Reverse mortgage for home purchaseNew business-building opportunity for you

Paul Wirth, CMB

Branch Manager

Power of Now

May 2011

2

As the nation’s leading retail originator of reverse mortgages, Wells Fargo is committed to helping seniors age 62 or older use the equity in their homes to realize financial independence and peace of mind.

Now with the new reverse mortgage for purchase program, count on Wells Fargo to help provide a new home financing option for your senior homebuyers.

2

Trusted leadership you can count on – meeting the needs of senior homeowners

3

What is a Reverse Mortgage?

What is the Home Equity Conversion Mortgage (HECM) for Purchase?

How can it help you build your business?

How can it help senior homebuyers?

Example of a HECM for Purchase transaction

Frequently asked questions

3

Table of contents

4

A reverse mortgage is a non-recourse loan that enables senior homeowners — age 62 and older — to convert a portion of their home’s equity into tax-free1 funds

There are no income, health, employment, or credit-score qualifying requirements2

The amount of funds clients can qualify for is based on their age, the property’s value and current interest rates

Funds may be obtained in a lump sum, monthly payments, a line of credit, or a combination of any of these options

Applicants must agree to participate in a counseling session with a HUD approved agency

Homeowners retain title to the property and continue to own their home

1. Consult a tax advisor2. Loan proceeds are not considered income and will not affect Social Security or Medicare benefits. Monthly

reverse mortgage advances may affect borrower eligibility for other programs. Consult either a local program office or an attorney to determine how, or if, monthly reverse mortgage payments might affect a specific situation.

3. As long as all program requirements are met.

What is a reverse mortgage?

5

An FHA-insured reverse mortgage

Enables senior homebuyers, age 62 or older, to purchase a new primary residence and obtain a reverse mortgage in simultaneous transactions with no monthly mortgage payments

Allows buyers to combine reverse mortgage proceeds with a down payment from their current home sale or other assets, to purchase a new home

Reverse mortgage for purchase

What is the Home Equity Conversion Mortgage (HECM) for purchase?

6

Expand your customer base to include senior homebuyers now able to take advantage of this new financing option

You may be able to sell more homes with this new financing option

Real estate agents may benefit from two potential transactions – a home sale and purchase

Reverse mortgage for purchase

How can it help build your business?

7

Purchase a new home without taking on a new monthly mortgage payment

Purchase a primary residence suitable for their current needs Purchase a home in a senior housing community Move into a new home that’s easily accessible with modern

amenities Downsize to a smaller, easier-to-maintain home Relocate closer to friends and family members

Reverse mortgage for purchase

How can it help senior homebuyers?

8

Step one: Gloria and Ted Palmer, both 74, want to buy a more

accommodating single-story home They work with real estate agent Jane Mills to sell their current

two-story home In a separate transaction, they look into buying a new single-

story home in a housing development being built by Bill Davis The Palmers meet with Mills and Davis and look at several

homes priced at $300,000

Reverse mortgage for purchase

How does the program work?

9

Step Two:

Mills introduces the Palmers to John Reynolds, a reverse mortgage consultant with Wells Fargo Home Mortgage

Reynolds shows the Palmers how the reverse mortgage for purchase could provide the additional funds they’ll need4

Purchase Price $300,000

Reverse Mortgage Proceeds $177,000

Cash Required To Close $123,000

4. Actual loan amounts available depend on the rates in effect when a loan is closed and the actual origination fee and closing costs charged, the appraised home value and current equity loan limits in your county.

Reverse mortgage for purchase

How does the program work?

10

Step Three:

The Palmers combine the $101,920 from the sale of their departure home, as a down payment with the $198,080 reverse mortgage to purchase a new home for $300,000 — and have no monthly mortgage payments!

Jane Mills handles two real estate transactions for the Palmers5

Bill Davis sells another home in his housing development

Reynolds shows the Palmers how the reverse mortgage for purchase could provide the additional funds they’ll need to purchase a new home.

5. Purchase and sale transaction can be handled by one or more real estate agents.

Reverse mortgage for purchase

How does the program work?

11

Examples

Based on a fixed interest rate program at 5.06% as of May 25, 2011.

YoungerBorrower's

Age

Principal Limit

Factor

Maximum Claim

$625,500

Principal Limit

Factor

Maximum Claim

$625,500

62 52.30% $327,137 61.90% $387,185

72 55.40% $346,527 67.70% $423,464

82 58.30% $364,667 73.00% $456,615

90 and up 61.00% $381,555 77.60% $485,388

UFMIP

SAVER STANDARD

Principal Limit Factors

Saver = 0.01% Standard = 2.00%

12

What sources are allowed for the cash required to close?6

The sale of the departure home

The sale of the homebuyer’s other assets

The homebuyer’s savings

What sources cannot be used for the cash required to close? Seller financing and concessions

Cash withdrawn from credit cards

A bridge loan of any kind

Subordinate financing

Gift money from parties involved in the transaction

Down payment assistance programs (DAPs)

6. These are examples of what sources may or may not be used to cover the cash required to close. For detailed information please contact your Reverse Mortgage Consultant.

Frequently asked questions

13

What property types are eligible? Single family

HUD-approved condos

Planned unit developments (PUDs)

Two- to four-unit properties (one must be owner-occupied)

Manufactured homes built after June 15, 1976

What property types are not eligible? Co-ops

Second homes

Boarding houses

Bed and breakfast establishments

Manufactured homes built before June 15, 1976 and any on leased land

Frequently asked questions

14

What requirements must the new home meet? Must become the buyer’s primary residence

Must be occupied by the buyer within 60 days from closing date

Construction must be complete, the property habitable, and a certificate of occupancy or its equivalent issued prior to the loan

application

Frequently asked questions

15

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.

The sale of a departure home is a completely separate transaction from the purchase and reverse mortgage for purchase transaction

Reverse mortgage is placed on the new primary residence

Reverse mortgage proceeds will be calculated based on the youngest homebuyer’s age and the lowest value of either the new home’s sale price or appraised value or the national HECM lending limit

Essential facts

16

Well Established. Well Respected. Wells Fargo.

For over 155 years, the Wells Fargo name has stood for reliability; integrity and pioneering progress that helps people manage their money and grow their assets. As part of the Wells Fargo & Company family, Wells Fargo Home Mortgage can provide easy access to banking, insurance, investment and consumer finance services to help our valued customers achieve their current and long-term financial goals.

An industry leader

17

Together, we can make this new business-building opportunity yours!Contact Information

Borrowers must be age 62 or older. Consult a tax advisor. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. Family members are also strongly encouraged to participate in these informative sessions. Call for more detailed program information. Loan proceeds are not considered income and will not affect Social Security or Medicare benefits. Monthly reverse mortgage advances may affect borrower eligibility for other programs. Consult either a local program office or an attorney to determine how, or if, monthly reverse mortgage payments might affect a specific situation. This information is for real estate and building professionals only and is not intended for consumer distribution.

Information is accurate as of the date of printing and is subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2009 Wells Fargo Bank, N.A. All rights reserved 104852

Paul Wirth, CMB

Branch Manager

(949) 933-7705

Paul.Wirth@WellsFargo.com

www.iReverseLoans.com