110261 01/25/11

Reverse MortgageAch i e v e F inanc i a l Ind ep enden c e Wi th A Reve r s e Mor t ga g e Loan

Rever se Mortgage Guide

Peace of Mind - own your home without

making monthly mortgage payments, with extra

money set aside for unexpected expenses or health

care costs.

Freedom - easily pay your monthly bills, with

enough extra cash to live comfortably and enjoy the

occasional luxury.

What Are Your Dreams for Retirement?

A Reverse Mortgage

Can Make It Happen!

Recreation & Leisure - enjoy time hosting friends

and family, participating in social opportunities and

pursuing your favorite hobbies.

Travel & Adventure - look forward to taking that

long-awaited vacation or family cruise, sooner rather

than later.

1

Making the most of your retirementHow do you envision your retirement years– pursuing hobbies, enjoying family gatherings, traveling, renovating your home? Or maybe you’re simply focused on achieving financial independence for the rest of your life. Considering your current goals and financial situation, you may still be deciding when you can actually retire if you haven’t already done so.

Taking StockEven if you’ve planned, saved and invested carefully, circumstances beyond your control or a change in your priorities can result in a gap between your current retirement income and the funds you need to meet your goals. Now is the time to consider all of your options and make the right decisions to ensure your dreams are within your grasp.

Fortunately, there is a solution that provides you with tax-free cash by tapping into the equity in your home: a Reverse Mortgage.

A Reverse Mortgage Can Help A Reverse Mortgage is an innovative government-insured loan that enables you to tap some of your home’s existing equity to obtain cash to help fund your retirement needs. Reverse Mortgage’s have helped thousands of homeowners just like you remain in their homes (mortgage payment free), throughout their retirement years.

2

Augment your retirement income with a Reverse MortgageRetirement should present an opportunity for leisure, well-earned relaxation and the freedom to enjoy life to the fullest without financial worries. But for some, it can be a time of uncertainty. Perhaps your retirement income isn’t as much as you thought it would be by now.

Many senior homeowners are taking advantage of a Reverse Mortgage to supplement their retirement. It’s not only flexible; it also offers security and predictability in today’s challenging economy. A Reverse Mortgage may be the ideal solution for you.

Pros Cons1. Delay retirement or

return to work You continue earning income to pay your financial obligations.

You may be unable or unwilling to continue working because of poor health or other reasons.

2. Sell your house and downsize

You eliminate or reduce your current mortgage payment and maintenance.

You may want to stay in your current home. You may still have a mortgage. Closing costs add to your financial burden.

3. Obtain a home equity loan or refinance your existing mortgage

You remain in your home.You may be able to lower your monthly mortgage payments and even pay off other debts.

To qualify for an equity loan, your income/debt ratio must be at a certain level and you must have an acceptable credit score.You must still pay your monthly mortgage, plus closing costs for the equity loan.

4. Decrease expenses and modify your life-style

You eliminate unnecessary expenses and reduce your monthly cash outflow.

It may be difficult to cut back if you’re already living frugally, or you may not want to sacrifice some comforts.

5. Obtain a Reverse Mortgage

You access tax-free cash to pay off your mortgage and may have additional funds for expenses or financial goals.

Upon your death, the Reverse Mortgage loan must be paid off. Any equity that remains then goes to your heirs.

If you’re experiencing a shortfall, you have several options for closing the gap:

Retirement Funding Options

3

What’s a Reverse Mortgage?A Reverse Mortgage is a loan that allows you to access some of the equity in your home to obtain cash now. The amount you receive is primarily based on:

• current interest rates

• age of the youngest borrower

• appraised value of the home (up to certain limits)

In general, the older you are, the more valuable your home, and the lower your loan balance, the more money you can expect to receive from a Reverse Mortgage.

You can get your money in a lump sum, fixed monthly payments, a line of credit that you can draw upon as needed, or a combination of these options. You can use the funds any way you want – to pay current bills, meet future financial obligations or simply enhance your lifestyle. Repayment is not due as long as you live in the home as your primary residence, continue to pay required property taxes and homeowners insurance, and maintain the home according to FHA requirements.

