If reverse mortgages allowed seniors to take out a set amount every month (aka a monthly draw) in exchange for no mortgage insurance, and if reverse mortgages did not force the name of everybody but one person off of the deed (including other family members), I would say it was a solid program.
Unfortunately, Reverse Mortgages don't offer a set monthly draw option in exchange for no mortgage insurance, and reverse mortgages do force everyone's name off of the deed, but one. Imagine being the widow or widower and the reverse mortgage was in the name of the recently deceased, not a good thing, that is for sure.
It's a shame we can't do something truly honorable for our vets and our seniors and offer a reverse mortgage program that in exchange for an agreed upon monthly draw has no mortgage insurance premium and does not force others off of the deed.
Instead, we have companies hiring former presidential candidates such as Fred Thompson and retired World War II veteran Vincent Speranza to promote reverse mortgage programs as they presently stand.
We CAN do BETTER for our veterans and our seniors than what this AAG Reverse Mortgage commercial is presently enticing viewers to do, which is pay that ridiculous mortgage insurance fee AND take a spouses name off of the deed. (scan over blank space below to see commercial)
Hi, Your comments matter greatly. If you post anonymously it helps if you briefly explain how your prior experiences relate to the comment you are leaving. Please no link ads unless you contact me first.
Your home is worth $300,000.00. They allow you $175,000.00. You make no payments so the debt against your home accumulates and compou8nds on the interest you're not paying. Before you know it that $125,000.00 difference is swallowed up. Now, how do they make money on this deal? And, if you die early, the extra equity in the home is gone to the lender who, in this case, makes out like a bandit. There is no estate for your loved ones. BEWARE! There has to be a catch in here somewhere. Two questions are (1) why are these loans advertised on TV channels that have all the swindle ads airing day and night and (2) why don't reputable banks offer these loans? People are being swindled by countless deals of all kinds, advertised on TV, every day. When are people going to get smart and stop falling for this garbage? When are we going to get a government in this country who will stop these swindles and imprison the culprits, the scumbags who partake of staring in the TV ads and the TV station personnel who are responsible for airing the ads? It's time the FCC pulls the plugs of these theiving TV stations that air these ads. I do not feel sorry for the dopes that lose everything when they fall for these ads.
ReplyDeleteI have been posting on the CFPB site as well asking them to remove the mortgage insurance requirement for seniors who are only going to take out a small, fixed amount every month. If the mortgage insurance requirement is removed for seniors who agree to take out a set, modest draw every month, then the interest rate being charged on that draw is not that big of a deal. The rip off occurs because seniors are being forced to pay what amounts to a second property tax bill every year (the mortgage insurance) on the full value of the home.
DeleteImagine a senior paying full car insurance on a luxury car that they use once a month, it's just a waste.
As a loan officer of one of the RM lenders, who I'll leave unnamed, we both the company and individual loan officers are both federally and state licensed, we are governed by HUD/FHA who maintain a tight rein, and then anyone who's considering an RM loan has to go through FHA counseling with a certified FHA counselor, who's also licensed before we can so much as fill out a loan application, and we the lender are required to give them a list of counselors, but are precluded by law from steering the borrower to any one in particular. Secondly the MIP protects the borrower and the lender, yes it's expensive but tell me an insurance that isn't? I'm a senior and live in a senior condo bldg. and I pay full insurance on my car, as well as the condo. Whether they take a lump sum, loc, or tenure makes no difference, the mip is necessary under the law, not because the lender is trying to swindle anyone. I read the post and the comment by anonymous (a great choice of name) and your answer and would suggest that you might want to learn more about RM's before you display how much you don't know. How do they get paid? An origination fee of 2% of the first 200k and 1% of any additional 100k, the interest that accumulates on the balance is paid the lender when the loan is paid, however long that may take.
ReplyDeleteOverall interesting site, I wish you the best.
L Murray
Just because the mortgage insurance is required "by law" doesn't make it a good law. This is typical wall street finance chicanery, lobby for a bad law, then once the bad law is enacted, say, "hey, we're just following the law".
DeletePeople taking out a very modest draw off of a paid off home can do so for many many many years without in any way shape or form endangering the mortgage.
I see a parallel once again with strategic defaulters versus good honest people. Strategic Defaulters take a huge lump of equity out at the beginning and as a result the home goes into the red much more quickly.
Once again, because of strategic defaulters, the rest of society has to suffer and pay mortgage insurance.
What actually endangers the mortgage in a reverse mortgage is....., the mortgage insurance premiums, that can run as high as 3% per year! As for the under 62 rule, heaven forbid a "younger" adult child than 62 years of age moves in to be a caregiver.
Oh, I forgot to mention that while no payment is required there's no rule that says they can't make a payment if they choose, and many do, or refinance and pay it off. There is no pre-payment penalty. As far as heirs, they have under law, 6 months with 2 3 month extensions or 1 year to decide whether to keep the house and refi it, sell the house and pay off the loan or let it go back, in which case the lender will sell it take what's owed and any balance over that goes to the borrowers estate.
ReplyDeleteL Murray
Sorry just one more thing, the only people that come off the deed are those under 62 years of age, if husband and wife are both 62 or a kid is on the deed and 62 then nothing changes. But if the wife is under 62 and on title, she must agree to be taken off before there can be a loan, once she reaches 62 they can do an RM refi to get her back on title, or they can buy an insurance policy on the husband, if he doesn't already have one, big enough to pay off the loan so she can keep the house when he passes.
ReplyDeleteL Murray