Who is REALLY responsible for reverse mortgage borrowers facing foreclosure

Posted on August 12, 2016 by Beth Paterson, CRMP

Reverse Mortgage Financing Stories about seniors losing their homes “because” of a reverse mortgage are hitting the media headlines. They are painting the picture that the reverse mortgage is a bad option. We recently received a call from a reverse mortgage borrower, not our borrower but from another lender, who is facing foreclosure. We’ll call her Mary.

Mary called to see if we could help her. She took her reverse mortgage out around 10 years ago, on a home valued at $200,000. Through the years she benefitted form the reverse mortgage by using the proceeds for her needs and wants.

She got behind on her taxes by $20,000. This means she is at least 5 to 6 years behind on paying her taxes if her property taxes were around $3,000 to $4,000 a year, likely for her home value in Minnesota.

The terms of the reverse mortgage, as with any traditional mortgage, require borrowers to pay property taxes and insurance on their property. Even if one doesn’t have a mortgage, it is the responsibility of homeowners to pay property taxes on their home.

In Mary’s case, as has often been the situation with reverse mortgages, the lender paid the back taxes and reached out to her to work with her to repay the amount they had paid on her behalf.

She said she can only pay $100 a month. At this rate it would take her 200 months or 16 years to repay this. And she still has to pay her current taxes.

The terms of reverse mortgages don’t allow for repayments for this length of time. Therefore the lender is telling her she needs to bring her back taxes current or they need to foreclose.

As a homeowner, who pays your property taxes? Even if your taxes and insurance are escrowed with your conventional mortgage, you are still paying the property taxes, just processed through the lender. Paying property taxes are a responsibility of being a homeowner.

Think about reverse mortgage Think about getting behind on your property taxes…eventually the county will foreclose. With the reverse mortgage, the lender paying the back taxes on the borrower’s behalf, and trying to work out a payment plan, could mean foreclosure doesn’t happen. In any case the lender paying the back taxes on behalf of the borrower extends the time before foreclosure could happen.

If the borrower works out a payment plan, keeps to it and repays back taxes in a reasonable timeframe and keeps their taxes current, then the loan is not called due and payable. However, if one isn’t able to find a reasonable payment plan and keep their taxes current, foreclosure will happen, whether by the county or by the lender.

And the reason for the foreclosure is the borrower did not pay their property taxes. Not because they had a reverse mortgage. They would be facing foreclosure even if there was no reverse mortgage.

Unfortunately as the conversation showed, Mary doesn’t understand this. She and the others written about in the media don’t want to take responsibility for their home ownership requirements. They want someone else to take responsibility or to blame someone else.

Mary doesn’t think it’s reasonable for her to have to pay the back taxes because she can’t afford to pay them. Her statement was, “I only get $1,000 a month, I can’t afford to more than $100 a month towards taxes.”

When asked about her being behind on her taxes and understanding it is her responsibility to pay them she stated, “The taxes are paid current.” Then when reiterated they were current because the lender paid on her behalf she acknowledged “Yes, they paid them.”

However she justifies that it was okay for the lender to pay taxes on her behalf and she shouldn’t have to repay them saying, “Well, the government bailed out the big banks but they don’t bail out the little guy.”

So she doesn’t think the lender should be requiring her to pay the back taxes. Really? Who should be paying her taxes?

The loan agreement on the FHA insured reverse mortgage requires borrowers keep taxes current and insurance on the property. Mary kept insisting, “They are current, the lender paid the back taxes,” ignoring that it is her responsibility, not the lenders to pay property taxes.

Sadly she didn’t have an answer when asked how she was going to pay her current taxes or going forward.

In summary of the conversation, Mary thought the bank should be eating her debt, covering her responsibility of paying taxes, and she shouldn’t be losing her home because she can’t afford to pay the taxes in the past or going forward.

Educated Reverse Mortgage Borrowers Borrowers should take time to be educated and understand the reverse mortgage, or any mortgage or financial product. With the reverse mortgage they are required to obtain 3rd party counseling where the counselor explains the product and the terms. The loan officer they are working with should also be explaining the features and terms of the reverse mortgage. Borrowers then get to decide whether they choose to proceed. It’s their decision and they should not blame a product they chose for their circumstances.

Starting in 2015, a Financial Assessment is required to determine reverse mortgage borrower’s ability and willingness to pay property taxes and insurance into the future. This consumer safeguard for borrowers, along with other new protections for spouses, help make reverse mortgages more sustainable for seniors who want to remain in their homes. This assessment does take into consideration the occasional life circumstance where one may have been late on a payment.

Blaming the reverse mortgage for one’s lack of taking responsibility of general home ownership duties is misplaced by the media and the homeowners.

2016 Beth Paterson, CRMP, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety and without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-1mN

Information is current as of date post published, program is subject to change in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Want Independence? Explore A Reverse Mortgage.