One type of Reverse Mortgage, a Home Equity Conversion Mortgage or “HECM,” is insured by the Federal Housing Administration (FHA). It offers borrowers a secure, low-risk loan option. We feature HECM Reverse Mortgages.

History of Reverse MortgagesDuring the 1970s, several private banks offered Reverse Mortgage-style loans. These helped seniors remain in their home by using their homes’ equity to pay off the mortgage. However, these early Reverse Mortgages didn’t provide the protections today’s loans do. In 1987, the U.S. Department of Housing & Urban Development (HUD) established a trial program issuing government-insured Reverse Mortgages and the Home Equity Conversion Mortgage, or HECM, was born. Since then, HECM Reverse Mortgages have rapidly grown in popularity. These secure, government-insured loans have enabled thousands of seniors to obtain cash to supplement their retirement income.

1990 1996 2002 2009

150,000

100,000

50,000

FHA Reverse Mortgage Growth – 1990-2009

Source: FHA Annual Management Report, Fiscal Year 2009

4

Reverse Mortgage Q & AToday, a Reverse Mortgage is becoming an increasingly popular way for seniors to supplement their retirement, offering a secure option for accessing cash based on the equity in their homes. Here are answers to common questions you may have about Reverse Mortgages:

What is a Reverse Mortgage?

A Reverse Mortgage is a loan that allows homeowners aged 62 and older to convert a portion of the equity in their home into tax-free cash. HECM Reverse Mortgage loans are insured by the Federal Housing Administration (FHA).

What is the difference between a Reverse Mortgage and a home equity loan?

With a traditional mortgage or home equity line of credit, you must meet minimum income and credit requirements to qualify for the loan, and you have to make monthly loan payments. With a Reverse Mortgage, there are no credit score and generally no income requirements, nor do you make loan payments.

Do I have to repay a Reverse Mortgage loan?

Yes, eventually. However, your payment is not due on your Reverse Mortgage loan as long as you live in your home, it’s your primary residence, you maintain it according to FHA requirements, and you pay required property taxes and insurance.

Do I still own my home with a Reverse Mortgage?

Yes. You keep the title to your home; the lender does not become a title holder. You own and can remain in your home as long as you meet all the Reverse Mortgage requirements.

Is any home eligible for a Reverse Mortgage?

Generally, single-family residences, two-to four-unit owner-occupied dwellings, townhouses, approved condominium units and some manufactured homes are eligible for a Reverse Mortgage. The home must meet FHA minimum property standards. If home repairs are required, in some cases they can be completed after closing using funds from the Reverse Mortgage.

Does a Reverse Mortgage affect my eligibility for Social Security or Medicare benefits?

A Reverse Mortgage usually does not affect eligibility for Medicare or Social Security benefits. Some government benefits, such as Medicaid and Supplemental Security Income (SSI), may be affected by a Reverse Mortgage. You should consult a qualified professional to determine if there would be any impact to your government benefits.

Are there income or credit score requirements necessary to qualify?

No. There are no credit score and generally no income requirements.

5

You don’t have to pay

anything up front for a

Reverse Mortgage except

the cost of HUD-required

counseling. In some

instances, the counseling

fee may be waived...

6

Reverse Mortgage Q & A (continued)

Do I have to make monthly mortgage payments?

No. Unlike a traditional home mortgage or equity loan, you do not make monthly loan payments. As with all mortgage loans, you must continue to pay your property taxes and homeowners insurance premiums. How much money could I receive from a Reverse Mortgage?

In general, the older you are, the more valuable your home, and the lower your loan balance, the more money you can receive from a Reverse Mortgage.

What are the payment options for a Reverse Mortgage?

You can get money in a lump-sum payment, a monthly check, a line of credit or a combination of these options. You choose the option that best fits your needs.

Do I have to pay income taxes on the money I get from a Reverse Mortgage?

No. Because funds from Reverse Mortgages are considered loan proceeds and not income, the money you receive is not considered taxable income.

Are there any restrictions on how I use the money I receive?

No. You can use the money from your Reverse Mortgage loan any way you like. Many people put the proceeds into a line of credit account for home repairs or improvements. Others use it to pay for in-home health care, medical costs or property taxes. You can even use it for a vacation, a new car or to help your grandchildren pay their college expenses. Use it however you want – it’s your money!

