Tag Archives: Seniors

Reverse Mortgage Features and Terms Summary

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Reviewing Reverse Mortgage DocumentsThere are many loan documents with the reverse mortgage (all mortgages actually) and it’s hard to remember all the details through the life of the loan.  To help you have a better understanding initially as well as be a reference in the future, this article summarizes the reverse mortgage features and terms.

  • A reverse mortgage is a mortgage or lien against your property allowing you to use the equity in your home.
  • Monthly mortgage payments are not required however you are responsible for property taxes and hazard insurance.
  • Through FHA, the Home Equity Conversion Mortgage (HECM) is a FHA insured program and regulated by HUD.
  • As a loan against your property, the funds are not considered income so Social Security and Medicare are not affected; and generally SSI and other public benefits are not affected; Medicaid can also be received under certain situations – consult with legal services for your situation.
  • Generally the funds received are considered tax free – consult your tax advisor regarding your situation.

Who Owns Your Home  

  • You retain title and remain a vested owner of your property.
  • You retain all rights and responsibilities of home ownership, including property maintenance, tax and insurance payments, etc.

Borrower Protection

  • Should the lender default, FHA will assume the responsibilities of the lender and guarantees funds are available to borrowers according to terms of the loan.
  • As FHA loan, interest rates are lower than they otherwise would be on a reverse mortgage.
  • Non-recourse: Borrower/Homeowner or the estate will never be obligated for more than the fair market value of the property.

Adjustable Interest Rate – HECMs

    • If you have selected an adjustable rate product, your interest rate may change over the life of the loan.
    • There is a lifetime cap on the rate; for the monthly adjustable rate it is 5 or10 points (depending on the lender) and for the annual rate it is 5 points over the initial rate at the time of closing.
    • The interest rate may adjust annually (maximum of 2 points with each annual change) or monthly. The current and future rates will be provided on your monthly statement.
    • The rate is based on the LIBOR index.

Interest is charged against your loan balance only. Unused line of credit and/or unused term/tenure payments will not accrue interest.

Fixed Interest – HECMs    

  • If you have selected a fixed rate product, your interest rate is fixed and will not change over the life of the loan.

Ongoing Costs

  • Interest accrues only on amounts borrowed.
  • Monthly charge for FHA Mortgage Insurance Premium (MIP) –  .5% (1.25% on loans closed prior to 10/2/2017) per year on loan balance (added to loan balance).
  • All costs, charges, and accrued interest are added to loan balance.
  • Essentially you are borrowing these funds each month because you are not paying them monthly; this is why the loan balance increases over time.

Line of Credit (if applicable)    

  • Available credit of unused portion of line of credit grows over time at the current applied interest rate plus .5% (1.25% on loans closed prior to 10/2/2017).  This is not interest, but a growth rate.
  • Interest is not charged on unused portion of line of credit.
  • Line of credit funds advances must be requested in writing from the lender/servicer.  Lender has 5 business days to process your request.

Term/Tenure Payments (if applicable)

  • If you have selected monthly Term or Tenure Payments, these monthly advances will be paid to you on the first business day of each month beginning the month after loan closing.
  • Interest is not charged on un-advanced monthly term/tenure funds.

Prepayment

  • Although monthly or periodic mortgage payments are not required, you may make full or partial payments at any time.
  • Please contact the lender/servicer for payment address and information.
  • Partial payments reduce the loan balance due.
  • Partial payments on adjustable rate HECM’s will create or increase the line of credit and these payments can be borrowed in the future.
  • Payments on fixed rate HECM’s are permanent payments.
  • Payment in full will terminate the loan and eliminate any available term/tenure payments and/or line of credit.

Due and Payable

  • No payment is required until/unless one of the following occurs:
    • Borrower(s) no longer occupy the home as a primary residence.
    • Borrower(s) no longer owns the home.
    • All borrowers have passed away.
    • Property taxes are not kept current.
    • Homeowner’s/Hazard insurance is not kept current.
    • Flood Insurance (if applicable) is not kept current.
    • HOA dues (if applicable) are not kept current.
    • Required repairs are not completed.
    • Property is not properly maintained.
    • Title vesting changes are made.

Upon Death of Borrower(s)

  • If there is a surviving borrower(s) continuing to occupy the home, the reverse mortgage continues without any changes.  If a sole borrower dies or there are no surviving borrowers or a non-borrowing spouse, the reverse mortgage becomes due and payable in full. (Non-borrowing spouses see HUD Mortgagee Letter 2015-15 and check with the servicer regarding their rights)
  • Heirs/estate should contact the lender/servicer within 30 days to provide notice of the death.
  • A reverse mortgage is not transferrable to the heirs or estate.
  • The loan may be repaid from sale of property.
  • If heirs wish to keep the home, they may satisfy the debt by paying the lesser of the mortgage balance or 95% of the FHA appraised value of the home at that time.
  • Most lenders are allowing up to six months for heirs to settle the estate and repay the reverse mortgage (but timely communication with the servicer is required).  Where justified, HUD, who regulates the HECM,  may approve extensions beyond this time up to a total of 12 months.

Your Responsibilities

  • Pay property taxes.
  • Maintain homeowners insurance on property.
  • Maintain flood insurance (if applicable) on property.
  • Pay HOA dues (if applicable).
  • Complete required repairs timely.
  • Maintain property.
  • Not make changes to title vesting.
  • Return the annual occupancy certificate to lender.
  • Provide proof your property taxes have been paid annually.
  • Provide proof your property insurance has been paid.