Posted on July 1, 2016 by Beth Paterson, CRMP

Celebrating Our Independence - Finding Independence With A Reverse Mortgage What gives you a sense of independence? When I think of independence I think of having freedom of choices and not relying on others. We all want our independence including seniors. How can seniors maintain that independence, have freedom of choices and not rely on others, the government or their children? A reverse mortgage provides independence for home owners 62 and older.

Having one’s own funds for home repairs, going out to lunch with friends, traveling, visiting family across the country, purchasing a new car, paying medical bills or for medications; paying for help with housework, meal preparation, yard work or transportation, whatever is desired can give that feeling of independence. Being able to pay off a mortgage to improve cash flow to to save one’s home from foreclosure gives one relief and freedoms. Being able to plan and have funds for the future and long-term care needs as well as protecting other assets and/or delaying taking out Social Security are other ways to have independence.

While some assistance may be needed for seniors to remain in their home, not relying on children or the government for help and being able to choose a home care agency of their choice will give them the sense of independence. Using the equity in one’s one with a reverse mortgage can provide seniors the funds for their independence.

“Now I have my dignity back and my independence” was what Edna exclaimed after her reverse mortgage was closed.

Another Minnesota reverse mortgage borrower, Bea, said, “With a reverse mortgage you begin to have independence anew and you begin to feel more secure. Being free from monetary anxiety, you have better control over spending your equity.” The reverse mortgage allowed Bea to pay off a mortgage, then to travel to family weddings and reunions. Several years after she initially did her reverse mortgage more recently Bea is using her reverse mortgage funds to pay for home care that is needed to keep her independent and at home.

Ted, age 91 and Anna age 87, Minnesota homeowners, were proud and didn’t want to discuss their financial situation. However, their son-in-law finally talked to them about doing a reverse mortgage. When I met them and we started the reverse mortgage process, the children and I were told they were doing the reverse mortgage so they could put new linoleum on their kitchen floor. Once the loan was closed I was informed by their children that they had indeed put in the new linoleum along with new windows and they bought some new furniture. The kids were going to Ted and Anna’s and were told, “Don’t pull in the drive way, we just had it blacktopped.” When Ted and Anna went out to eat with their kids, they could pay for their kid’s meals too making them feel good that they could treat their children to a meal.

Then one day Anna and her daughter were sitting at the kitchen table and Anna shared that before their reverse mortgage they used to go 3 days at the end of month without food or even milk because they would run out of money from their Social Security. As they were sitting there and looking at the paper, Anna exclaimed, “Look, Depends are on sale, I can now stock up.”

While Ted and Anna were too proud to let their children know their financial situation initially and they didn’t want to depend on them to assist with their living expenses, once they signed the reverse mortgage documents they kept their independence and had funds for their needs and desires. This also improved their dignity.

A reverse mortgage insured by FHA, an agency within HUD, is known as a Home Equity Conversion Mortgage or HECM. As one of the most protected financial options available for seniors, it allows them to use the equity in their home for whatever they need or want. With no monthly mortgage payments, cash flow can be improved by receiving money in monthly payments, a line of credit, lump sum or a combination of these. (Borrowers are still responsible for paying their property taxes and hazard insurance and maintaining the home.)

The title remains in the borrower’s name and the loan is not due until the home is no longer the primary residence, when they die, sell or move or on their 150th birthday. Repaid from the sale of the property, as a non-recourse loan if the loan balance is higher than what the home can be sold at fair market value the borrower or their heirs are not responsible for the difference. If the home is sold for more than the amount due then the borrower or their heirs keep the difference.

As you bring out the red, white and blue, hang your flags and gather with family to celebrate the independence of this great country of ours, ask what independence means to your loved ones. What is needed to help them remain independent and in their home, not relying on the government or on you, their children. Then explore a reverse mortgage, get the facts about them, and see if it might be an option for their situation to maintain their independence. Happy Independence Day!

This material may be re-posted provided it is re-posted in its entirety and without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-1my

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Hearing these statements are reasons to do a reverse mortgage

Posted on May 16, 2016 by Beth Paterson, CRMP

Have you heard any of these statements from a homeowner 62 and older? They may find their solution is a reverse mortgage and they should be encouraged to get the facts to see if the FHA insured Home Equity Mortgage (HECM) is right for their situation.

“I want to stay in my home.”
“My only option is to move.”
“I’m planning for retirement.”
“I’m not sure how I’m going to afford any potential long-term care costs.”
“I can’t afford home health care.”
“We can’t afford a mortgage payment.”
“We can’t afford to make home repairs or modifications.”
“I need money but drawing from my retirement plans have penalties.”
“Not enough money at the end of the Social Security check.”
“I need help with keeping up my home with housekeeping or yard work.”
“I’m downsizing and moving.” or “I’m moving closer to my children.”
They can’t afford the little extras that would help them maintain and enjoy their life.
They want Security, Independence, Dignity, and Control which they are missing in some way now.

