REVERSE MORTGAGES

Reverse mortgages offer a real solution to certain senior homeowners hoping to improve their quality
of life by staying in their home, but make lack the cash flow to do so.

Reverse mortgages once had a negative connotation, but are now getting the recognition they deserve.
These products offer senior homeowners many great benefits.

Demand for reverse mortgages continues to grow at a phenomenal rate.

Seniors can qualify for larger reverse mortgages because of new higher loan limits.

A reverse mortgage is a special type of loan used by older Americans to convert the equity in their
homes into cash. The money from a reverse mortgage can provide seniors with the financial security
they need to fully enjoy their retirement years.

The reverse mortgage is aptly named because the payment stream is “reversed” instead of making
payments to a lender, as with a regular mortgage or home equity loan, a lender makes payments to
you.

Reverse mortgages allow homeowners age 62 and older the ability to convert part of the equity in
their home into tax-free income without having to sell their home, give up title, or take on a new
monthly mortgage payment.

No monthly payments are made on a reverse mortgage during its term - it becomes repayable when
the borrower sells the home or permanently moves out. In addition, the repayment amount can
never exceed the value of the home.

Any excess proceeds (of the sale of the home) belong to the homeowner of the estate. Homeowners
who use reverse mortgages never owe more than the value of their home or the amount borrowed
under the terms of the loan, whichever is less.

The money from a reverse mortgage can be used for anything: daily living expenses, home repairs,
medical bills and prescription drugs, pay-off existing debts, continuing education, travel, long-term
health care, prevention of foreclosure and other needs.

Reverse mortgages are a great way for seniors with built-up equity in their homes to generate income
to meet an extraordinary expense or an immediate need.

--- Reverse mortgages once had a negative connotation, but are now getting the recognition they deserve
as a planning tool . These products offer senior homeowners many great benefits:

- Homeowners always retain title and ownership of their home.

- Cash advances can be used for any purpose.

- There is no fixed maturity date (meaning that as long as one of the borrowers lives in the home, no
repayment is required), and

_ The tax-free income does not affect Social Security or Medicare benefits.

Reverse mortgages are extremely flexible. Homeowners can choose how they want to receive their
mortgage funds as a lump sum, as monthly income-for up to life, as a line of credit, or as a combination
of monthly income and line of credit.

These funds can then be used at the homeowner’s discretion-to pay for home repairs, medical costs, in
home care, education, or simply as supplemental retirement income.

The size of the reverse mortgage that you can get depends on your age at the time you apply for the loan,
the type of reverse mortgage you choose, the value of your home, current interest rates, and-sometimes
where you live. In general, the older you are and the more valuable your home (and the less you owe on
you home), the larger the reverse mortgage can be.

-- -Demand for reverse mortgage continues to grow at a phenomenal rate

There are three primary reasons for this growth: a better understanding of the product; an aging
population; and an effort by various organizations to promote the benefits and flexibility of the product.

The most popular reverse mortgage is the federally insured Home Equity Conversion Mortgage
(HECM). More than 80,000 HECMs have been made since the first one was originated in 1989.

--- Seniors can qualify for larger reverse mortgage products as of January 1, 2004 because of new,
higher loan limits.

The increases affect two reverse mortgage products: the federally insured HECM, which accounts for
roughly 90 percent of all reverse mortgages mad in the U.S. and the Fannie Mae Home Keeper loan.

The loan limit in 2004 for the HECM product has increased to $290,319, up from $280,749 in 2003.
The lowest ceiling, which generally applies to the rural and non-metropolitan areas will rise to $160,176,
up from $154,896.

The loan limit for Fannie Mae’s Home Keeper loans has increased to $333,700 from the prior limit,
in 2003, of $322,700.

The increases in the loan limits for HECM and Home Keeper products will enable seniors to convert
a greater portion of their equity in their homes into cash.

--- FHA, AARP and the lending industry are very sensitive and aware that some older homeowners
may not be familiar with typical lending practices. As such, numerous safeguards are built into
the program to ensure the consumer understands the product and not subject to implied predatory
lending practices.

With Third party counseling prior to application, the consumer must speak with an approved agency
to ensure they understand how the program works, its cost, how it will affect the estate and to explore
options other than the reverse mortgage that might better suit the consumer’s needs.