When To Notify Your Lender

  • If you change your insurance provider.
  • If you change your bank for direct deposits.
  • If you are putting the property into a Trust.
  • Any other changes to the property.
  • If there is a claim from your property insurance.
  • When a Power of Attorney (POA) is being implemented to make decisions on your behalf.

©2013-2015 Beth Paterson and Greenleaf Financial, LLC, Beth’s Reverse Mortgage Blog, 651-762-9648

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-Cr

Related articles:

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.

Have Senior Homeowners With Reverse Mortgages And Tax Defaults Really Gone Into Foreclosure and Lost Their Homes? You Are In For A Surprise!

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Headlines give misinformation about HECM Reverse MortgagesWith all the media hype that seniors are losing their homes because they have a reverse mortgage and have tax defaults, the latest data shows the homework wasn’t done before reporting their stories.  Trying to paint a negative of reverse mortgages is widespread without the data to back it up.

The fact is rather than foreclose, reverse mortgage servicers made advancements on behalf of borrowers for their insurance and property taxes defaults.  And since January 2011 when FHA introduced loss mitigation tools the servicers have been working with the borrowers who were delinquent on their property taxes and insurance.  As a result, 20% of those in these situations have been repaid.  Another 60% of the defaulted borrowers have begun making repayments.

According to HUD’s Director of Single Family Program Development, Karin Hill, the default rate for the more recent Home Equity Conversion Mortgages (HECMs) is lower than the loans done previously with the worst performing being from 2007 and 2008 which account for just under 40% of all those in default.

The first four years after origination the probability of default increases then slowly declines over time noted Hill.  Younger borrowers (62 to 65) are the most likely to default however they are making more repayments than older borrowers.

While we haven’t received data on those who have not made repayments, servicers and HUD remain committed to assist senior homeowners to remain in their home.  It shouldn’t be assumed that reverse mortgage borrowers have gone into foreclosure.  It’s important to remember that even without a reverse mortgage in place, these homeowners who haven’t paid their property taxes face foreclosure or tax forfeiture through the county.  The reverse mortgage is not the reason senior homeowners go into foreclosure.

While the headlines report senior homeowners are losing their homes because of a reverse mortgage and tax defaults, the data shows otherwise; it’s just more myths about reverse mortgages.

Resource: The National Reverse Mortgages Lenders Association (NRMLA); data presented at the 2012 Annual Meeting & Expo by senior HECM managers.

©2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-C6

Related articles:

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.

Are Reverse Mortgage Property Tax Defaults Really Due To The Reverse Mortgage? …They Are Not The Only Reason Seniors Lose Their Home

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Reverse mortgages are not the reason for tax defaultsThere is a lot of talk about the issues of reverse mortgage defaults causing borrowers to go into foreclosure and lose their homes because of not paying their taxes and insurance… claiming that the tax defaults are a reason one should not do a reverse mortgage.  The media and so-called senior advocates are pushing this point hard.  Are you aware that anyone who doesn’t pay property taxes on one’s property can face foreclosure?

If one has a conventional mortgage and doesn’t pay their taxes, the lender will pay the taxes on behalf of their borrower and increase the homeowners mortgage payments to cover the taxes.  If they let their homeowners insurance drop, the lender will place “forced” insurance on the property and pass the costs along to the borrower.

Even if one doesn’t have a mortgage, a reverse or conventional, one can lose their home for not paying their taxes – the counties foreclose on them.  Here in Minnesota the county claims the property as a tax forfeiture.

Ann, a 65 year old woman called me inquiring about a reverse mortgage stating she owed over $20,000 in back taxes and was facing tax forfeiture in just a few short months.  Ann had no other debt and her home was worth more than $300,000.  Based on her situation, she wouldn’t qualify for a conventional or “forward” mortgage.  Someone had suggested the reverse mortgage a solution to her situation.

I explained the details of the reverse mortgage: A reverse mortgage is a loan with special terms for those 62 and older.  As an FHA insured loan HUD oversees the Home Equity Conversion Mortgage or HECM providing protections like no other financial option.  With the HECM there are no income or credit score qualifications* and no monthly payment requirements.  The home would remain hers with the title in her name.  And the reverse mortgage funds could pay off her tax debt and she could leave the remaining funds in a Line of Credit with a growth rate for future needs including paying her property taxes going forward.  Or if she chose she could receive monthly payments, a lump sum or a combination of these options.

The loan would be due and payable when the home was no longer her primary residence or on her 150th birthday.  If at the time the loan was due and payable and the home was sold for more than the loan balance she or her estate would receive the difference in funds.  Or if the loan balance was higher than what the home could be sold for, as a non-recourse loan she or her estate would not have to come up with the difference, the FHA Mortgage Insurance covers the difference to the lender.

In her situation she would have had a large line of credit that would allow her funds to pay her taxes and insurance going forward… and some other life necessities or a little extra here and there to maintain or improve the quality of her life.

There are many homeowners who lose their home for not paying their property taxes.  When one gets behind on their taxes, they also reduce their option of qualifying for a conventional mortgage, especially with the tighter credit and income qualifications.

And think about it, if one doesn’t have insurance on their home and there is a fire or a storm that destroys the home, the homeowner loses their home and they don’t have money to rebuild.

