Gefen Financial - New York Mortgage Broker

Slide 1: Reverse Mortgages from Gefen Financial Corp. Enabling older homeowners to turn home equity into tax-free income.

Slide 2: Gefen Financial Corp  Dovid Winiarz President and Chief Mortgage Manager ....  Helping people manage the debt through mortgage and equity financing since 1986

Slide 3: Reverse Mortgage Program  Enables homeowners age 62 and older to tap the equity they have in their home and receive tax-free income  No repayment is required until the home is no longer their principal residence  There are no income, asset, employment or credit requirements to participate

Slide 4: Some Benefits of the Loan  The homeowner always retains title and ownership of the home  Cash advances can be used for any purpose  No Fixed Maturity Date  Tax-free income will not affect Social Security or Medicare benefits

Slide 5: Eligibility  62 years of age or older (Revocable Trusts, Guardianships, Conservatorships, DPOA’s)  Own home free and clear or have a balance that can be paid off with the reverse mortgage  Occupy property as principal residence  Agree to attend a informational session with an approved counseling agency

Slide 6: Principal Residence  The property must be the principal residence of each borrower  Married spouses or other co-borrowers may be living apart because one of them is in a health care facility; however  At least one borrower must be living in the home in order for the HECM to close

Slide 7: Properties Eligible  1 - 4 Unit Dwellings  Town homes / Condominiums  PUD’s  Manufactured / Mobile Homes (FHA Standards)  Life Estate  Leasehold Interest in Property  Co-op’s (Pilot in NY State only)

Slide 8: How much can be received?  Age of the youngest homeowner  Current interest rate  Market value of home  County where property is located

Slide 9: Payment Plan Options  Term – monthly payments for a specified period of time  Tenure – monthly payments for as long as homeowner occupies the property  Line of Credit – payments received upon request  Combination of Above

Slide 10: Payment Plan Flexibility  In the HECM program, the borrower may change payment plans at any time  This flexibility enables the homeowner to reshape the loan as circumstances change  Administrative charge of $20

Slide 11: Settlement Costs  Origination Fee  Mortgage Insurance Premium (MIP)  Traditional “FHA Allowable” fees

Slide 12: Origination Fee  This fee covers the lender’s administrative costs in processing and underwriting the loan  Borrower is permitted to finance a minimum fee of $2,000 and no more than 2% of the Maximum Claim Amount

Slide 13: Mortgage Insurance Prem.  Reduces the risk of loss in the event that the outstanding balance, including accrued interest, MIP, and fees, exceeds the value of the property at the time the mortgage is due and payable – A one-time non-refundable initial MIP equal to 2 % of maximum claim amount – A monthly MIP equal to one-twelfth (1/12) of the annual rate of 0.5 % of the balance

Slide 14: FHA Allowable Fees  Appraisal  Title Insurance  Credit Report  Recording Fee  Termite Report  Flood Zone Certification  Document Preparation

Slide 15: Adjustable Interest Rate  Set by the U.S. Treasury Securities rate adjusted to a constant maturity of 1 year  Monthly (Margin: 150 bps) or Annually (310 bps) Adjustments

Slide 16: Servicing Fee  Lender is permitted to charge a servicing fee  Fee is established at closing as a monthly figure (Currently, $30)  The amount necessary to pay this fee is calculated and set aside at closing  The lender adds this fee to the borrowers outstanding balance monthly

Slide 17: Consumer Protections  Non-Recourse  No Prepayment Penalty  Three Day “Right of Revision”  Advance Disclosures  Third Party Counseling

Slide 18: Counseling Requirement  Ensures the participant understands how the program works  Examine options other than a reverse mortgage that might better meet the needs of the client  Provided by a HUD-approved agency

Slide 19: After Loan Closing  Annual Payment of Property Taxes  Annual Payment of Homeowners Insurance  Maintenance of Property  To Make Repairs, if required

Slide 20: Termination Actions  All the borrowers have died or sold the property  Property is no longer principal residence of at least one borrower for a period exceeding 12 months  Borrower refuses to fix property in disrepair  Borrower violates any other covenant

Slide 21: Recovery of Mortgage Proceeds  When the borrower does not occupy the property for 12 consecutive months  Loan must be repaid in one lump payment  Usually the loan balance is paid from sale proceeds of the home  A non-recourse loan

Slide 22: Requirements for Appraisals  Property must meet Minimum Property Standards for existing properties

Slide 23: Required Repairs (Less than 15%)  Repairs that are estimated to cost less than 15% of the maximum claim amount can be completed after closing  At closing, the borrower must establish a repair set aside at least equal to 150% of the cost or repairs, plus a repair administration fee

Slide 24: Tax Effects  Payments received by the borrower are not taxable, as they are loan payments

Slide 25: Limited Liability  The “non-recourse” provision of the program limits the borrowers liability to the net sale proceeds from the sale of the property  No deficiency judgement may be taken against the borrower or the estate

Slide 26: Prepayment  The loan may be repaid either in whole or in part, at any time without penalty  If the loan is repaid if full, this will terminate the loan and further draws would be unavailable  A partial repayment can be used to increase the monthly payment or set up a line of credit (revolving credit)

Slide 27: Effect on Public Benefits  Proceeds are considered a loan and not as income  Will not effect Social Security, Medicare or others programs that are not based on need