Marie lives in a manufactured home (sometimes called a mobile home). It’s a beautiful home built around the original form so you can’t even tell it’s a manufactured home. Two years ago I worked with Marie but unfortunately we were not able to do a reverse mortgage because her manufactured home did not meet HUD’s requirements. While we can do a reverse mortgage on manufactured homes they have to meet the long list of HUD’s requirements.
Two weeks ago Marie called and said she had talked with an originator of a large bank who told her that the reverse mortgage can be done on her home. Marie said she had called me because she trusted me. As I discussed the situation with her she said the other originator had told her that they found on the internet that her property had been reclassified. Additionally Marie said at the suggestion of the other originator she had scheduled her required counseling.
Not believing that a manufactured home could be reclassified, I told Marie to cancel the counseling (potential cost of $125 which she didn’t need to spend if her property wouldn’t qualify) and that I would check to see what I could find out for her regarding a reclassification.
After doing some checking on the internet, reviewing HUD’s requirements and checking with an underwriter, I called Marie back to confirm what I initially thought, her property was not reclassified from HUD’s standpoint and HUD would not insure her property. A manufactured home is a manufactured home no matter how much you have done to change the look.
Fortunately Marie had called me – if she had proceeded with the other lender she would have spent $125 for counseling, $450 to $500 for an appraisal and then found out that she still couldn’t do the reverse mortgage. She took it in good humor, stating, “They’ll do anything to get an application.” While I would have loved to do the reverse mortgage for her, I believe in servicing the client even if it means I won’t earn a commission.
Another call I received was from someone who was shopping for lenders. They lived on a rural property and after talking with them about their property I determined that it would not meet HUD’s requirements because of commercial use. This person said they were told by a large bank originator that they could do the reverse mortgage. If they proceed in with the counseling, application and the process with the other lender when the file gets to underwriting (hopefully) or to HUD they will be very disappointed when they learn the reverse mortgage can’t be done, especially when they have paid for the counseling and appraisal, credit and flood certificate fees.
Reverse Mortgages can be lifesavers for seniors but the property has to qualify. Keep in mind that some lenders require originators submit a number of applications as part of their employment, even if they don’t close. These are just a couple of examples, we receive other calls on unusual properties where other originators have led the borrower to believe a reverse mortgage can be done where in fact HUD will not insure the property. While this is not reverse mortgage fraud, I consider it to be unethical.
Seniors should contact and work with originators who have years of reverse mortgage experience not only in originating but also with HUD’s as well as the investor’s requirements, processing, underwriting. Ask for references. Additionally the originator should look out for the seniors, i.e. be a senior advocate – we don’t want to get senior’s hopes up and have them pay out hard earned money if they aren’t going to qualify for a reverse mortgage.
Don’t be afraid to ask the originator questions about their knowledge and experience with the various aspects of reverse mortgages, from origination, processing, underwriting, closing, servicing, etc. Utilize the questions in my Blog article “Don’t Let Fear Keep You From A Reverse Mortgages But Know What To Look For In a Lender.” Additional information can be found on our website: “What To Consider When Talking With Reveres Mortgage Lenders” and “Why Choose Prestige Mortgage, LLC/Reverse Mortgage SIDAC.”
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Also read how reverse mortgages have made a difference in the lives of those who do qualify:
- Finance Retirement with A Reverse Mortgage
- Know A Senior Who Wants Security, Independence, Dignity, and Control? A Reverse Mortgage May Be The Answer!
- Reverse Mortgages Answer Prayers
- Reverse Mortgages Help Celebrate Independence
- Reverse Mortgages Finance Home Care
- Reverse Mortgages: Friend or Foe? Definitely Friend
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