Reverse Mortgages for Financial Planners

1. ©UFS
An Introduction to Reverse
Mortgages
For Professionals
Prepared by MetLife Bank, N.A.
Reverse Mortgages - A Financial Planning Tool
R0211157176[exp0212][All States][DC] For business and professional use only. Not for consumer distribution.

2. ©UFS
MetLife Bank, N.A., is registered with the Certified Financial Planner Board
of Standards, Inc. as a sponsor of continuing professional education.
'An Introduction to Reverse Mortgages for Professionals ' is currently a
registered program with the Board and meets continuing education
standards.
Certified Financial Planner Board of Standards Inc. owns the certification
marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® (with flame
design) in the U.S., which it awards to individuals who successfully
complete CFP Board’s initial and ongoing certification requirements.
The Certified Financial Planner Board of Standards is not affiliated with
MetLife or any of its companies.

3. Today’s Agenda
• Reverse Mortgage Industry Overview
• Reverse Mortgage Product Overview
• Reverse Mortgage Product Development
For business and professional use only. Not for consumer distribution. 3

4. ©UFS
Industry Overview

5. Record
Historical Perspective Volumes
The industry is relatively young, 2001
with the first HECM loan closed in Jumbo Reverse
1989. An industry association, the Mortgages 2009
National Reverse Mortgage
Lenders Association (NRMLA), was
formed in 1997, and the
2000
introduction of independent
counseling by AARP, a vested NRMLA Counseling
party from early on, occurred in
Is Founded
1997 Offered by AARP
2002.
1994
1993 Source: National Center for Home
1989 Equity Conversion Mortgage (NCHEC)
1991
HECMs in all
First states except
(AK, SD & TX)
FHA-insured
HECM
For business and professional use only. Not for consumer distribution. 5

6. Potential Market for Reverse Mortgages
24 Million households with residents 60 years of age or older
……with less than 2% of eligible households having a reverse mortgage.
For business and professional use only. Not for consumer distribution.

7. Source: Tapping Home Equity in Retirement: The MetLife Study on the Changing Role of Home Equity and Reverse Mortgages, June 2009
For business and professional use only. Not for consumer distribution. 7

8. Product Overview and
Analysis
For business and professional use only. Not for consumer distribution. 8

9. HECM Products: A Marketplace Overview
• Adjustable Rate HECMS
– Rate is adjusted monthly or annually
– Offered with a variety of margins
– Uses LIBOR or CMT as the index
– Often used by borrowers requiring a line of credit
• Fixed Rate HECMS
– One rate for the life of the loan
– Usually taken as a full draw
– Most attractive for borrowers who are rate sensitive or those
paying off a large first mortgage
For business and professional use only. Not for consumer distribution. 9

10. HECM Product Basics
• All borrowers must be 62 (minimum age) and a citizen or a legal resident
• All borrowers must be on the deed with limited exceptions such as life
estates and trusts
• Primary residences only; owner occupied
• Proceeds are tax-free*
*This presentation does not constitute tax advice; borrowers should consult a tax advisor regarding their situation.
Appraised property value may affect loan amount. All loans are subject to property approval. Certain conditions and fees
may apply.
For business and professional use only. Not for consumer distribution. 10

11. HECM Product Basics (cont’d)
• Loan Amount is Subject to FHA 203b limit (national limit of
$625,500 for 2010)
• All borrowers must receive independent counseling; lender
must provide a list of FHA HUD-Approved counseling
agencies to borrower
• No income or credit score qualifications; income and assets
on HECM for Purchase transactions may be reviewed
• HECM must be in a first-lien position
For business and professional use only. Not for consumer distribution. 11

12. HECM Proceeds: Payment Plan Options
Tenure - equal monthly payments as long as at least one borrower lives
and continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of months selected.
Line of Credit - unscheduled payments or in installments, at times and
in an amount of your choosing until the line of credit is exhausted.
Modified Tenure - combination of line of credit plus scheduled monthly
payments for as long as you remain in the home.
Modified Term - combination of line of credit plus monthly payments for
a fixed period of months selected by the borrower.
For business and professional use only. Not for consumer distribution.

13. HECM Property Eligibility
• Eligible Properties
– Single family
– 2-4 units, as long as one unit is the borrower’s primary residence
(not eligible for HECM for Purchase at MetLife Bank)
– Condominiums and PUDs
– Manufactured Homes meeting FHA Guidelines
• Non-Eligible Properties
– Investment properties
– Vacation homes
– Properties with illegal accessories; units or mixed use properties
where more than 25% is used for non-residential purposes
For business and professional use only. Not for consumer distribution. 13

14. Consumer Protection
Mandatory borrower counseling
• HUD-approved counseling agencies for all HECM
borrowers with HUD- mandated curriculum and protocols
• Lenders cannot order services until counseling has been
completed
• HUD maintains a national roster of approved counselors
• HUD counseling rules focused on anti-steering (e.g.,
lenders must provide approved counselor lists to
consumers)
For business and professional use only. Not for consumer distribution. 14

15. HECM Counseling Topics
• Options other than a HECM
• Financial implications of a HECM
• Advantages and disadvantages of a HECM
• Alternatives and options regarding each payment plan
• Explain the typical costs required to obtain a loan
• Disclosure information
• Mandatory budgeting for borrowers whose monthly income is less
than 200% of the poverty limit. ($1,805 FOR ONE PERSON;
$2,428.33 FOR TWO PERSONS)
For business and professional use only. Not for consumer distribution.