Another consideration regarding reverse mortgage defaults is they are minimal compared to conventional or “forward” mortgage default foreclosures.  I’m sure some of the forward foreclosures included seniors who had been sold a mortgage without consideration on whether they would be able to make payments in the future.  In fact I know of an 80+ year old woman who did a 30-year mortgage… what was the likelihood she would be able to make mortgage payments for 30 years?  A reverse mortgage would have been a better loan choice for her.

When the senior homeowners with forward mortgages have had “life happen” and they couldn’t make the payments, they also didn’t qualify for a reverse mortgage because they owed more than the reverse mortgage proceeds, they went into foreclosure.  (We often receive calls from seniors in this situation and have to say we can’t do the reverse mortgage for them.)  If these seniors had done the reverse mortgage initially instead of doing the forward mortgage, they would be benefitting from no mortgage payments and having funds to pay their taxes and insurance as well as for their other needs.Reverse Mortgages Make Positive Difference in Seniors' Lives

Reverse mortgages make a huge positive difference in the life of senior homeowners; the majority of reverse mortgage borrowers are satisfied with their reverse mortgage.  Reverse mortgages shouldn’t be discounted because a small percentage are in default.

When reverse mortgage borrowers haven’t paid their taxes the lenders/servicers work with the borrowers to find ways to help them including sending them to counselors who  work with borrowers to find a way to assist them address the issue.

Unfortunately, Ann’s brother had told her reverse mortgages are bad and she shouldn’t do one and she listened to him.   Consequently the county foreclosed on her.  She not only lost her home and a place to live, she lost the $280,000+ in equity.  Whereas a reverse mortgage could have saved her home from foreclosure and she would have been able to pay her taxes and remain in her home with funds for other needs or desires including paying her future taxes and insurance.

So you see, reverse mortgage tax defaults are really defaults on taxes with a reverse mortgage in place and are not the only reason seniors can lose their home – they happen with conventional or no mortgages at all as well.  The media and politicians should stop attacking the reverse mortgage industry as the bad guys and gals – counties across the country are foreclosing on seniors’ homes too.

*To address the issue of tax and insurance defaults, in the near future we anticipate financial assessments with the reverse mortgage to determine if the borrowers are able to pay property taxes and insurance into the future.

©2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-YU

Related articles:

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.

Do You Go To A Plumber For Health Issues? Then Why Would You Receive Advice on Reverse Mortgages From A Politician?

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Do you go to a plumber for health issues?In a conversation with a woman the other day when I told her I specialize in reverse mortgages she said, “I’ve talked with a Minnesota politician who said people shouldn’t do a reverse mortgage.”  So I asked her the question, “Do you go to a plumber for your health problems?”  “Of course not!” was her adamant reply.  No we don’t, when we have health issues we go to the health professional who specializes in the area of our problem such as cancer or heart.

I went on to explain to this woman that I know the politician she had talked with and I too have had conversations with them.  Their concern is that one should have an understanding of the reverse mortgage, the terms and details, not that one shouldn’t do one.  In addition I pointed out that the state of Minnesota in their Own Your Future campaign is suggesting people consider reverse mortgages as a way to pay for their long-term care.   Additionally I explained that because the politicians don’t specialize in reverse mortgages they can’t provide all the details and facts about them.  Her response was, “Ohhhhh, I see.”

Everyone has their area of specialty, the doctor, the attorney, the politician; mine is reverse mortgages.  I can’t advise you on health, legal issues or laws in areas I am unfamiliar, don’t specialize or am not licensed.  Just because I grocery shop doesn’t make me a specialist in groceries or the grocery store.

After getting the facts, a reverse mortgage is right for LindaBefore deciding that a reverse mortgage shouldn’t be done based on the comment or opinion of a politician, media, friend or relative talk with a reverse mortgage specialist to get the facts and decide whether a reverse mortgage may be right for your circumstances.  One who specializes in reverse mortgages can provide details and calculations for your personal situation.  Invite your family or other trusted advisors to be involved in the informational meeting so they also receive the facts and details.  You can then have a discussion and trust that you are making an informed decision.

Linda did just that, she talked with her financial advisor and with me and has decided that a FHA HUD Home Equity Conversion Mortgage (HECM) reverse mortgage is right for her situation.  Doing one to eliminate her current mortgage payments and improve her cash flow (she doesn’t have to make mortgage payments with her reverse mortgage), she feels the relief from stress on figuring out how she would be able to continue to make her mortgage payments.

Do you go to the plumber for your health issues?  Then why go to a politician for reverse mortgage details and facts? Explore the related stories linked below and through out this blog; learn how reverse mortgages have made a difference in the lives of those who received the facts and understood the details.

©2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-YT

Related articles:

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 To Consider When Choosing Your Reverse Mortgage Originator

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Reverse Mortgage Originator Explaining Documents to a MN BorrowerWhen you have decided to explore or to proceed with a reverse mortgage you want to make sure you are working with an originator you are comfortable and has the knowledge and experience to guide you through the process.  Originating the reverse mortgage takes patience, kindness, a “social worker” attitude and a teacher aptitude versus a sales approach.  There is a difference in originators with their expertise, knowledge and experience with reverse mortgages along with the customer service they provide.

To help ensure that you are working with an originator (also referred to as Loan Officer/Reverse Mortgage Specialist, Reverse Mortgage Advisor or Reverse Mortgage Consultant) who is experienced, knowledgeable and meets the industry’s standards, consider the following when choosing your reverse mortgage originator.  Yes, the list is long but knowing the answers to this list of questions will help support and protect you.

