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Notary Bulletin

Reverse Mortgages Offer Potential Income To Notary Signing Agents

Reverse mortgageWith the conventional mortgage market going through its deepest downturn in nearly a decade and a half, reverse mortgages offer a potential alternative line of work for Notary signing agents.

While the current market for this type of loan, which allows older homeowners to borrow off the equity in their homes, is relatively small, the Federal Housing Administration projects positive growth in the coming years. And the potential is considerable as more of the baby boom generation reaches retirement age.

What Is A Reverse Mortgage?

With a traditional mortgage, the bank loans money to the borrower, who then pays off the loan over time. With a reverse mortgage, the bank loans money based on the equity in the home but no payments are made until the borrower either dies or moves out and the home is sold.

There are two types of reverse mortgages: the first is the HECM, or home equity conversion mortgage, which is issued by a private bank, but insured by the Federal Housing Administration. To qualify for an HECM, borrowers must be 62 years old, own their homes outright or have paid off a considerable portion of their mortgage, occupy the home, and maintain the property.

Currently, HECM's make up nearly all of the reverse mortgage market in America, according to the National Reverse Mortgage Lenders Association. The other type is called a proprietary reverse mortgage, and these are privately insured. These are often called "jumbo" because they are taken on higher-value homes, generally worth $750,000 or more.

Availability Of Reverse Mortgage Assignments For Notary Signing Agents

Since HUD instituted its reverse mortgage program in 1990, market volume soared from just 157 loans to more than 114,000 loans at the program's peak in 2009. Since then, volume has fluctuated, with around 60,000 mortgages executed in fiscal year that ended September 30, 2013.

Though the forecast is poor for overall mortgage origination volumes (they are expected to decline in 2014 by 32 percent, according to the MBA), the NRMLA has launched an effort to drive up reverse mortgage volume to 300,000 by 2018. The Federal Housing Administration projects a more modest increase, and expects to see around 78,000 reverse mortgages by 2020.

Reverse mortgages also have become a hot topic among those at or nearing retirement age. According to a report from the Consumer Financial Protection Bureau, about 32 million baby boomer households own their homes, and half of them have the bulk of their net worth tied up in their homes.

Reverse Mortgage Document Package Tips

Signing agents familiar with refinance loans will recognize most of the documents in a reverse mortgage package, however there are a couple of differences. The reverse mortgage actually contains two mortgages and two notes to secure payments made by HUD to the borrower, according to the NRMLA.

Ted Trapp, chief operating officer for FieldChoice, a nationwide signing service, said Notaries who are considering adding reverse mortgages to their basket of services shouldn't hesitate. His company works with a number of Notaries who are able to take on these assignments.

"It's absolutely worth their time," he said.

He has a few tips for Notaries who are considering this option. Compared to other borrowers, people taking out a reverse mortgage must be 62 years old, so they generally take more time, scrutinize the documents more closely, and have more questions, he said, so Notaries should be prepared to handle issues related to the signing.

The differences between a reverse mortgage package and other packages may not be huge (for example, there are also different riders), but Trapp recommends that Notaries spend time educating themselves on the product or take a training course before they volunteer for a closing.

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