How much do I have to pay to get a Reverse Mortgage?

You don’t have to pay anything up front for a Reverse Mortgage, except the cost of HUD-required counseling. In some instances, the counseling fee may be waived. All other costs – such as origination fees, third-party closing costs and FHA mortgage insurance premiums – can be financed as part of the loan.

What happens to my home upon my death?

Upon your death, your heirs can keep your home by repaying the full loan balance.

What if the loan is more than my home is worth?

When you sell your home, your repayment responsibility is limited to the value of your home, even if your loan balance exceeds that amount. However, if you or your heirs desire to keep your home, the full loan balance would need to be repaid.

7

Is a Reverse Mortgage right for you?To determine if a Reverse Mortgage is right for you, evaluate your finances and goals:• currentbudget• futurefinances• lifestyleneedsanddesires• personalgoals• howlongyouplantoliveinyourhome• howimportantitistoyoutoleavehomeequitytoyourheirs

The timing of your decision is important, since the amount of your loan will be based on the value of your home, your age and other factors. It is usually best to consult a trusted financial advisor and a licensed Reverse Mortgage loan advisor to help you determine the best option for you.

If you decide that a Reverse Mortgage is right for you, we’re

here to help!

8

What Your Family Should Know

Many seniors want to include family members in their Reverse Mortgage decisions. Family members who aren’t familiar with Reverse Mortgages may be concerned, since they may have misconceptions about this financial tool.

We invite you to include your children, siblings or other family members in the application process, if you so desire. We’ll be happy to explain how a Reverse Mortgage works and answer any questions they may have before you proceed.

Built-in safeguards protect youAs with any other major financial decision, you should carefully consider all the facts and get expert advice before choosing a Reverse Mortgage. Fortunately, a Reverse Mortgage has built-in safeguards to help you determine if it’s right for you.

Independent HUD Counselors Provide Valuable InformationBefore we can begin processing your Reverse Mortgage, you must talk with an independent counselor approved by the U.S. Department of Housing and Urban Development (HUD). They provide objective information about Reverse Mortgages, answer your questions and make sure you understand the process. This can often be conducted over the telephone for your convenience.

Your Interest Rate is CappedIf your loan has an adjustable interest rate, there is a limit on how much the rate may change during a specified time period. These interest rate caps ensure your interest rate won’t increase beyond a certain level.

You Know All Your Costs Up Front The Reverse Mortgage lender must disclose all estimated loan costs and fees, including the Total Annual Loan Cost (TALC), so you know exactly what you are paying to get the Reverse Mortgage.

You Have Three Days to CancelThe Reverse Mortgage contract has a “Right of Rescission,” giving you the right to cancel the loan within three business days of the closing.

8

9

Don & Shirley Leighton are a retired couple, aged 72 and 70, who want to stay in their home but need to boost their monthly income to pay living expenses.

They also would like to take the honeymoon they never had when they married 50 years ago. They’ve heard about Reverse Mortgages, but didn’t know the details. They decide to contact their local, experienced Reverse Mortgage loan advisor to discuss their current needs and future goals.

Don & Shirley Leighton represent a hypothetical couple whose story illustrates the benefits and simple steps involved in obtaining a Reverse Mortgage.

Don & Shirley Leighton Need More Income

Qualifying may be easy!Chances are, you may already qualify for a Reverse Mortgage if you’re approaching retirement age and have sufficient equity in your home.

You are eligible for a Reverse Mortgage if you:

• are 62 years of age or older• live in your home and have sufficient equity in it• can pay off any existing liens on your home (you can use the

money from the Reverse Mortgage to do this)• can continue to pay your property taxes and homeowners

insurance

Your home qualifies for a Reverse Mortgage if:

• it is your primary residence• it is the right type of property; generally, single-family

residences, two- to four-unit owner-occupied dwellings, townhouses, approved condominium units and some manufactured homes are eligible for a Reverse Mortgage

• your home’s physical condition meets FHA requirements; if it needs repairs, the Reverse Mortgage can be used to pay for them

10

The Leightons Determine Their Home Value and Loan Amount

Don & Shirley meet with an appraiser, who performs a thorough assessment of their home and researches comparable sales in the area from the past few months. The appraiser determines that their home’s value is $300,000. They currently owe $35,000 on their mortgage, which gives them $265,000 in equity. The Leightons can access $145,000 of their equity from the Reverse Mortgage. This calculation is based on Shirley’s age, since she is the youngest borrower, the $265,000 equity in their home, and a current interest rate of 5.49% on a fixed-rate product, including loan and origination fees.