  • How much experience does the Reverse Mortgage Originator have with reverse mortgages – not just conventional mortgages as they are quite different?
    • Work with experienced reverse mortgage originators who specialize in reverse mortgages.  Ask how many years they have been originating and if/what training they have received.
  • How many reverse mortgage loans has the Reverse Mortgage Originator done?
    • Experienced loan officers have originated hundreds of reverse mortgage loans.  Ask how many they have originated, not just their company or lender, but them personally.
  • Does the mortgage company and Reverse Mortgage Originator have the required federal and state licensing?
    • Mortgage Brokers/Originators have completed federal and state education, testing and licensing requirements. FDIC Banks and Credit Unions are registered but have not completed the education, testing and licensing requirements.
    • Ask your originator to provide documentation that they personally are licensed and/or look them up at the National Mortgage Licensing System  – if the person you are talking with is not listed they are not licensed to originate loans.
      • Make sure they are licensed in the state you are located.  In Minnesota all individual mortgage loan officers (performing marketing, educating, originating functions) have to be licensed.  This includes completing the application – the originator should be guiding you through the application and explaining the documents you are signing, not just having a notary at the application as they are not approved to provide you information or explanations on the documents you are signing.
  • Who is the mortgage company’s lender sponsor?
  • Do they offer all reverse mortgage programs available for FHA’s HECM and when available, proprietary (private)?
    • Experienced originators should offer and be familiar with all the various programs available.
  • If you are in a manufactured home, log home or unique property, do they work with a lender who will accept these properties?
    • Many lenders no longer accept these properties but some do and as a broker, we, Reverse Mortgages SIDAC work with lenders who do accept these properties.
  • Do they assist you in determining which program is most suitable for your needs?
    • Experienced originators should discuss the various programs and help you to assess the program most suitable for your needs.  Originators should be showing you at least 3 if not 4 options.  Is the adjustable rate program better than the fixed rate program for your situation.  Are they discussing how you may be able reduce the upfront Mortgage Insurance Premium (MIP)?
  • Do they just try to “sell” the program to you or do they help you determine if the program is appropriate for your situation?
    • An originator should not pressure you or sell you a particular program, they should discuss the various programs and options and have YOUR best interests at heart, i.e. is an adjustable rate better than a fixed rate for your situation.
  • Will they meet with you face-to-face for an information session and the application?  Or do they just mail you the application package or send a notary to the application?
    • Because of the complexities of the program, originators should meet with you face-to-face to complete the application package.  These sessions normally take around 2 hours to review all the documentation and insure you understand what you are signing.  Don’t sign a package that is mailed to you or one where a notary is observing your signature – find an experienced originator who is local/in your state to work with you.
  • Do they disclose ALL information and identify ALL costs, explaining the program(s) and details and terms accurately and clearly so you understand them?
    • Originators should be willing to disclose and discuss all information regarding reverse mortgages in terms and a way so you understand them.  They should welcome your questions and be able to answer them to help ensure you have an understanding.
  • Do they know what costs are not allowed by FHA?
    • HUD regulates the fees and a mark-up of fees are not allowed – you should only be paying the actual cost of the service.  Your originator should know which fees are allowed by HUD and which aren’t.  They should fight for you if a title company is charging processing or “junk” fees.  (Many charge processing fees without the lender or originator addressing it with their title company.)  The cost of the settlement statement should reflect this actual amount.
  • Where are their loans processed?
    • Your loan should be processed in an office where they can provide a personal touch vs sending them across the country to a processing center.
  • How fast do they process their reverse mortgage loans?
    • Because the rates can change so quickly, processing (application to closing) should be able to be completed in 30 to 45 days under normal circumstances.  If additional documents are needed from you and you don’t provide them, the processing could take longer.
  • Who does the processing of the reverse mortgage loans?  Does the processor have experience processing reverse mortgages, not just conventional mortgages?  How much experience does the Reverse Mortgage Originator have with processing and solving the issues that arise during processing?
    • Because reverse mortgages are different than forward mortgages, the processor should have experience with reverse mortgages.  Originators should also have an understanding of the processing and assist in solving any issues that arise during the processing – they should not just be focused on getting the sale and then moving on.
  • What type of customer service do they provide?  Do they have testimonials and/or references?
    • Experienced originators should pride themselves on their customer service and be able to provide testimonials and references from their reverse mortgage clients – ask for them.
  • Will they (the Reverse Mortgage Originator) answer questions and continue to provide customer service once the loan is closed?
    • Originator’s customer service should include being available even after the loan is closed.  If they don’t have a lot of experience and/or they move from one lender to another you may not get your future questions answered.
  • Does the Reverse Mortgage Originator have the knowledge and experience on how the reverse mortgage and other Minnesota programs interact?  Programs such as Medical Assistance/Medicaid, Elder Waiver, home improvement loans from cities and counties.
    • Originators should be familiar with how the reverse mortgage interacts with other programs.  If they don’t find a different originator to originate your loan.  You may not need this now, but you may in the future and need assistance with this.
  • Does the Reverse Mortgage Originator have the knowledge and experience with the requirements of the reverse mortgage if there is a power of attorney, guardian or conservator, a bankruptcy, Trust or Life Estate?
    • Originators should have knowledge of what the requirements are or you may start your loan but it may not make it through underwriting or be insured by HUD if your loan doesn’t meet their requirements.
  • Do they or the companies work with (mortgage company,  lender, underwriter, servicer, etc.) offer financial or insurance products in addition to the reverse mortgage?  Are they trying to cross-sell (selling more than one product) during the origination of your reverse mortgage?  Will you be contacted and offered other services such as financial or insurance products by them or the companies they work with after the loan is closed?
    • Cross-selling is not allowed.  Originators should only specialize in reverse mortgages and not sell or encourage you to purchase other products.  You are not required to purchase annuities, insurance or financial products with your reverse mortgage proceeds.
  • Are you treated with respect and dignity?
    • You, of course should be treated with respect and dignity.  If you feel you are not, find a different originator.
  • Do they protect your privacy and confidentiality and not distribute personal financial information to any third party without permission from you?
    • To protect against identity theft you want to be assured that your information is private and kept confidential.  Ask what their policies and procedures are.
  • Do they encourage you to discuss the loan transaction with family and/or trusted advisors?
    • Originators should encourage you and welcome talking with your family and/or trusted advisors about your decision to do the reverse mortgage.  But respect you if you chose otherwise.
  • When completing the application do they leave you copies of what you have signed and copies of the sample closing documents?
    • At the time of application or within three days, originators are required to leave you copies of what you signed including the calculations and Good Faith Estimate, booklets, and samples of the closing documents.  If you do not receive these, request them, if you have problems receiving them, change to a different originator.
  • Do they provide a list of FHA counselors without steering you to a particular one?
    • HUD does not allow an originator to steer or be involved in your choosing or receiving counseling.  Minnesota law requires borrowers be counseled by a counselor located in Minnesota, they cannot choose any of the national counselor.
  • Are they familiar with the Minnesota state laws (or whichever state they are originating in)?
    • If an originator is originating in your state they should be familiar with the state’s laws, i.e. Minnesota has some particular laws that pertain to reverse mortgages – all originators are, unfortunately, not familiar with them.