There statements fit into the 5 general reasons to do a reverse mortgage:

Needs based: need funds immediately for covering living expenses
Maintaining lifestyle: having funds for travel, buying a car, purchasing vacation home
Protecting or delaying draws from other investments: Using the reverse mortgage to tap home equity rather than accessing other investments or retirement funds that may have penalties or are taxable; let the investments or retirement funds grow so more retirement funds are available later in one’s life; use the home equity so other investments can be left as the inheritance
Planning for long-term care needs (Standby reverse mortgage): Taking the reverse mortgage at a younger age then leaving in the line of credit which grows to have funds to draw from in the future when “life happens”
Purchasing a new home: Whether downsizing, moving closer to family or buying a dream home, the reverse mortgage can be used for financing.

A reverse mortgage is a mortgage with special terms for seniors 62 and older. Some of the differences from a traditional mortgage include income and credit scores are not considered to qualify for the interest rate and monthly mortgage payments are not required. Borrowers are responsible for paying property taxes, insurance, maintaining the home and abiding by the terms of the loan. Borrowers must meet HUD’s financial assessment qualifications to demonstrate ability and willingness to pay property taxes and insurance into the future.

Rather than a 15 or 30 year term, the loan is due and payable when the home is no longer the primary residence of the borrowers or on the 150th birthday of the youngest borrower. In addition, the reverse mortgage is non-recourse, which means if the loan balance is higher than what the home can be sold for there is no personal liability to the borrower or their heirs. If the home is sold for more than the loan balance, the borrower or their heirs receive the difference. The most common and only reverse mortgage available in Minnesota is the FHA HUD insured Home Equity Conversion Mortgage or HECM.

Options are available! When you hear any of the above statements remember a reverse mortgage may be the option that is the most beneficial to their situation.

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-1m5

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Senior Homeowners’ Foreclosures Should NOT Be Blamed On Reverse Mortgages

Posted on May 3, 2016 by Beth Paterson, CRMP

Homeownership We are seeing articles in the media about seniors with reverse mortgages who are losing their homes to foreclosure. Is this unfortunate? Yes! But let’s look at the reason rather than blaming the product, the reverse mortgage.

All homeowners regardless of age are responsible for paying their property taxes and keeping insurance on their home or risk losing it to foreclosure or not having funds to rebuild after damage to the home from a storm. This is true whether one has a reverse mortgage, a traditional loan, a Home Equity Line of Credit (HELOC), or no mortgage. Blaming the reverse mortgage for one’s lack of taking responsibility of general homeownership duties is misplaced by the media and the homeowners.

Several years ago I talked with a woman who was behind on her property taxes and the county was foreclosing on her. She could have qualified for a reverse mortgage, paid the back taxes, improved her cash flow with funds in a line of credit (or for others paying off a current mortgage and eliminating the monthly mortgage payment) and have funds to pay future property taxes and keep insurance on her home. Instead she listened to her brother who said reverse mortgages are bad, even though he had no basis for the statement and wouldn’t get the facts before making a decision. By listening to her brother and not doing the reverse mortgage, the county foreclosed on her property. She lost $280,000 in equity because she didn’t do the reverse mortgage and pay off the back taxes.

Stories about the county foreclosing on properties because one has not paid back taxes do not make the news…why?

Reverse mortgage maintains lifestyle The reverse mortgage can, and has, helped those 62 and older have the funds to pay their property taxes and insurance along with other homeowner responsibilities. More times than not we hear the stories on how the reverse mortgage has made a difference in the lives of seniors. How it has given them funds to cover their needs, maintain or improve their lifestyle, plan for their future long-term care needs or purchase a new home so they can downsize, move closer to their children or buy their dream home. See below links to articles on these uses.

The reverse mortgage lenders have reached out and worked with many borrowers who were delinquent in their property taxes and insurance to find a solution to help them get caught up on their late payments. Some used reverse mortgage proceeds, others worked out a payment plan. Because they have worked out a plan, these reverse mortgage borrowers are not facing the foreclosures. Only those who did not respond to lenders’ and/or work out a repayment plan are facing the foreclosures.

As of April 2015 a Financial Assessment is required to determine reverse mortgage borrowers’ ability and willingness to pay property taxes and insurance into the future. This consumer protection for borrowers helps make reverse mortgages more sustainable for seniors who want to remain in their homes. This assessment does take into consideration the occasional life circumstance where one may have been late on a payment.

Be educated about reverse mortgages Borrowers should take time to be educated and understand the reverse mortgage, as they should with any mortgage or financial product. With the reverse mortgage they are required to obtain 3rd party counseling where the counselor explains the product. The loan officer they are working with should also be explaining the features and terms of the reverse mortgage. Borrowers then get to decide whether they choose to proceed. It’s their decision and they should not blame a product they chose for their circumstances that likely benefited them over time.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency

What You Need To Know When A Reverse Mortgage is Due and Payable – Respond Quickly

Posted on January 11, 2016 by Beth Paterson, CRMP

Reverse Mortgages provide benefits for homeowners 62 and older

A reverse mortgage can be very beneficial to homeowners who are 62 or older, giving them the opportunity to live in their home with improved cash flow and with no monthly payment (they are still responsible for property taxes, hazard insurance, maintenance, as well as flood insurance and HOA dues if applicable). During the term of the loan borrowers use their proceeds for everyday living expenses, retirement planning, long term care, purchasing a new home, fulfilling dreams and wishes and needs of retirement.

