earn interest.
The “growth” is simply additional credit that you may receive as time goes on with your reverse mortgage.
Not all reverse mortgage loans have this growth feature. Those that do, typically experience approximately a 6-7% annual growth in their available funds in their line of credit. However, because changing interest rates affect the level of growth, it is impossible to know what level of growth your reverse mortgage may or may not have over the life of your loan.
9. Who owns my home?
You retain full ownership of the property. Your reverse mortgage is simply a loan taken out against the equity in your property. As long as you occupy the home as your principal residence, keep your property taxes and insurance current, and comply with the terms of your reverse mortgage, you will be in no danger of losing your home through the reverse mortgage.
10. Annual Occupancy Certification
As part of receiving your reverse mortgage, you had to agree that you would live in your home as your primary place of residence, but you can take vacations or leave the home for up to 12 months without defaulting on your reverse mortgage. However, please let us know if you are going to be out of the home for more than two consecutive months, so we can keep our records current.
11. What happens to my reverse mortgage if I pass away or move from the home permanently?
Your reverse mortgage will have to be repaid when the last surviving borrower on the loan passes away, moves from the home permanently, or does not occupy the home for longer than 12 months.
Depending on the type of reverse mortgage you received, you (or your heirs) may be eligible for time extensions ranging from six months to one year. These time extensions are to be used to provide time to sell the home or obtain a new loan to pay off the balance of the reverse mortgage. If the home is sold for more than the balance of the reverse mortgage, the remaining proceeds from the sale are yours (or your estate) to keep.
12. Who should I contact for any questions about my reverse mortgage?
Our Borrower Care Associates are available from 8:00 am to 5:00 pm Eastern Time Zone, Monday through Friday by calling the toll-free number on your mortgage statement.
All Reverse Mortgage® is here to answer your questions! If you’d like to learn the reverse mortgage statement reads contact the toll free number on your statement or calculate your reverse mortgage amount here.
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