HUD-HECM Reverse Mortgage Telephonic Counseling Session TRANSCRIPT

IN RE: HUD-HECM Reverse Mortgage
Telephonic Counseling Session

of Neil J. Gillespie and
Penelope M. Gillespie with
Susan Gray, CCCS MMI.
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RECEIVED AT:
Home Office Telephone Extension

of Neil J. Gillespie
DATE & TIME:
April 22, 2008
TRANSCRIBED BY: Michael J. Borseth

Court Reporter
Michael J. Borseth
Court Reporter/Legal Transcription
(813) 598-2703
* * * * * * * * * * * *
NOTE: Calls on home office telephone
extension (352)854-7807 are recorded for
quality assurance purposes pursuant to the use
exemption of Florida Statutes chapter 934,
section 934.02(4)(a)(1) and the holding of
Royal Health Care Servs., Inc. v.
Jefferson-Pilot Life Ins. Co., 924 F.2d 215
(11th Cir. 1991)
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* * * * * * * * * *
AUTOMATED OPERATOR: This call is being
recorded.
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MR. GILLESPIE: Hello.
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MS. GRAY: Hi, may I speak to Penelope
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Gillespie?
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MR. GILLESPIE: Yes, hold on.
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MS. GRAY: Thank you.
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MR. GILLESPIE: You want to pick it up, mom.
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MRS. GILLESPIE: Hello.
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MS. GRAY: Hi, Ms. Gillespie.
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MRS. GILLESPIE: Yes.
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MS. GRAY: This is Susan Gray. I'm with Money
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Management International. And I'm contacting you
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this afternoon to provide the reverse mortgage
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counseling for you.
MS. GRAY: Okay. How did you hear about the
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reverse mortgage?
MR. GILLESPIE: From our bank, Park Avenue
Bank.
MS. GRAY: Park Avenue, okay. And what are
some of your goals in obtaining a reverse mortgage?
MR. GILLESPIE: We want to eliminate our
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monthly payment and have whatever equity is

possible.
MS. GRAY: Okay. And how much do you owe on
the existing mortgage?
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MR. GILLESPIE: About 77,000.
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MS. GRAY: Okay. And what is the approximate
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value of the home?
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MR. GILLESPIE: 140,000.
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MS. GRAY: Okay. And Ms. Gillespie, I have
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got you on the line and who the gentleman I am
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speaking with?
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MRS. GILLESPIE: It's my son.
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MS. GRAY: Okay. And what is your name?
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MR. GILLESPIE: My name is Neil Gillespie.
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MS. GRAY: Neil. Is that N-e-i-l?
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MR. GILLESPIE: Yes, it is.
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MS. GRAY: Okay. And Gillespie is
G-i-l-l-e-s-p-i-e?
MRS. GILLESPIE: That's right.
MS. GRAY: Okay. And Ms. Gillespie, did you
have a middle initial?
MRS. GILLESPIE: M.
MS. GRAY: N as in Nancy?
MR. GILLESPIE: No.
MRS. GILLESPIE: M as in --
MR. GILLESPIE: Your middle name, mom. Marie.
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MRS. GILLESPIE: Marie.
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MS. GRAY: Okay. Okay. Neil, do you use a
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middle initial?
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MR. GILLESPIE: J.
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MS. GRAY: K?
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MR. GILLESPIE: J. J as in Joseph.
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MS. GRAY: Okay. And what is your date of
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birth, Neil?
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MR. GILLESPIE: March 19th, 1956.
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MS. GRAY: Okay. And Ms. Gillespie, I need
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your highest level on education completed.
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MRS. GILLESPIE: Just high school.
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MS. GRAY: Okay. And Neil, your highest level
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of education completed?
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MR. GILLESPIE: Bachelors Degree.
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MS. GRAY: Okay. All right. There is a note
in the file that -- let's see, bear with me just
one second. Okay. That you have a lender ID
number.
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MR. GILLESPIE: No, we don't have a lender ID

number.
MS. GRAY: Okay.
MR. GILLESPIE: I believe the bank called you
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about that issue yesterday.

MS. GRAY: Okay. Okay. Do you have anyone in
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particular that you would like your certificate
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faxed to?
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MR. GILLESPIE: Yes, Park Avenue Bank.
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MS. GRAY: Okay. Whose attention should I
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address this to?