Unlike a traditional mortgage, the loan is not due until the borrower is no longer in their home as their primary residence. The due date on the mortgage is actually the 150th birthday of the youngest borrower. Of course this all depends on the terms of the loan being followed. As a non-recourse loan there is no personal liability, the loan is only repaid from the property, not from other assets. If the home is sold for more than the loan balance the borrower or estate keeps the difference.

The reverse mortgage does not automatically become property of the lender or bank nor do they automatically start foreclosure. Foreclosure is the last resort HUD and the loan servicers want to take.

One of the more common questions we as loan originators get is, “How long do I or my children have to pay off the reverse mortgage?” So what happens when the borrowers are no longer in their home?

Obviously it is nearly impossible to repay the loan the day it becomes due (the date of death or moving out of the home or not abiding by the terms). But there are some important details that need to be addressed right away. HUD has some pretty tight requirements the lender’s servicers must follow when it comes to satisfying the reverse mortgage repayment. (Not always the same as the lender, servicers are companies lenders contract with to handle the servicing of the loan. These are the companies who have mailed the monthly statements, release the line of credit funds or monthly payments, etc. during the term of the loan.)

Communication, communication, communication and more communication with the servicer is of the utmost important when a reverse mortgage borrower is no longer in their home. The borrower or their estate must move quickly in contacting the servicer so they can make use of the maximum time that can be allowed by HUD for satisfying the loan. And it must happen quickly after one is no longer in their home.

Following is an outline of the steps that must be taken when the reverse mortgage becomes due and payable.

The servicer must be notified within the 1st 30 days of the borrower being out of the home by death or moving, etc. Note it is based on the actual date of death or move out date, it is not based on the date the servicer is notified. This can be done over the phone followed up with written documentation.
Condolence/demand letter mailed from the servicer. This letter may seem harsh and insensitive but the wording is required to stress the importance of the loan being due and the time frames required to satisfy the loan.
Options are provided to satisfy the loan:
- Paying it off via sale of the home to a third party.
- A family member finding financing if they choose to keep the home.
- If it looks like the home value is less than the loan balance, contact the servicer to make arrangements to pay the loan at 95% of the appraised value. The servicer will order an FHA appraisal within 30 days.
  - The borrower or estate must be prepared for this and allow this by providing a contact to allow an appraiser access to the home. With the full appraisal, it can be used for a short-sale. If a full appraisal is not completed and they only do a “drive-by” one, another appraisal will have to be obtained for the short-sale.
- The borrower or the estate has the option to do a Deed In Lieu of Foreclosure. This is taking all personal property and “broom sweeping,” cleaning out debris and trash from the property then turn the marketable title over to the servicer.
- Walking away and allowing the lender to foreclose.
Within 30 days of receipt of the demand letter borrowers or their estate must respond to the letter and return a written “intent to satisfy the loan” document.
Within 60 days the servicer must receive copies of death certificate; copies of probate proceedings, appointment of executor, administrator or personal representative of the borrower’s estate; copies of the trust, Life Estate or Transfer on Death Deed if applicable.
Within 60 days the home has to be on the market documenting the intention of satisfying the loan. This documentation must be sent to the servicer immediately.
If intention is to not sell the home, documentation of financing to pay off the loan must be provided within 60 days.

IT IS IMPORTANT TO PROVIDE AND DOCUMENT THE INTENTION OF SATISFYING THE LOAN QUICKLY!

If the communication with the servicer is happening and necessary documentation is provided to the servicer in their time lines then the borrower or their estate are provided 6 months to satisfy the loan. It may be possible to receive up to two 3-month extensions. But this is where the communication is important. One must NOT assume they have this time. If the servicer does not receive the communication and documentation according to their time lines, they will start the foreclosure proceedings according to HUD’s requirements.

And what happens if one doesn’t notify the servicer or follow these time lines?

If one doesn’t notify the servicer or follow these times lines then a letter of demand will be resent. If no response to the demand letter is received the servicer will refer to an attorney to start foreclosure to collect the debt. The 1st action to start the foreclosure will begin within 180 days by the foreclosure attorney.

If the last surviving borrower passes and the servicer is not notified within 30 days of the death, a notice of foreclosure is sent and attorney contacted. The more time that passes the less time the estate has to satisfy the loan and avoid foreclosure.

Foreclosure of the reverse mortgage follows the laws of each state. There may be time to satisfy the loan even after the foreclosure has started however extra fees will be added to the loan balance.

Borrowers’ Responsibilities

Paying taxes, keeping hazard insurance on the property and if applicable, flood insurance, maintaining the property and not changing title are all borrower’s responsibilities under the terms of the loan.