16. HECM NET Principal Limit
• Principal Limit minus
- Upfront Mortgage Insurance Premium (if applicable)
- Lender’s Origination Fee (if applicable)
- “Other” closing costs (appraisal, title insurance, etc)
- Servicing Fee set-aside (if applicable)
- Mortgage and other lien payoffs
For business and professional use only. Not for consumer distribution.

17. HECM Costs: Mortgage Insurance Premium
• Mortgage Insurance Premium (MIP) insures cross-over risk, should the
loan balance exceed the value of the property*
• MIP protects both borrower and lender
- Non-recourse to the borrower
- Lender is assured of repayment if cross-over occurs
- HECM Standard: Premiums are charged to the borrower (and
almost always financed) as an upfront premium, currently set by
HUD at 2% of Maximum Claim Amount plus 1.25% annualized
charged monthly against the loan balance
- HECM Saver: Upfront MIP is drastically reduced to .01%, plus
1.25% annualized charged monthly against the loan balance
*If the sale proceeds are insufficient to pay the amount owed when the loan becomes due, HUD will pay the lender the amount
of the shortfall, provided that the sale is an arm’s length transaction in accordance with HUD guidelines.
For business and professional use only. Not for consumer distribution.

18. Reverse Mortgage Facts
• The Bank will NOT take title to the property in exchange for
lending money to the borrower
• There is NO income qualification
• The homeowners remain responsible for property taxes,
homeowner’s insurance, and maintenance
of the home, but there are NO required monthly payments (interest
and MIP accrues on the portion of the loan amount disbursed)
• Government benefits, such as Social Security and Medicare,
generally will NOT be affected (needs-based benefits, such as
Medicaid and Supplemental Security Income (SSI), may be
impacted. Borrowers should consult their personal representative.
For business and professional use only. Not for consumer distribution. 18

19. Latest Product
Development
For business and professional use only. Not for consumer distribution. 19

20. HECM Saver
• In 2010, a consortium of lenders assembled to re-engineer the HECM
loan program in an effort to address varying consumer needs
• On October 4, The Federal Housing Administration (FHA) launched a
new product that was engineered by the consortium—HECM Saver
• Required up-front costs are greatly reduced as compared to HECM
Standard—this may save the average reverse mortgage borrower
thousands of dollars, depending on the home’s value
• Maximum amount of money (The Principal Limit) that can be borrowed
is less than with a HECM Standard, but the lower up-front costs may
make it an attractive option for many clients
For business and professional use only. Not for consumer distribution. 20

21. HECM for Purchase
• A HECM for Purchase enables senior homebuyers age 62 or older to purchase
a new home without taking on monthly mortgage payments*
• Reverse mortgage customers receive title to their new home and cannot owe
more than the value of their home, provided they comply with loan terms..
• The sale of a departure home is a completely separate transaction from the
purchase and reverse mortgage for new home.
• The reverse mortgage is utilized on the new primary residence
• Reverse mortgage proceeds will be calculated based on the youngest
homebuyer’s age and the lower of either the new home’s sale price, appraised
value or the national HECM lending limit
• All of the normal costs associated with selling and buying property apply as well
as the normal reverse mortgage fees
*Although there are no monthly mortgage payments, interest and on-going MIP accrues on the portion of the loan amount disbursed. Only
applicable for the purchase of a single family unit dwelling to be occupied as a principal residence. Program, rates, fees, terms and conditions are
not available in all states and subject to change.
For business and professional use only. Not for consumer distribution. 21

22. Product Evolution – Addressing Structural Flaws
Sept. 30, 2009 Oct. 1, 2009 April 1, 2010 Oct. 4, 2010
Home Value $400,000 $400,000 $400,000 $400,000
(72 yr old Borrower)
Principal Limit $282,400 $254,000 $254,000 $ 221,600
MIP $8,000 $8,000 $8,000 $0
3rd Party Closing Costs $3,000 $3,000 $3,000 $2,500
Origination Fee $6,000 $6,000 $0 $0
Total Upfront Fees $17,000 $17,000 $11,000 $2,500
Servicing Fee $4,872 $4,872 $0 $0
Set Aside
Net to Borrower $260,528 $232,128 $243,000 $219,100
*This slide is for illustrative purposes only and does not represent an actual loan.
For business and professional use only. Not for consumer distribution.