MR. GILLESPIE: You would address that to Liz
Baize. L-i-z B-a-i-z-e.
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MS. GRAY: Okay.
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MR. GILLESPIE: Do you want the fax number?
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MS. GRAY: Certainly.
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MR. GILLESPIE: It's area code (352) 854-0112.
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MS. GRAY: Okay. And is this a single family
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residence, condominium or townhome?
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MR. GILLESPIE: Single family.
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MS. GRAY: Okay. And I have the address is
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8092 Southwest 115th Loop; is that correct?
MRS. GILLESPIE: Yes, yes.
MS. GRAY: Okay.
MR. GILLESPIE: Mom, you will have to speak up
louder, it's hard to hear you.
MS. GRAY: And that is Ocala, Florida 34481?
MR. GILLESPIE: Yes.
MS. GRAY: Okay. Would you like for me to
provide any household budget counseling for you
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today or would you just like the presentation on
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the reverse mortgage?
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MR. GILLESPIE: Just the presentation on the

reverse mortgage.
MS. GRAY: Okay. Do you plan to use any of
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the funds that you receive from the reverse
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mortgage to obtain an annuity?
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MR. GILLESPIE: No.
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MRS. GILLESPIE: No.
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MS. GRAY: Okay. Do you plan to sign a
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contract on an agreement with an estate planning
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firm to obtain a reverse mortgage?
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MR. GILLESPIE: No.
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MRS. GILLESPIE: No.
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MS. GRAY: All right. Can you both hear me
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pretty good?
MS. GRAY: All right. I need to take just a
couple of minutes and read our disclosure in order
to obtain permission to counsel you today. Okay?
MR. GILLESPIE: All right.
MRS. GILLESPIE: Okay.
MS. GRAY: Before providing counseling we
disclosed and received your agreement to the
following: Money Management International,
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Incorporated is a non-profit, HUD approved housing
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counseling agency. We provide reverse mortgage
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counseling to help you make an informed choice
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about use of a reverse mortgage product. Your
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counselor will try to help you make an informed
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choice, but the decision whether to apply for a
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reverse mortgage is completely yours. Your
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counselor will not specifically recommend for or
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against using a specific loan product or a specific
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lender.
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Client privacy is important to us and the
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counseling services we provide are confidential.
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At your request we may provide verification of
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counseling to the lender of your choice, but no
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personal financial information will be disclosed.
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As part of this counseling interview you will
be asked to provide information about estimated
income and expenses. We do this to help you
develop a clear overall financial picture of your
own day-to-day budget, to help you decide whether a
particular reverse mortgage meets your needs. This
information is held in strictest confidence and
will never be disclosed to your lender.
Information from your file may be released for
quality assurance purposes to a credible third
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party such as program review staff from the U.S.
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Department of Housing and Urban Development, who
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will also ensure confidentiality. Our privacy
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notice is available on our website at
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www.moneymanagement.org. You will not be charged a
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fee for a reverse mortgage counseling session.
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However, to help offset our cost we may request a
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contribution from your mortgage lender. This
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request may include your name and the date when you
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spoke with a counselor. We will not refuse service
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if your lender declines to make this contribution.
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By providing us with your mother's maiden name you
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will authorize us to provide the counseling for
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you. Do you understand the provisions outlined?
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MR. GILLESPIE: Well, I heard what you said,

yes, uh-huh.
MS. GRAY: All right, and may I have each of
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your mother's maiden names, please?

MR. GILLESPIE: I'm not sure why you need
that.
MS. GRAY: Okay.
MR. GILLESPIE: Well, let me ask you this,
could we refuse the maiden names?
MS. GRAY: You sure can. You can use
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something else. Do you want me to give you some
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other ideas?
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MR. GILLESPIE: We will use our pet name; how