Borrowers are responsible for providing the following information to servicers:

Complete required repairs according to timeline outlined at closing.
Responding to and returning the letters of occupancy that are mailed to borrowers on the anniversary of their reverse mortgage closing.
Providing proof that property taxes have been currently paid on an annual basis.
Changes to any of your insurances with the updated information, i.e. if you change from one insurance company to another letting them know who the new provider is.
If you are out of the home for extended period of times, i.e. for hospital or rehab stays or long term travel.

Be sure to timely open and review mail from lenders and servicers to ensure you are taking care of your responsibilities and responding to their communications.

If the servicer does not receive this information they will make attempts to obtain it. If they are unsuccessful in obtaining it they are required to notify HUD who will likely require the foreclosure process begin to meet their deadlines.

Default for Not Paying Property Taxes, Insurance, Abiding by Terms of Loan

If the loan has become due and payable due to lack of payment of taxes and/or insurance or not occupying the property according to the terms of the loan, HUD has the right to foreclose on the property. And this may happen! When this does happen, the borrowers are not losing their home due to the reverse mortgage but because they didn’t abide by the terms of the loan. If one doesn’t pay property taxes the county can, and does, foreclose whether there is a traditional mortgage, reverse mortgage or no mortgage.

When one is in default due to one of the terms of the loan not being adhered to the demand letter for repayment is sent. There may be options to cure the default so one should reach out to their servicer to see if they can qualify for one of these.

If an arrangement cannot be made to cure the default, the foreclosure process may begin and an attorney contacted.

Servicers Check Public Records

The servicers are regularly checking public records and will send the demand letter for repayment if they learn the last surviving borrower is no longer in the home or a borrower hasn’t paid property taxes, kept insurance on the home or maintained the property.

Funds Frozen

Once a loan payoff is requested the funds from one’s line of credit and/or monthly payments will be frozen. If you, the borrower, are thinking funds will be needed for the move, fixing the home for sale, etc. make sure funds are requested prior to the move and payoff request. The heirs, because they are not borrowers, cannot request funds.

Responsibilities continue

Until the loan is actually paid off, the borrowers or the estate are responsible for maintaining the property, paying property taxes, utilities, maintaining hazard insurance, flood insurance if applicable, on the property, etc. Interest and the FHA Mortgage Insurance Premium will accrue as well as a servicing fee if one was on the loan.

Keep reverse mortgage information with other important documents

I strongly encourage you to have your reverse mortgage information, lender, servicer contact information with your other important documentation so your estate can notify the servicer timely. Remember if the servicer is not notified timely and communication not continued, they are missing opportunities to have the time to satisfy the loan.

Some borrowers choose not to tell their children they are doing or have done a reverse mortgage. This is their right. Doing a reverse mortgage is their own personal financial decision. If this is your choice it is even more important to have your reverse mortgage information with your other important documents so they have the opportunity to respond timely.

Non-borrowing Spouse

This article does not address non-borrowing spouse situation. If you are a non-borrowing spouse and the borrowing spouse has passed, contact the servicer immediately. HUD has made provisions for non-borrowing spouses to possibly remain in the home but the servicer must be contacted immediately and additional documentation must be provided to determine one will qualify for this option.

I’m here to assist my borrowers

I, as a broker and loan originator, do not have access to the servicing information, however I am available even after the loan has closed to answer borrower’s questions and guide them through the process. I welcome the opportunity to guide and advise my borrowers on the steps they need to take and referring them to the servicer timely. Other reverse mortgage brokers also welcome the calls so while you ultimately need to talk with the servicer, don’t hesitate to reach out to your broker loan originator for some guidance.

Thanks to Ryan LaRose from Celink for assistance by providing information.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Reverse Mortgage Assists to Cover Expenses and Protect Assets

Posted on December 3, 2015 by Beth Paterson, CRMP

Reverse Mortgage provides funds for retirement Home owners sometimes find themselves tapping their retirement funds or assets to cover their monthly expenses. And when “life happens” such as medical expenses or other emergencies they find themselves drawing even more money from their accounts. A reverse mortgage is an option to protect their retirement funds yet have the funds for their everyday living, maintaining their lifestyle or emergencies.

Ron, a recent borrower stated, “Initially we did the reverse mortgage to buy hearing aids and for the longer-run to have funds for ‘emergencies’ without having to use investment funds.”

After the passing of his wife, Darrel found he was drawing funds regularly from his retirement funds for his living expenses and other needs. He chose to do the reverse mortgage so he wouldn’t have to keep drawing from those accounts and paying the penalties that came with it. The addition of $300 tenure payment and $15,000 in his line of credit means he can leave the retirement funds to grow.

Dorothy joined me for a presentation to other seniors, sharing why she did the reverse mortgage. “I have lived in my home for many years. I ‘knew’ Social Security was going to take care of me… my mother had gotten by on it and I figured I would too.

Reverse Mortgage Works Wonders for MN woman I retired at 65. I had no hospitalization or a pension when I retired. I didn’t face those facts right away. I had invested and purchased stocks over the years in modest amounts. I figured that would be my answer to any and everything. When I wanted to travel I just cashed in part of a stock and I took off and did some great fun things.