Be cautious that you do not complete an application or give the originator the counseling certificate until you have made your final decision of the originator you are choosing.  Once an originator or lender has the counseling certificate they can obtain a FHA number and lock you into using them when they might not be your choice of originator or lender.

Be educated on reverse mortgages and work with an originator and lender who is experienced, knowledgeable, meets the industry’s requirements and fulfills the above list of expectations.

© 2009-2014 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-YR

Related articles:

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.

Be Cautious on Reverse Mortgages… And From Whom You Are Getting Your Reverse Mortgage Information

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Proceed with Caution on A Reverse Mortgage & From who You Receive the InformationCautious is defined as showing or using caution; a warning or having alertness or taking care in a situation.  Therefore I feel you should be cautious of the food you are putting in your mouth, the medications you are taking, the safety of the products you purchase, the credit card you are applying for, how you are spending your money, answering the door when you weren’t expecting anyone, purchasing services from the person going door-to-door, the car you are purchasing, the home you are buying.  Should you be cautious of reverse mortgages?  Of course you should be cautious of reverse mortgages.  But you also need to be cautious of who you are getting your reverse mortgage information.

State Attorney Generals, politicians and other government agencies are issuing cautions on reverse mortgages.  Some of their advice is good, unfortunately, with many of these “warnings” the information is not accurate.  Their advice that one should get information and have an understanding the product and it’s pros and cons is good advice… just as you should for any product or service.  Unfortunately one government agency, the Consumer Financial Protections Bureau (CFBP) didn’t even talk with borrowers to write their report, therefore their report is not based on actual circumstances and discredits the quality of their information.

Senior advocacy groups also offer their cautions on reverse mortgages without having facts or experience with these unique products.  Their opinions include that reverse mortgages should be used as a last resort; should only be for older seniors; are for the cash poor, not for those planning for long-term care.  In my years of specializing in reverse mortgages (since 1999) I have found that these are misguided cautions.  Everyone’s situation is different, so assumptions should not be made and generalized for all situations.

The reverse mortgage should not necessarily be a last resort; can benefit those 62 as well as those 82 or 92; those needing a better cash flow because their home is their only asset or those who want to protect some of their assets for their long-term care planning purposes.  Rather than being an advocate, cautions of these sorts are really a disservice because they scare people rather than encourage them to get the facts and allow seniors to make their own decisions.

On a news talk show recently they were discussing reverse mortgages with a financial advisor who was being portrayed as a reverse mortgage expert.  As I listened to the interview I was astounded by the inaccurate information provided by this so-called “expert.”  Being financial advisors are not allowed to offer reverse mortgages, they are not the reverse mortgage specialists or the experts so they don’t have all the facts.  They have their areas of specialties, as reverse mortgage specialists, we have ours.  At the end of this interview an 800 number was provided with the statement that this was the HUD number to be call to get more information. I didn’t get the number written down so I don’t know whether this was a number to HUD or not.  What really made my jaw drop was the interviewer’s statement that one shouldn’t need to call the number because they just heard all the “facts” from “Mr. Financial Advisor.”  Unfortunately if they listened to those “facts” they would be very misled and not really understand the reverse mortgage or have the truths about them.