is that?
MS. GRAY: That will be fine. As long as you
each have something different.
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MR. GILLESPIE: My pet name is Fluffy.
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MS. GRAY: Okay.
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MR. GILLESPIE: And my mother's is Ginger.
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MS. GRAY: Okay. That will work just fine.
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MS. GRAY: Just something that is unique to
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you. Okay. All right. Now, today we're going to
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be talking about mostly the HECM Reverse Mortgage.
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This is the most popular and widely available.
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However, I want to mention to you that there are
other reverse mortgages that share similar
characteristics, one of these being the Home
Keeper, which is underwritten by Fannie Mae. And
there are some lender specific reverse mortgage
products that are offered by several large learning
institutions. Now, these reverse mortgages are not
insured by FHA and are most commonly used by
borrowers with home values exceeding 500,000.
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The HECM is a HUD FHA reverse mortgage that
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allows you to convert some of the equity in the
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home into usable cash that has no restrictions on
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use. All homeowners on the deed must be at least
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62 years old and living in the home as primary
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residence. The home must meet FHA standards and an
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appraisal will be required. The proceeds from the
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reverse mortgage must be sufficient to pay off all
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liens against the property. Homeowners must keep
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their property taxes and insurance current and
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continue to maintain the property in good
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condition. Any questions on the material so far?
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MR. GILLESPIE: No.
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MRS. GILLESPIE: No.
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MS. GRAY: Okay. With the reverse mortgage
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you will retain all rights and privileges of home
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ownership without having to make a monthly mortgage
payment. The money that you receive from the
reverse mortgage is nontaxable, it need not be
reported as income. There are no restrictions on
how the funds are used and you need no income to
qualify. You can continue to receive your regular
Social Security payments and your Medicare
benefits.
It's important to remember that the HECM may
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have an impact on your estate and the heirs;
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meaning there may be little or no equity left in
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the home at the end of the loan time.
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The closing costs associated with the HECM are
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typically high. And the interest that will be
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added to your loan balance each month is deferred
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and cannot be deducted from income taxes until the
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house is sold.
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A reverse mortgage may effect your eligibility
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to receive assistance under Federal and State
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income or asset-based programs. If you are
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receiving any public assistance such as Medicaid,
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SSI or Food Stamps, be careful not to jeopardize
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these benefits by receiving more cash from the HECM
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loan in a given month than you plan to spend in
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that same month. Any questions so far?
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MR. GILLESPIE: No.
MRS. GILLESPIE: No.
MS. GRAY: Okay. There are some different
payment options available with the reverse mortgage
HECM, and I want to go over those with you. You
will notice it's very flexible as far as ways you
can access the fund. You can take out a lump sum
at closing to meet an immediate need, such as
paying off an existing mortgage. Or if you need
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extra money on a monthly basis you could elect to
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receive a 10 year payment for as long as you live
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in the home. Or there is the term payment. The
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term payment allows you to receive a larger monthly
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payment than a 10 year. The shorter the term the
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larger the payment. However, when the term expires
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you would no longer receive that monthly payment.
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You also have what is called the HECM Line of
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Credit. The line of credit is a holding account
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for the funds that you can draw from in any amount
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at any time. And it even allows for automatic
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credit line growth, so that you can end up with
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more available cash. You can combine these options
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and you can always make changes later for usually a
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twenty dollar fee. Any questions on that?
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MR. GILLESPIE: No.
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MRS. GILLESPIE: No.
MS. GRAY: All right. Now, the longer you
have this loan, the more the debt owed increases.
And that's due to the interest, fees and
disbursements being added to your loan balance.
And at some point in time this loan will have to be
repaid. And the repayment can either be the heirs
can either sell the home and pay back what has been
borrowed, or if they wish to keep the home they can
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use funds from another source, or take out a
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different loan and pay back the reverse mortgage.
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However, no repayment is necessary unless you
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permanently move from the home, sell the home or
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pass away.
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If the loan balance at the same time exceeds
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the home value, FHA will pay the difference to the
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lender. This is called the Non-Recourse Limit. In
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other words, neither the borrower nor the heirs
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will ever be held accountable for more than the
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value of the home.
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Okay. Have you seen some analysis for the
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reverse mortgage as far as how much you would
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receive and the different costs and fees associated
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with it?
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MR. GILLESPIE: Yes.
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MS. GRAY: Okay. I am going to put your
information in right quick and then I'm going to go
through this with you so that we can go over those
costs and fees with you and see if you have
questions on those.
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Neil, I just want to be sure I have your name

as N-i-e-l, right?
MR. GILLESPIE: No. It's N-e-i-l.
MS. GRAY: N-e-i-l. Okay. Let me fix that
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really quick.
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MS. GRAY: And for some reason I was thinking
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that didn't look right to me. There we go.
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That's in Marion County?
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MR. GILLESPIE: Yes.
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MS. GRAY: Okay. Now, I'm going to use a home
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value of 140; is that what they used when they did
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your analysis for you?
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MR. GILLESPIE: Yeah, I believe so.
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MS. GRAY: Okay. And a payoff of 77,000?
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MR. GILLESPIE: Yes.
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MS. GRAY: Okay. I am trying to get my
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numbers close to what they have so -- now, with
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this reverse mortgage you're going to hear the term
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Principal Limit. The principal limit is the
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maximum amount that HUD will allow you to borrow.
And to determine this amount they use a formula
which consists of the age of the youngest borrower,
the appraised value of the home, and the expected
interest rate.
So, for Ms. Gillespie your, your principal
limit would be -- now I'm going to use a 1 and a
half percent lender's margin which, is the higher,
so that I can -- let's see. And assuming a
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35-dollar monthly fee for service, that would have
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a principal limit of $106,000, is what you will
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have available for the principal limit.
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Now, what the lender typically does with this
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loan is they roll the closing costs back into the
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loan, so that you should not have any out of pocket
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expenses. So from that principal limit they're
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going to deduct your monthly service fee set aside.
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Do you see that on your comparison that you have
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there, does it say service fee?
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MR. GILLESPIE: Well, I don't have a
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comparison per se. What I have is 2 percent of
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the -- 2 percent for the bank and 2 percent for the
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FHA mortgage.
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MS. GRAY: Uh-huh.
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MR. GILLESPIE: 3,700 in closing costs and
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about 5000 for the projected set aside.