“However we know the stock market took a plunge a couple of times and what I had was back down to half or less than what I had built up. Also I was having to use this in addition to my Social Security income. Fortunately I was able to have paid off my mortgage by the time I retired so I didn’t have those payments. I thought it would be easy street.

“I had a house paid for and was able to get a line of credit from the bank. Anything I wanted to do I would I just borrow the money on the line of credit. After that climbed I would cash some stock in to pay the line of credit.

“Pretty soon I needed a car. I took out a loan on the car. Pretty soon I’m paying the line of credit and the car payment. And I was using up my stock portfolio. I was owing more to the bank than I had stock to pay off all this line of credit. The stock broker I was talking with said, you have your house paid for, the best thing I could do would be to get a reverse mortgage.

“I have my reverse mortgage. I decided that as long as I was getting my Social Security and didn’t have to touch my stock, I wanted a reverse mortgage line of credit. My reverse mortgage line of credit would grow at nice increments – it was growing faster than my stock portfolio was growing. I also decided to take a minimal monthly payment.

“The reverse mortgage has given me a great feeling of security. I don’t have to touch my stock. My line of credit is going up every month as long as there are funds there. It’s much better than CDs.

“I’ve done home repairs, replaced my car and taken some funds to get my driveway repaired. My yard needed some attention that I had overlooked because I didn’t want to spend the money. So I’ve taken some funds for that too. I still have a nice sum in my line of credit and I haven’t had to use my stock.

“I watch the market go up and down and it’s not life and death like it had been before when I knew I just had that stock and when it was gone then what would I do.

“It’s worked wonders for me. I’ve been able to take trips with the money, repair my house, re-roof it, and do this and that. It’s given me ease of mind and it’s certainly helped my kids because at one point I think they thought they would have to help me financially and they weren’t looking forward to that. Now that worry is off their mind. So as long as I can, I will stay in my home, and that’s what I plan to do.”

Nine years after her closing she’s still in her home benefiting from her reverse mortgage.

Blog posts’ information is current as of date post published, program is subject to change in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

TV Show Discusses Facts & Uses of Reverse Mortgages

Posted on September 15, 2015 by Beth Paterson, CRMP

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Seniors Find Independence With Reverse Mortgages

Posted on July 2, 2015 by Beth Paterson, CRMP

As we look to celebrating the independence of our county let’s also look at how our seniors can celebrate their own independence. Defined as “sufficient income for comfortable self-support; a competence” at dictionary.com, independence is important to seniors.

When we talk with our clients we hear they want to be able to enjoy their retirement and maintain their lifestyle which includes having their independence. So how can they do this if they are living off their Social Security and if they have retirement investments but they have dropped in value?

Even though as one ages some help may be needed, they can still maintain their independence. A reverse mortgage can help provide this independence. After Edna did her reverse mortgage she said, “Now I have my dignity back and my independence.”

Some instances where the reverse mortgage can help one remain independent include having funds for home repairs, going out to lunch with friends, traveling, visiting family across the country, purchasing a new car, paying medical bills or for medications; paying for help with housework, meal preparation, yard work or transportation, whatever they desire. The HECM for Purchase also helps seniors have independence. Having funds for the future and retirement and long term care planning is another way the reverse mortgage provides independence.

Or if one needs more help to remain in their home they would have the funds to pay for the assistance from a home care agency to do so. While some additional assistance may be needed seniors can still have a sense of independence if they have the funds to get the additional help and choose the agency they wish.

Seniors have sometimes used their credit cards to fund their lifestyle or pay their bills, others have used a conventional home equity mortgage or a line of credit. And others look for additional cash by applying for a conventional home equity mortgage but don’t qualify.

The reverse mortgage can benefit here too. Interest rates on credit cards are high. Having the reverse mortgage can reduce their dependence on their credit cards. They usually don’t qualify for a conventional mortgage with today’s lending requirements especially since their only income is Social Security. Even if they do qualify or currently have a home equity mortgage or line of credit, they have to make payments which can be difficult on a fixed income or when “life happens.”

Another Minnesota reverse mortgage borrower said, “With a reverse mortgage you begin to have independence anew and you begin to feel more secure. Being free from monetary anxiety, you have better control over spending your equity.”