The FHA insured, HUD reverse mortgage, the Home Equity Conversion Mortgage or HECM, is the most common reverse mortgage in the country and the only one available in Minnesota.  One can obtain reverse mortgage information from HUD.  Note all those who offer reverse mortgages are not included on the FHA list of lenders.  In January 2011, HUD issued a Final Rule eliminating their approval process of loan correspondents or brokers although brokers can still participate through a sponsorship from a FHA approved sponsor.  For example, we, Reverse Mortgages SIDAC, are a broker, with a FHA licensed sponsor and meeting the federal and state licensing requirements through the National Mortgage Licensing System (NMLS), NMLS #173899.

While not on the FHA list, brokers offer many benefits including working with many different lenders, are local, often meeting with you face-to-face in your home.  Review the difference on my post, “Are You Confused on Whether to Use A Reverse Mortgage Broker, Bank or Lender.”

Proceed with A Reverse Mortgage After Getting Facts from A Reverse Mortgage SpecialistSo yes, take precautions with reverse mortgages, as you should with everything. But also take precautions on who or where your information is coming from.

Do you go to a plumber, politician or the media if you have health issues?  No you go to the doctor, and you go to the doctor who specializes in your specific condition.  The same is true with reverse mortgages, go to the person who specializes in reverse mortgages.

Get the facts from someone who specializes in them, has years of experience and only offers reverse mortgages (not other mortgages), one who works with various lenders, is local in your state not a “call-center” where they only talk with you over the phone.  A financial advisor can be part of the team to help you analyze your overall financial situation.

Keep in mind, the decision is yours on whether or not the reverse mortgage is right for your situation.  It’s not up to the Attorney Generals, politicians, seniors advocates, media, reverse mortgage counselor or originator/loan officer.

© 2012-2014 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-YP

Related articles:

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 Mortgages Provide Independence

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Reverse Mortgages Help Celebrate IndependenceJuly 4th we celebrate Independence Day in America honoring the day our country signed the Declaration of Independence.  Signing the reverse mortgage documents is a way for seniors 62 and older to sign their own declaration of independence.

Independence is defined as “freedom from the control, influence, support, aid, or the like, of others.”  This fits senior’s attitudes, they want to maintain control of their life, make their own decisions and not depend on others for assistance.  They may be short funds for maintaining their lifestyle and sometimes they will eat cat or dog food because it is cheap and they do not want to rely on their children.  Yet I’ll hear, “I want to leave my house as an inheritance to my children.”

Let me share a story of one of my clients, I’ll call them Ted and Anna.  He was 91, she was 87.  Being proud, they 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 the mother and daughter were sitting at the kitchen table and mom 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, mom 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 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.

Unfortunately while not wanting to rely on their children and wanting to leave their home as an inheritance to their children, seniors are doing without.  This isn’t what their kids want – they don’t want their parents doing without so they can have an inheritance.  Kids actually want their parents to have funds to remain independent.

Then we have the kids who are taking care of their parents by paying for groceries, meals when they go out, paying their bills, taking time from their busy schedules to clean their house, provide home care, and helping meet their other needs.  This can have a negative impact on these kids’ finances.  Yet their parents don’t want to use the equity in their home and do a reverse mortgage now just so they can leave an inheritance for these kids.  In essence the kids are using their funds to take care of their parents now in exchange for an inheritance after their parents are gone.

Neither one of these scenarios make sense.  Why be insistent on leaving an inheritance to the kids while you’re doing without now?  Why depend on your kids and use their money to take care of you today so you can leave them an inheritance?  They want you to have your independence now and they aren’t looking for the inheritance when you need to funds now.  Actually the best inheritance you can leave your children would be to take care of yourself so they don’t have to worry about you.Celebrate with a reverse mortgage

Improve your cash flow during your retirement – sign your own Declaration of Independence with a reverse mortgage – then celebrate your independence.

© 2009-2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-YM

Related articles:

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.

A Reverse Mortgage Doesn’t Leave An Inheritance. But How Are You Going To Meet Mom’s Needs Today?

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A reverse mortgage provides for Mom's needs today“I want to leave an inheritance for my kids.”  “I want my son to get my house.”  “The reverse mortgage will eat up my inheritance.”  “The reverse mortgage isn’t good for the kids.”  “The reverse mortgage should only be done with those who don’t have children.” These are statements that are often seen or heard when a reverse mortgage is mentioned.  My question is, do you, the children, have the money needed to cover the costs of mom or dad’s needs today if they don’t have the money and don’t do a reverse mortgage?

Let me share a story.  As I always do, I have a discussion on the needs and desires of one who is considering a Home Equity Conversion Mortgage (HECM) or a reverse mortgage.  In this one particular situation, the woman, Chris, was living off her Social Security income of about $600 a month.  She needed new teeth, new glasses, some new clothes, and her home needed some repairs.  She loved going to plays but couldn’t even afford the community plays for $5 to $10.  Doing a reverse mortgage would help Chris “live with more” so she completed the application.

A few days later she called to say she decided not to proceed. When I inquired why the change, she replied that her son didn’t want her to do it.  After some exploratory questions as to why, she said her son wanted her home after she had passed away so he could rent it out and make money.

How outrageous is this?  Was she really going to do without all the things she needed as basic necessities not to mention just being able to have some money for a few extra things to enjoy life while she’s still alive just so her son could make money off her house after she passed away?

While I was astounded by this response, I kept my tongue in check and calmly asked her if her son was going to provide the money she needed now or was she going to do without the glasses, teeth, clothes, and home repairs so her son could benefit after she passed away.  She said, “Of course not, he doesn’t have the money to help me.”