MS. GRAY: Okay. That's very close to what I
have.
MR. GILLESPIE: Uh-huh.
MS. GRAY: That's what I am coming up with.
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So -MR. GILLESPIE: I mean, the bottom line is it
would be about an 83,000 dollar lump sum payment,
or 83,000 available for disbursement.
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MS. GRAY: What is the -- what did they --
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what is your expected interest rate on that, Neil?
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MR. GILLESPIE: I think it was 5 percent,
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five-point something.
MS. GRAY: Okay. And date of birth is
10/29/30?
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MR. GILLESPIE: Yes.
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MS. GRAY: Okay. And they used 140 home
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value. I'm coming up with -- now, after they take
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out the service fee set aside, which that fee can
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vary between lenders.
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MS. GRAY: The most that it can be is $35 per
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month.
MR. GILLESPIE: Okay.
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MS. GRAY: That fee could vary. And using $35

a month I am showing around $5,300 taken out.
MR. GILLESPIE: Yes, uh-huh.
MS. GRAY: What are they showing her principal
limit to be before anything is taken out?
MR. GILLESPIE: I don't have that figure.
MS. GRAY: You don't? Okay. If they take
that out that leaves you available principal limit
of about 100,000. And then from that they're going
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to deduct your mortgage insurance premium.

Now, that particular cost is set by HUD. So
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it's going to be the same from one lender to
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another. And that is 2 percent of your home
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appraised value. And then your origination fee,
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now this is the lender's fee for making the loan.
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The maximum the lender can charge is 2 percent of
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the home's appraised value. Some lenders charge
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the full 2 percent and some do not. So that fee
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can vary from one lender to another. And now let's
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see, you have your other costs; I'm coming up with
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about 4,100, but that's your third party costs.
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Now, after all those are taken out I show a
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net principal limit of around 91,000. And from
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that they will deduct your 77,000 dollar payoff on
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your mortgage. Which leaves you about 14,000 on
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the table, that you can have to do whatever you
want to.
MS. GRAY: Now, my numbers are just estimates
for illustrative purposes. Your lender will give
you your actual figures, but it sounds like ours
are fairly close.
MR. GILLESPIE: Yeah, uh-huh.
MS. GRAY: Okay. Any questions on the cost or
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fees, interest? The interest rate, let me go back
11
and tell you that there is two types of HECM's.
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You have a Monthly Adjustable HECM, which usually
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gives you the most cash, because you have a lower
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lender's margin. And then there is a Annually
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Adjustable HECM. Now, some lenders now are
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offering a Fixed Rate HECM if you want to take all
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the money out in one lump sum. So those are your
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different choices on the interest part.
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MR. GILLESPIE: There is a monthly adjustable,

a annual adjustable and a fixed rate?
MS. GRAY: Right. The only thing about the
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fixed rate is there is no monthly, 10 year or line
23
of credit, it's just a lump sum option.
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All right, any questions on this?
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MR. GILLESPIE: Well, on the interest rate,
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what is the interest rate multiplied against? Is
it the principal lending limit?
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MS. GRAY: The interest rate is going to be

applied to whatever you have actually borrowed.
MR. GILLESPIE: And that is the principal
lending limit?
MS. GRAY: That is -- well, that's going to be
how much ever -- for her it's going to be the net
principal limit, if she takes it out in a lump sum.
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If not, it's going to be the payoff on her existing
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mortgage plus the closing costs. And then let's
12
say she takes that extra 14,000 and she puts it in
13
a line of credit, then that will actually grow, but
14
the interest won't be charged on that amount, just
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on what she actually takes out.
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MR. GILLESPIE: All right, so the net
17
principal lending limit in this example that you
18
said is about 91,000?
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MS. GRAY: Exactly, uh-huh.
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MR. GILLESPIE: So the interest would be
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charged on that 91,000?

MS. GRAY: Well, if she takes it all out at
one time.
MR. GILLESPIE: Let's say she takes, just for
the sake of illustration, that she takes it all
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out.
MS. GRAY: Then, yes, that would be correct.
MR. GILLESPIE: And what is the current
interest rate?
MS. GRAY: Right now the expected interest
rate -- now this is based on HECM monthly 150. And
that would be 5.17, that's what it is right now.
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MR. GILLESPIE: Okay. So that's roughly 4,700

a year?
MS. GRAY: Yeah -- well, and it compounds, so
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it's going to -- it's going to -- let me do an
12
amortization real quick, Neil. I'll send you an
13
amortization, too, so you can see how it --
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MR. GILLESPIE: All right. So that 4,700 is

going to be added to the balance; is that right?
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MS. GRAY: Uh-huh.
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MR. GILLESPIE: Every year, like you say, it
18
compounds.
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MS. GRAY: It compounds, exactly.
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MR. GILLESPIE: So how does that ever -- how
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does the house ever increase more than that amount?