A reverse mortgage is a mortgage with special terms for senior home owners 62 and older to allow them to remain in their home. The loan amount is determined by the appraised home value (or FHA lending limit), the age of the borrower, and an Expected Interest Rate. Let’s review the facts of reverse mortgages:

The title stays in the borrower’s name same as with any mortgage. The borrower owns the home, no one else does.
Income and credit scores are not used to determine the interest rate for the HUD insured Home Equity Conversion Mortgage or HECM, the most common reverse mortgage. Interest rate is determined by the margin and the program chosen.
The borrower may be able to stay in their home as long as it’s their primary residence or until their 150^th birthday.
Lower interest rates than other loans – historically the reverse mortgage interest rates have been lower than conventional loans, lines of credit and credit cards.
A borrower won’t lose their home because they can’t make a mortgage payment – they don’t have to make monthly payments. They are however, as with any loan, responsible for taxes, insurance and maintaining the property and abiding by the terms of the loan agreement.
The reverse mortgage funds are generally considered tax-free (although if proceeds are used for certain purposes taxes may apply – consult with a tax advisor).
The proceeds are not considered income so Social Security and Medicare are not impacted and one may still be able to receive Medicaid.
The HECM is government insured and funds are guaranteed to be available for borrowers if something happens to the lender.
Allows access to more funds without paying additional closing costs – there is a growth rate with the line of credit and monthly payment options with the adjustable interest rate program.
There are no out of pocket costs other than the cost of the appraisal.
There are no prepayment penalties.
Borrowers or their heirs get to keep any remaining equity after the loan is paid off.
The loan is non-recourse which means there is no personal liability to the borrower or their estate. The repayment amount is determined by the fair market value at the time the loan becomes due.

Paying off a mortgage on her home, Judy stated, “I truly believe in reverse mortgages, especially for someone like me with a limited income. I received enough from the reverse mortgage to pay off some other bills and still had a little to put into a “line of credit” account. Some of the bills I am paying are credit card debts which have a very high interest rate. It’s a good feeling to be able to do that. It makes bill paying each month less stressful.” Now this is senior independence!

Have a wonderful time celebrating the independence we have in this wonderful country of ours. And keep in mind that a reverse mortgage equals independence for seniors.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Reverse Mortgage Borrowers Have Responsibilities Or They’ll Pay the Consequences

Posted on March 15, 2015 by Beth Paterson, CRMP

When loan documents are signed at closing, borrowers agree to the terms of the loan, whether a conventional loan for refinance or purchase; a home equity line of credit (HELOC); or a Home Equity Conversion Mortgage (HECM), the reverse mortgage insured by HUD; or a proprietary (private) reverse mortgage. As with any home loan, with the reverse mortgage borrowers are using the equity in their home and the title of the home remains in the borrower’s name; the lender is using the home for collateral. With any mortgage, conventional or reverse, the bank does not own the home, nor do they want t.

The reverse mortgage has helped seniors 62 and older remain in their home with their security, independence, dignity and control but not without responsibilities to adhere to the terms of the loan. The main responsibilities are to not violate terms of the loan, generally these include:

Paying property taxes
Keeping hazard insurance on the property
Maintaining the property
Paying association dues if applicable
Not changing/transferring the title

Paying property taxes means keeping up with the county property taxes, paying them on time. If one doesn’t pay property taxes, with or without a loan, the county could start tax forfeiture or foreclosure.

Keeping hazard insurance on the property helps protect the homeowner, with or without a mortgage. If one doesn’t have insurance on their property and a storm comes along and damages the home they wouldn’t have funds to repair or rebuild the home. With a mortgage (reverse or traditional) on the home, lenders require hazard insurance be kept on the property to protect the homeowner and lender if there is any damage to the property. Being the lenders are invested in the property by lending money based on the home equity, they require the insurance so their investment is protected if there is damage. For example if a tree falls on the home and damages the roof, the hazard insurance will cover the replacement of the roof and bring the home back to the condition required for lender’s investment.

Maintaining the property is required to protect the lender’s investment in the property and includes keeping the home in good condition including not letting the property become run down. Keeping the roof in good repair, insuring the siding and trim do not have chipped or bare wood but are protected against the elements. Ensuring against safety issues such as automatic garage doors will rise if something is under them, railings are in place and stable on stairs and decks rotten boards are replaced. Interior maintenance is also important, for example having heating, electricity, plumbing, water in working order as well as safety issues such as railings on stairs.

If one is in a condo or town home and association dues are required, loans require that the association dues are kept current. If they are not kept current then the association has the right to force the homeowner from the property.

What are the consequences if the requirements of the reverse mortgage loan terms are not abided by? If terms of the loan agreement are not followed, the lenders have the right to call the loan due and payable or foreclose.

Changing or transferring titles may mean the loan becomes due and payable. For example if one decides to add a person to the title of the property (depending on who the person is), implement a Life Estate, or sell the property this may change who the lender’s have invested their interests. If the property is going to be put in a trust it will not mean the loan will be come due and payable however the lender will need to review the trust to ensure that it meets the requirements of their investors and in the case of the HUD insured HECM, the trust must meet HUD’s guidelines. Check with your lender before making any changes to the title to make sure it won’t impact your loan.

The area that has caused the biggest problem is when borrowers don’t pay their the property taxes and hazard insurance. Therefore, FHA, the arm of Housing and Urban Development (HUD) who insures the majority of reverse mortgages, will soon require a Financial Assessment to stabilize the HECM and determine borrowers’ ability and willingness (based on payment & debt history) to pay property taxes and insurance.

With conventional mortgages, if taxes and insurance are not paid, the lenders will start an escrow account, requiring more money from borrowers in their monthly payments for the escrow account. The lenders then make the tax and insurance payments on behalf of the borrower from their escrow accounts.