10

The Reverse Mortgage ProcessThe steps to obtaining a Reverse Mortgage loan include:

Examine Your Financial Situation

Complete a Reverse Mortgage Application

Speak with a HUD Counselor

Home Appraisal

Loan Processing and Underwriting

Loan Closing

Receive Your Money

4

3

2

1

5

6

7

11

How the Leightons Spend Their Proceeds

TOTAL REVERSE MORTGAGE PROCEEDS

$145,000

Pay off their mortgage balance, making them “mortgage payment-free” for the life of the loan

$35,000

Apply $9,000 toward required fees

$9,000

Take a 3-week “belated honeymoon” trip

$6,000

Renovate their kitchen so they can enjoy cooking new recipes they learned during their vacation

$20,000

Save the remaining balance in their bank account for emergencies and unexpected expenses

$75,000

Thanks to their Reverse Mortgage, the Leightons are enjoying a more comfortable retirement because they are able to cover their expenses and stay in their home.

12

balance of the loan. Their children keep any remaining equity.

Scenario 2 - Home value is less than the loan balance

An appraiser determines that the Leightons’ home is worth less than what is owed on the loan. Don and Shirley’s children sell the home at market value and apply this to the Reverse Mortgage balance. However, since their Reverse Mortgage was FHA-insured, HUD makes up the difference between what the home sold for and the loan balance.With families of their own to raise, the Leightons’ children were not able to help their parents financially. They were relieved and grateful that their parents had the opportunity to secure a Reverse Mortgage to fulfill their dreams and enjoy their retirement without the stress of financial burdens.

Your Reverse Mortgage may provide much-needed cash to supplement your lifestyle. However, there will come a time when your situation changes and your loan will need to be repaid.

Examples of when a Reverse Mortgage must be repaid:

• You sell your house or transfer the title to another person

• You vacate your home for longer than 12 months (in most states)

• You pass away and there is no other borrower on the title

• You do not maintain the home’s condition according to FHA requirements

• You do not pay required property taxes and/or homeowners insurance

The most common situation is that the last borrower on the title passes away after living in the home until his or her death. The estate then sells the home and repays the Reverse Mortgage with the proceeds, keeping any remaining equity. Remember, when you sell, neither you nor your heirs will ever be personally liable for repaying more than the market value of your home to repay the Reverse Mortgage.

If your heirs do decide to keep your home, they can do so by repaying the full loan balance.

Repaying the Reverse Mortgage

12

The Leightons’ Family Repays the Reverse MortgageAfter 15 years of living mortgage payment-free and drawing from the bank account established with the Reverse Mortgage to supplement their retirement income, Don passes away. Shirley continues to live in their home and uses the remaining Reverse Mortgage funds to pay for in-home health care and medical expenses. Five years later, Shirley passes away, 20 years after she and her husband acquired the Reverse Mortgage. The loan balance, including principal and interest, is now due. The Leightons’ children decide to sell Don and Shirley’s home.

Scenario 1 - Home value is greater than the loan balance

The Leightons’ home continued to appreciate in value during those 20 years, and it’s now appraised at more than the

13

Not all Reverse Mortgage lenders are alike. We pride ourselves on serving our customers’ best interests, which is why we offer borrowers:

Constant, dedicated contactUnlike some Reverse Mortgage lenders, we work directly with you to manage the loan process from application through funding – so you’ll work with our own employees throughout the process and you’ll always have a friendly voice to answer your call.

The Difference Working with an Experienced Reverse Mortgage Loan Professional

Let’s Get Started!A Reverse Mortgage may be the perfect financial option if you’re a senior homeowner seeking additional cash for retirement. After you’ve had a chance to take stock of your situation and assess your goals, schedule a meeting with your Reverse Mortgage loan professional, to discuss how we can help you fulfill your wishes for a financially independent, enjoyable and worry-free retirement.