MS. GRAY: Well, your house, you know -- you
mean the value of the home?
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MR. GILLESPIE: Yes.
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MS. GRAY: Well, what we do when we do an
21
amortization is we use a 4 percent appreciation
rate.
MR. GILLESPIE: Yes.
MS. GRAY: Which could be more than that some
years. You look at the past year or two in the
mortgage industry, might be less than that.
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MR. GILLESPIE: Well, even using 4 percent,

that's still a 1 percent -- 1.17 percent loss.
MS. GRAY: Uh-huh. She's looking at -- hang
10
with me now just a second, I'm doing an
11
amortization. Okay. Now this is using, like I
12
say, 4 percent appreciation on the home value of
13
140. Okay. She should -- even with assuming she
14
takes the whole amount out in a lump sum -- now why
15
didn't I -- she should maintain positive equity in
16
the home for quite sometime because keep in mind,
17
her beginning balance is going to be around 91,000,
18
but her home value is around 140.
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MR. GILLESPIE: I see.
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MS. GRAY: So even with interest being accrued
21
and compounding, she's got a larger amount for her
22
home value that's going to be adjust -- you know,
23
adjusted, whatever the factor is, 4 percent. Could
24
be 6 percent one year and 2 the next, it's just
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going to, you know, it's hard to say. We usually
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use 4 percent.
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MR. GILLESPIE: Thank you for pointing that

out.
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MS. GRAY: But I think that might be why, it

does maintain positive equity.
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MR. GILLESPIE: Thank you for pointing that

out.
MS. GRAY: Sure. Sure. Matter of fact, in -let me see something right quick. Okay. Let's
10
look at year 10. Okay. In year 10 her balance on
11
this loan will be around $150,000. And her home
12
value will be 207,000.
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MR. GILLESPIE: 207 minus 150.
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MS. GRAY: Uh-huh.
15
MR. GILLESPIE: Equity of 57.
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MS. GRAY: Uh-huh.
17
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MS. GRAY: Yeah. That part -- I'll send you a
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printout of that.
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MS. GRAY: Okay. Any other questions for me,
22
Neil?
23
MR. GILLESPIE: No, no, I don't think so.
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MS. GRAY: Okay. Penelope, did you have any
25
questions?
23
MRS. GILLESPIE: No, I don't.
MS. GRAY: Okay. All right. The next part of
this session will address other options and
resources that may be useful when considering a
reverse mortgage. Some State and Local government
agencies offer low cost reverse mortgages to
seniors. Eligibility criteria may vary. These
loans are usually for low to moderate income.
These are called Public Sector Reverse Mortgages.
10
Although these loans usually cost less than a
11
regular reverse mortgage, they are very restrictive
12
in terms of what the funds can be used for, and
13
they are not available in all areas. Some examples
14
of Public Sector Loans would be the deferred
15
payment loan for home improvements and repairs, the
16
property tax deferral loans for repayment of
17
property taxes, and long, excuse me, single purpose
18
state offer reverse mortgages, for longterm care
19
and medical costs. For more information on these
20
loans please contact your Local or State Housing
21
Authority.
22
Many homeowners are eligible for Local, State
23
or Federal programs that may allow them to save
24
money on expenses. The Area Agency on Aging is a
25
resource to help find health, financial and social
24
service programs. For more information on the Area
Agency on Aging you can contact them toll free at
1-800-677-1116, or by visiting their website at
www.eldercare.gov.
Homeowners who have access to the internet can
use a quick, easy, confidential service from the
National Counsel on Aging, which uses a
questionnaire to help instantly identify programs
for which they may be eligible. That website is
10
11
www.benefitscheckup.org.
And finally, you have the Sale Leaseback and
12
the Time Sale option. This is where the buyer
13
provides the seller a lease to remain in the home,
14
either for life or until the lease is terminated by
15
the seller. These arrangements are not very common
16
and they can be complex. For more information on a
17
Sale Leaseback or a Time Sale, please consult a
18
real estate attorney or specialist.
19
Homeowners should not pay a fee to the lender
20
to obtain information. Some companies under the
21
guise of estate planning charge 10 percent of the
22
amount borrowed for these services. These costs
23
are in addition to the traditional costs associated
24
with obtaining a HECM loan.
25
After the mortgage closing you will have three
25
business days to reconsider your decision. This is
called the Right of Recision Period. If for any
reason you change your mind and you decide you do
not want the loan, you can make a written request
to cancel. Only HUD approved lenders are able to
offer the FHA insured HECM. We do not endorse any
particular lender or loan product.
I'm going to send you some loan comparison
examples. Please note these are to be used for
10
education and illustrative purposes only. These
11
will provide you an estimation of the likely loan
12
proceeds and costs. However, only a HECM lender
13
can give you your accurate loan offer details.
14
If you would like to learn more about the
15
reverse mortgage I do recommend that you obtain a
16
copy of AARP's 52 page publication: Homemade
17
Money. It is available by calling toll free
18
1-800-209-8085. Or by visiting their website at
19
www.aarp.org.
20
And that concludes the reverse mortgage
21
presentation as required by HUD. Did you have any
22
questions for me or anything you would like for me
23
to go over in more detail with me?
24
25
MR. GILLESPIE: Mom, do you have any