With the implementation of the Financial Assessment depending on borrower’s income, assets and debt history, for some a partial or full set aside will be created to pay the homeowners property taxes and insurance into the future. Others won’t have to have a set aside created if there is a positive history of payments of taxes, debts, hazard insurance and income and disposable assets document their ability to pay taxes and insurance in the future. Credit scores will still not be utilized to determine qualifying nor impact the interest rate. (The Financial Assessment is a requirement as of April 2015.)

After the HECM is in place if borrowers do not have the capacity to pay the taxes and insurances they owe, the servicer will be forced to foreclose on the property per HUD’s requirements. (Note that reverse mortgage lenders and servicing companies are required to abide by HUD’s requirements.)

Having reverse mortgage terms and responsibilities explained

While the originators, counselors and loan documents spell out these requirements, borrowers must take their responsibilities seriously. It is also their responsibility to be sure to look at their budget and have a plan to be able to pay their property taxes, hazard insurance as well as maintaining the property. Then they can remain in their home and enjoy the many benefits of the reverse mortgage.

Originally posted in 2010, updated 2015.

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-1b5

Related articles on Reverse Mortgages in Minnesota:

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Our Experiences with Getting Our Reverse Mortgage

Posted on February 24, 2015 by Beth Paterson, CRMP

Happy With Reverse Mortgage Actual reverse mortgage borrowers have good things to say about their reverse mortgage experiences. Let me share what some of our Minnesota reverse mortgage borrowers have said.

Dave shared, “Having had an accident that eliminated my of my teeth, total dental implants was required. Without a reverse mortgage I could not have raised the money to have the implants done. It was a great relief to be able to smile again and eat sweet corn again.”

To increase his cash flow Bernie did a reverse mortgage and had this to say, “After talking with 2 other reverse mortgage representatives, receiving apologies for non-functioning DVDs, and talking to an attorney, I chose Reverse Mortgages SIDAC. It is so helpful to deal with local persons. Both Beth and Steve followed up with everything. They were very helpful in personal visits and phone calls. Beth has also been helpful with other senior issues.”

Larry and Karen* did the reverse mortgage to stabilize their finances. They found Reverse Mortgages SIDAC to be friendly, courteous and respectful of them. Additionally they shared they found that all pertinent information was discussed regarding reverse mortgage options and costs and the details were explained so they understood them. They also felt that they were informed of what to expect during the processing and kept informed of the status through the process. In addition they said they received explanations of the forms that were signed at closing. Overall they shared their experience was positive.

Mike shared, “Without the help and knowledge of Beth Paterson who first told me about the reverse mortgage to buy I would never have been able to get our beautiful new townhome, which my wife needs because of her mobility to navigate a lot of stairs. I owe Beth a big debt of gratitude. She is the best! She is knowledgeable and she cares and worked tirelessly for us.”

Wayne recommends us stating, “Reverse Mortgages SIDAC is very customer focused and will settle for no less than what the applicant request’s objectives are. They knew the “system” very well and lead the borrower though it step by step. Above all, Reverse Mortgages SIDAC is respectful and honest.”

Helping them out of foreclosure, Gary and Cathy* said, “Thanks so much! Beth and Steve you guys are the best!”

Satisfied Reverse Mortgage Borrower Yvonne wrote, “My experience with Beth and Steve was very enjoyable. I was always able to reach one of them. I paid off my mortgage, so eliminated the monthly mortgage payment! It has made a big difference in my quality of life to have that additional income every month.”

To supplement her income, Marilyn did the reverse mortgage, sharing, “I didn’t really want to have to do this reverse mortgage because I’m too proud. But thank goodness it was there for me. Steve was so very helpful as was Beth. At closing all documents were in order perfectly. I’m very glad I reached out to this company. Everything went so well.”

Bonnie did the reverse mortgage to “secure my retirement” allowing her to retire. Of her experience she said, “Beth and Steve were wonderful! Caring, efficient, thoughtful. All are words that describe them and their service – I had contacted a nationally advertised company but did not feel at all comfortable with them. I went with Reverse Mortgages SIDAC because they are local and knowledgeable about Minnesota and my needs here.”

“Having Beth and Steve to guide me through every step of the process was the blessing that made a reverse mortgage possible. We were able to complete the process in time to obtain the maximum possible funds under the old system, making my dream of remodeling possible,” Matthew stated.

These are just a few of the experiences reverse mortgage borrowers have had. Keep them in mind as you hear about reverse mortgages and are considering one. Work with a reverse mortgage originator who is local, specializes and has experience in reverse mortgages, is ethical adhering to the NRMLA pledge and takes their time to give you the details so you understand the reverse mortgage and will have a positive experience and find the benefits. If you’re in Minnesota, give us a call.

*Some names changed to protect privacy.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Minnesota Reverse Mortgages SIDAC

Minnesota Reverse Mortgage Information, Facts and News from the Experts Excelling in Service

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