Is living from Social Security check to Social Security check just to get by and maybe doing without some of the things in life that give dignity such as having lunch with friends, getting one’s hair done, or having cable TV really a good option over a reverse mortgage?  Why should one be more concerned about leaving an inheritance than having their independence and control of their life and living comfortably?  Why do children think they deserve an inheritance rather than their parents being able to live comfortably, have security, independence, dignity and control of their lives?  Aren’t these the same things every one of us wants?  Why would you deny your parents?

Even if one’s children are able to help their parents today, do their parents really want to be dependent on their children?  What happens if “life happens” to their children, they lose their job, get sick, have to come up with money to pay for their kid’s college, etc. and they no longer have the funds to help their parents?  This can impact everyone!

What if one needs home care or has medical expenses?  Why should one do without needed care so they can leave an inheritance?  Why do children think they should receive an inheritance over their parents having the dignity of paying for their own care and expenses?

If one moves into senior housing, whether independent living, assisted living or skilled care, does one really think there will be funds left to leave for an inheritance?  Or will the children have to help pay for the senior housing?  Whether private pay or services paid by Medicaid or other government funds, there may not be an inheritance.

And whose money is it anyway?  Who should benefit from the use of funds or assets that the senior worked so hard for?  Shouldn’t the money and assets be used for whatever one’s parents need or want?

Many seniors say, “My kids are doing better than I am.”  This is often the case but even if this isn’t the case, why should one be concerned about leaving money after their gone?

A reverse mortgage is a loan against one’s home to allow seniors 62 and older to remain in their home with security, independence, dignity and control.  The most common, and only one available in Minnesota, is the FHA insured HECM.  The reverse mortgage offers many benefits including no monthly mortgage payment requirements, and no income or credit requirements to qualify for a low interest rate.  The loan is due and payable when the home is no longer the primary residence of the borrower(s) or on the 150th birthday of the youngest borrower.  As a non-recourse loan, if the loan balance is higher than what the home can be sold for at fair market value, the borrower or their estate are not responsible for the difference.  And the opposite is true too, if the loan balance is lower than what the home is sold for, the borrower or their estate receives the difference.

The borrower remains the owner of the home with the title staying in the name of the borrower(s).  In addition, the reverse mortgage has many protections, likely more than any other financial product or service.  To learn what these are read, “You Need To Know Reverse Mortgage Borrowers Are Highly Protected.”

A reverse mortgage provides security, independence, dignity and controlI’m happy to say Chris did proceed with her reverse mortgage.  And for the last six years I’ve received at least one call, sometimes a couple calls, a year saying she’s so relieved to have the money to meet her needs.  Besides the initial needs, she has had funds to fix her car when it needed some repairs, to cover some medical expenses and she had funds to take a trip to attend a family wedding.  And yes, she’s even enjoying the community plays every now and then.

Once Chris passes away her son will have the opportunity to keep the home by obtaining a conventional mortgage to pay off the reverse mortgage.  If he’s renting the property out, the rent payments he will be receiving will cover the mortgage payment – he could still make money if priced accordingly.  In the meantime Chris is remaining in her home with the security, independence, dignity and control she deserves and enjoying her life.

So what do you think is better?  Doing without today just so a child can have an inheritance or the senior being able to fulfill one’s needs and wants while they are alive?

© 2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-yv

Related articles:

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 Hope and Opportunity With Reverse Mortgages

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Seniors find hope and opportunity with reverse mortgagesIt’s the season of hope and new growth and opportunity.  Flowers are blooming, trees are budding, the grass is growing.  As with the season, seniors can find this hope, new growth and have new opportunities that they can remain in their home with security, independence, dignity and control.  And like the many types of flowers, buds and new growth, the variety of how the reverse mortgage funds are used and numerous, basically endless.  Here are some of the ways seniors have found hope and opportunity with their reverse mortgage.

  • Stay in one’s home where they may have raised their family, are familiar with the neighborhood and their neighbors and where they usually want to remain.
  • Pay off a current mortgage to eliminate the monthly mortgage payments.
  • Save one’s home when faced with foreclosure or tax forfeiture.
  • Have improved cash flow with no monthly mortgage payments.
  •  Have funds for making home improvements or home modifications.
  •  Retire and not feeling like you have to work just to have money to pay the bills.
  •  Have cash flow to be able to pay taxes.
  •  Have funds to pay for home health care.
  •  Have funds for some assistance with home care or companion services.
  •  Have funds for adult day services.
  •  Have funds for medical expenses and prescriptions.Seniors find hope and opportunity with reverse mortgages
  •  Afford going to the dentist.
  •  Afford new eye glasses.
  •  Have funds for the needed hearing aid.
  •  Have funds to cover long term care expenses.
  •  Cover everyday living expenses.
  •  Not rely on credit cards.
  •  Not rely on children.
  •  Have funds for the little extras in life, like:
    • getting one’s hair done,
    • having cable TV,
    • buying groceries,
    • going to lunch with friends,
    • treating their children to dinner,
    • going to community plays or the theater or a concert,
    • taking the grandchildren to the zoo or a movie,
    • Depends (I had a client say with their reverse mortgage they could now afford to buy Depends),
    • being able to do hobbies.
  • Purchase a more dependable car
  • Afford transportation if one can no longer drive.
  • Afford the travel for the family wedding or reunion.
  • Take the vacation they have dreamed of all their life.
  • Protect some of their other retirement funds or investments where there might be taxes or penalties on withdrawals.
  • Purchase a new home to downsize and/or  move closer to family
  • Have funds for emergencies.
  • Reduce financial stress.
  • Have funds to full fill needs and goals.
  • To live with security, independence, dignity and control.