questions?
26
MRS. GILLESPIE: No, I don't. Sorry.
MR. GILLESPIE: Well, it sounded pretty good
to me. What was your name again, ma'am?
MS. GRAY: My name is Susan Gray.
MR. GILLESPIE: Susan Gray.
MS. GRAY: Yes. Would you like my toll free
number and extension?
MR. GILLESPIE: Yes, yes, uh-huh.
MS. GRAY: It is 1-800-873-2227.
10
MR. GILLESPIE: 2227.
11
MS. GRAY: Yes, sir. And my extension is
12
13
14
6636.
MR. GILLESPIE: 6636. And that's Susan
S-u-s-a-n.
15
MS. GRAY: Uh-huh.
16
MR. GILLESPIE: Gray, G-r-a-y.
17
MS. GRAY: That's correct, uh-huh.
18
MR. GILLESPIE: And if we have any questions
19
can we call you at this number?
20
MS. GRAY: You certainly can. If you get my
21
voice mail, just leave me a message and I'll call
22
you back. And I usually try to return calls during
23
that business day.
24
25
MR. GILLESPIE: All right. I think you have

answered all the questions. You helped me
27
understand the interest, how that was added back to
the principal and how that related to the annual
projected property value increase.
MS. GRAY: Okay.
MR. GILLESPIE: Because I don't think I had a
6
7
clear understanding of that prior.

MS. GRAY: That was a really good question,
observation about the property value increase and
the interest rate. But it's just you got a -- a
10
lower principal limit, so your home should maintain
11
positive equity for a long time.
12
13
MR. GILLESPIE: Uh-huh. All right. I think

then that is everything.
14
MS. GRAY: Okay. Well, I sure hope things go
15
well for both of you and I will make sure we get a
16
copy of this faxed over to Liz. I'll send that to
17
her in just a few minutes. And then, now, the
18
originals, I will be mailing those to your home.
19
Once you get those originals you will both need to
20
sign those. And then your lender is going to ask
21
you for those originals.
22
23
24
MS. GRAY: Okay. Anything else I can do for
25
you today?
28
MR. GILLESPIE: I guess the only other
question I have about the interest rate was over,
you know, the last 10 years or so has it been about
that same amount or has it gone lower or higher?
MS. GRAY: You know, Neil, I have had -- I
have not pulled a history of the T-bill rates.
It's the one year T-bill rate.
MS. GRAY: And I -- but I have been told that
10
it has remained fairly constant. It's probably one
11
of the more stable indexes. But I don't have a
12
history of it. I think you can probably pull that
13
off the internet.
14
MR. GILLESPIE: Yes.
15
MS. GRAY: A history of the T-bill rate. And
16
I keep saying I'm going to do that and I just
17
never, never do it, but I believe back in the 80's
18
it may have had some pretty -- a lot bigger
19
changes, but I would say the past 10 years it's
20
probably remained pretty constant.
21
22
MR. GILLESPIE: I see. All right. Well, it's

the T-bill rate and that is what I will look for.
23
MS. GRAY: Right. It's the one year.
24
MR. GILLESPIE: One year T-bill rate.
25
MS. GRAY: Uh-huh.
29
MR. GILLESPIE: Okay. Sounds good.
MS. GRAY: And I don't have the information on
the fixed rate. That is still a relatively new
option and we don't have the information on that at
this time.
MR. GILLESPIE: Because under this it will be
this rate at 5.1, you know, approximately. That
will be adjusted in a monthly or annually?
MS. GRAY: That's going to be up to you how
10
you want to set that up. They can set it up, but
11
you can choose either option.
12
13
MR. GILLESPIE: But a fixed rate for the life

of the loan, that gives you more predicability.
14
MS. GRAY: It does. But I don't know what the
15
lender's margin, I don't know how they determine or
16
what they use to base the fixed rate on. We
17
haven't been given a lot of information other than
18
it is out there now.
19
20
MS. GRAY: But I am sure your lender can
21
advise you on that option and at least make you
22
aware of it so that you can, you know, decide if
23
that will help you or not. I just don't know too
24
much about it.
25
30
1
2
MS. GRAY: Other than it's, you know, it's out

there now.
MS. GRAY: I know the annually adjustable HECM
you're going to have a higher lender's margin,
which at the end of the day gives you less money
out of your reverse mortgage than would a monthly
adjustable option. Which you will see that when I
send you these comparisons. I have the Fannie Mae
10
Home Keeper, the Monthly Adjustable and the
11
Annually Adjustable all next to each other, so you
12
can compare them and you can see the differences.
13
MR. GILLESPIE: All right. And what is this
14
15
margin you're talking about?

MS. GRAY: Okay. They're -- the lender is
16
allowed to charge a lender's margin, which is an
17
index that they attach to that one year T-bill
18
rate.
19
MR. GILLESPIE: And how much does that run?
20
MS. GRAY: The lender's margin can be as high
21
as 1 and a half percent. There may be a 2 percent
22
now. I really -- but I haven't been -- I don't
23
know a lot about it yet. But as far as I know 1
24
and a half percent is what we show as being the
25
highest.
31
MS. GRAY: And it has been the case -- and let
me do something real quick here. That -- the 1 and
a half percent lender's margin actually netted you
more money at the end of the day. Let me do
something real quick and I'll tell you. If you
look at a HECM 1 percent lender's margin your -- I
believe that's the 14,000 was your -- based on
these numbers I have was what you would have on the
10
table.
11
MR. GILLESPIE: Yes, that's what you said.
12
MS. GRAY: Okay, if we look at a 1 percent
13
lender's margin, you would have around 13,000 --
14
well, 13,800 versus the 1 and a half percent. And
15
I am going to tell you why here in just a second,
16
why it's like that. The first time it's ever been
17
that way. The 150 gives you 14,073. So the
18
lender's margin in this example, the higher
19
lender's margin actually gives you more cash. And
20
I don't know that it wouldn't even be more with the
21
2 percent. I don't have a 2 percent, if they can
22
even do a 2 percent.
23
MR. GILLESPIE: Well, why would that be?
24
MS. GRAY: I'm fixing to tell you. I'm fixing
25
to tell you. Hang with me just one second. I'm
32
trying to find my information on that. Okay. The
fact is that the expected interest rate has now
dropped so low that it is even below the floor that
was established for the factor table used in the
HUD formulas. This means that the HECM 150 has the
same or slightly higher principal limit than the
100. So --
8
9
MR. GILLESPIE: So the HECM 100 is really a

buyer's margin of 1 point?
10
MS. GRAY: 1 point.
11
MR. GILLESPIE: And a HECM 150 is a buyer's
12
margin of 1.1 and a half points.
13
MS. GRAY: That is right.
14
MR. GILLESPIE: And this 1 and a half points
15
is added to the interest rate.
16
MS. GRAY: To the T-bill rate.
17
MR. GILLESPIE: T-bill rate, uh-huh. I still
18
don't see how a higher interest rate leads to a
19
higher amount of money being able to take out.
20
MS. GRAY: And I'll be honest with you, Neil,
21
I don't understand the mathematical reasoning
22
either, other than it has something to do with the
23
floor that was used when they made up these factor
24
tables.
25
MR. GILLESPIE: And you said something
33
about -- well, what do you mean by the floor?
MS. GRAY: Like I say, to get you really
detailed information I don't -- I don't have the
mathematical -- I just don't, I'm being honest with
you, I don't know. I just know that it's coming
out -- I would imagine if your lender could
probably give you more insight as to that
particular reason.
9
10
MR. GILLESPIE: Well, what do you mean by

floor?
11
12
MS. GRAY: It's just -- it just says the floor

that these factor tables have. I guess --
13
14
MR. GILLESPIE: In other words, you don't

really know what the floor is.
15
MS. GRAY: No, I do not know. I'm sorry.
16
MR. GILLESPIE: It's not the thing that's
17
covered with wall to wall carpet.
18
MS. GRAY: Yeah, yeah. I don't know what the
19
floor was when they developed the formula for this
20
program that we use, I don't know.
21
MR. GILLESPIE: And what did you -- you
22
mentioned something about these rates are lower
23
than what they had projected historically sometime
24
ago.
25
MS. GRAY: No, that the variance in the 150
34
giving you more money than a 100 is something that
has -- it was never like that until around the
latter part of last year --
MS. GRAY: -- when the interest rate dropped.
MR. GILLESPIE: The interest rate dropped?
MS. GRAY: Yeah. I guess the T-bill rate
dropped lower than what they had built into the
formula. I really don't understand it. I just
10
know that whenever you factor a 150 up against a
11
100 you're getting more cash out.
12
MR. GILLESPIE: And the T --
13
MS. GRAY: It was never like that before.
14
MR. GILLESPIE: And the T-bill rate dropped
15
16
17
last year?
MS. GRAY: It dropped -- I mean, it goes up
and down every week.
18
19
MS. GRAY: It changes from week to week.
20
MR. GILLESPIE: I need to do a historical
21
search on that.
22
MS. GRAY: Yeah, check that out. Because, in
23
fact, I'll probably do that when we hang up today.
24
I'll probably check it out myself because I don't
25
have that information. I know that it's out there
35
on the web, I just never pulled it up. I know it's
published ever week in the Wall Street Journal.
MS. GRAY: If you go to their website, and I
believe it's on Wednesdays that they publish that
T-bill rate.
MR. GILLESPIE: All right, I'll look for that.
MS. GRAY: So you can kind of, if you want to
9
10
11
follow it you can.