Seniors find hope and opportunity with reverse mortgagesIt’s fulfilling to me to be able to help seniors find hope, growth, and opportunity with  reverse mortgage (visit the links below for some stories).  A reverse mortgage has given hope and opportunity to thousands of Minnesota seniors so they can remain in their home with security, independence, dignity and control even during trying times.  If you know a senior who is looking for hope and opportunity, a reverse mortgage may be their answer.

To determine if a reverse mortgage is right for one’s situation, talk with an experienced licensed reverse mortgage expert to get the facts.  Learn some of the facts at our website: www.RMSIDAC.com.  “What to Consider When Talking With Reverse Mortgage Lenders” will help you determine questions to ask when choosing your originator.

© 2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-y9

Related articles of stories on how seniors have used the reverse mortgage and how it’s made a difference in their lives:

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 Loses Home After Listening to “Reverse Mortgages Are Bad” Advice

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House goiing into tax forfeitureI got a call from a 65 year old woman, Ann, inquiring about a reverse mortgage stating she owed over $20,000 in back taxes and was facing tax forfeiture in just a few short months.  Ann had no other debt and her home was worth more than $300,000.  Based on her situation, she wouldn’t qualify for a conventional or “forward” mortgage.  Someone had suggested the reverse mortgage a solution to her situation.

I explained that a reverse mortgage is a mortgage with special terms for those 62 and older.  As an FHA insured loan HUD oversees the Home Equity Conversion Mortgage or HECM providing protections like no other financial option.  With the HECM there are no income or credit score qualifications *(see updated information below) and no monthly payment requirements.  The home would remain hers with the title in her name.  And the reverse mortgage funds could pay off her tax debt and she could leave the remaining funds in a Line of Credit with a growth rate for future needs including paying her property taxes going forward.  Or if she chose she could receive monthly payments, a lump sum or a combination of these options.

I went on to explain that the loan would be due and payable when the home was no longer her primary residence or on her 150th birthday.  If at the time the loan was due and payable the home was sold for more than the loan balance she or her estate would receive the difference in funds.  Or if the loan balance was higher than what the home could be sold for, as a non-recourse loan she or her estate would not have to come up with the difference, the FHA Mortgage Insurance covers the difference.

She of course wanted to think about it.  During a follow-up conversation she said she had talked with her brother who told her she shouldn’t do the reverse mortgage because they are bad.  When I inquired why he thought they were bad, she didn’t have a response.  I asked if her brother could come up with the funds to pay her back taxes…  “Maybe.” 

I reiterated the details and benefits of the reverse mortgage emphasizing that the funds could pay the back taxes and she would have funds in a line of credit for her future taxes and that she wouldn’t have to make monthly mortgage payments.  (Borrowers are still responsible for paying property taxes and property insurance.)  I also offered to meet with her and her brother to educate them on the details and facts of the reverse mortgage.

A couple weeks later during another follow-up conversation, she was still hesitant because of her brother’s advice.  I again inquired if her brother could come up with the funds for her back taxes… “No, he doesn’t have that kind of money!” With an inquiry if she had another way of coming up with the funds for the back taxes… no she didn’t.  And her brother didn’t want to meet to learn the details and facts of the reverse mortgage.  I explained that if the county foreclosed on her home she would be losing around $280,000 in equity.

Time was getting down to the wire in order for us to have time to process the reverse mortgage so I did one more follow-up call.  She said her brother warned her not to do the reverse mortgage because they were “bad” and expensive.  I reviewed the costs explaining they compare to a conventional mortgage other than the FHA mortgage insurance.  And even beyond that the benefit of the reverse mortgage outweighed the costs… saving her home from foreclosure and the loss of around $280,000 in equity.**

A few months later when I checked the county records, the county was the owner of her property.Lost equity due to tax forfeiture

Listening to her brother who did not know, and was unwilling to learn the details and facts of the reverse mortgage, Ann had lost her home and a lot of equity.  With all the benefits and protections, the reverse mortgage would have made a huge difference in the quality of her life.

It was sad and unfortunate that she listened to the unwise advice of “Don’t do a reverse mortgage, they are bad.”

Next time you hear “Reverse mortgages are bad” or “Don’t do a reverse mortgage” or “One should wait until their 70’s to do a reverse mortgage” remember this story and how the reverse mortgage could have made a difference.

*In April 2015 a Financial Assessment was implemented to determine borrower’s ability and willingness to pay property taxes and insurance into the future.  This safeguard help make the reverse mortgage more sustainable so borrowers can remain in their home.

**Property taxes are levied and collected by counties.  When property taxes are past due after a certain amount of time (redemption period) they go into tax forfeiture.  In most counties across the US, to get their money quickly, the county issues a tax lien certificate or a tax deed and will conduct a sale where the tax lien certificate or tax deed are sold at auction often for only the taxes, penalties and interest due.  The winning bidder receives a legal claim to the tax debt or tax lien certificate.  The property owner has the opportunity to pay off the debt and reclaim the property.  If the owner does not pay back the certificate then the investor often gets the entire property for only the taxes, penalties and interest due.

© 2012 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

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-xy

Related articles:

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.