MR. GILLESPIE: All right. Did you have any
other questions, mom?
12
MRS. GILLESPIE: No, I don't, no.
13
MR. GILLESPIE: All right, well, we will look
14
15
for this stuff you're going to mail us.

MS. GRAY: Okay. I'll send you some things in
16
the mail. And like I say, be sure to hold on to
17
those certificates for your lender.
18
MR. GILLESPIE: We will.
19
MS. GRAY: Okay.
20
MR. GILLESPIE: All right. Thank you for
21
calling.
22
MS. GRAY: Sure. Thank you.
23
MRS. GILLESPIE: Thank you.
24
MS. GRAY: Thank you.
25
MR. GILLESPIE: Goodbye.
36
MS. GRAY: Bye-bye.
(Whereupon, the above recording was
concluded.)
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C-E-R-T-I-F-I-C-A-T-E
1
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STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
I, Michael J. Borseth, Court Reporter
for the Circuit Court of the Thirteenth Judicial
Circuit of the State of Florida, in and for
Hillsborough County, DO HEREBY CERTIFY, that I was
authorized to and did transcribe a tape/CD recording of
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the proceedings and evidence in the above-styled cause,
11
as stated in the caption hereto, and that the foregoing
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pages constitute an accurate transcription of the tape
13
recording of said proceedings and evidence, to the best
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of my ability.
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IN WITNESS WHEREOF, I have hereunto set my hand
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in the City of Tampa, County of Hillsborough, State of
17
Florida, this 14 April 2013.
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MICHAEL J. BORSETH, Court Reporter

HUD-HECM Reverse Mortgage Telephonic Counseling Session TRANSCRIPT

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HUD-HECM Reverse Mortgage Telephonic Counseling Session TRANSCRIPT

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IN RE: HUD-HECM Reverse Mortgage

Telephonic Counseling Session

Home Office Telephone Extension

DATE & TIME:

April 22, 2008

TRANSCRIBED BY: Michael J. Borseth

NOTE: Calls on home office telephone

extension (352)854-7807 are recorded for

quality assurance purposes pursuant to the use

exemption of Florida Statutes chapter 934,

section 934.02(4)(a)(1) and the holding of

Royal Health Care Servs., Inc. v.

Jefferson-Pilot Life Ins. Co., 924 F.2d 215

(11th Cir. 1991)

MR. GILLESPIE: Hello.

MS. GRAY: Hi, may I speak to Penelope

MR. GILLESPIE: Yes, hold on.

MS. GRAY: Thank you.

MR. GILLESPIE: You want to pick it up, mom.

MRS. GILLESPIE: Hello.

MS. GRAY: Hi, Ms. Gillespie.

MRS. GILLESPIE: Yes.

MS. GRAY: This is Susan Gray. I'm with Money

Management International. And I'm contacting you

this afternoon to provide the reverse mortgage

counseling for you.

MRS. GILLESPIE: Yes.

MS. GRAY: Okay. How did you hear about the

some of your goals in obtaining a reverse mortgage?

MR. GILLESPIE: We want to eliminate our

monthly payment and have whatever equity is

MR. GILLESPIE: About 77,000.

MS. GRAY: Okay. And what is the approximate

value of the home?

MR. GILLESPIE: 140,000.

MS. GRAY: Okay. And Ms. Gillespie, I have

got you on the line and who the gentleman I am

MRS. GILLESPIE: It's my son.

MS. GRAY: Okay. And what is your name?

MR. GILLESPIE: My name is Neil Gillespie.

MS. GRAY: Neil. Is that N-e-i-l?

MR. GILLESPIE: Yes, it is.

MS. GRAY: Okay. And Gillespie is

MRS. GILLESPIE: That's right.

MS. GRAY: Okay. And Ms. Gillespie, did you

have a middle initial?

MS. GRAY: N as in Nancy?

MR. GILLESPIE: No.

MR. GILLESPIE: Your middle name, mom. Marie.

MRS. GILLESPIE: Marie.

MS. GRAY: Okay. Okay. Neil, do you use a

MR. GILLESPIE: J. J as in Joseph.

MS. GRAY: Okay. And what is your date of

MR. GILLESPIE: March 19th, 1956.

MS. GRAY: Okay. And Ms. Gillespie, I need

your highest level on education completed.

MRS. GILLESPIE: Just high school.

MS. GRAY: Okay. And Neil, your highest level

MR. GILLESPIE: Bachelors Degree.

MS. GRAY: Okay. All right. There is a note

in the file that -- let's see, bear with me just

one second. Okay. That you have a lender ID

MR. GILLESPIE: No, we don't have a lender ID

MS. GRAY: Okay.