Comments on: Reverse Mortgages: The Next Subprime Mess?

By: Nick

Nick — Sat, 21 Feb 2009 17:33:07 +0000

The banks need to make sure the senior taking the loan is the one actually taking the loan. My aunt trusted the wrong POA. The POA has now died and left my aunt with nothing but a lien on her house. Now she sits in a nursing home with no recollection of the process and a loan over $90,000 and no one to prosecute.

By: Ray

Ray — Wed, 01 Oct 2008 08:49:30 +0000

I looked at the reverse mortgage business a couple of years ago. It seemed like a no brainer to me. If a senior took a lump sum option and received 150000 @ 3 percent on the money this would give them about an extra 400 dollars a month with out touching the principal. I am seriously considering training and pursuing this business because I believe that it is a good product in many different ways and can be freeing to most seniors.

By: Rich Smith

Rich Smith — Wed, 10 Sep 2008 20:19:07 +0000

First you don’t have a clue about reverse mortgages. It is not reversed mortgage, it’s reverse mortgage. If your house is paid off, it doesn’t necessarily mean you have security, most of the time seniors are house rich and cash poor, meaning they cannot make ends meet only with their social security checks. Some of the equity from the house can be used to live better and make their monthly payments to subsist. The worst case and common scenario, is they don’t have enough income to pay the taxes, the house goes into tax sale and there goes the security.

If members of the family want the house, it can still be theirs and the reverse can be paid off by the family instead of selling. The investors have to give the family a chance to sell or refinance, they do not want the house. The investor just wants to be paid back the amount of money used from the reverse mortgage plus the interest that has accrued on the loan.

I have been writing reverse mortgages for over 6 years, have written a couple hundred reverses and everyone has been thrilled they did the reverse mortgage and are much better off than they were before the reverse. It is not right for everyone and about 30% of seniors should not do a reverse. Despite the high closing costs, the reverse is almost always a good thing. It keeps seniors in their home to Age in Place, which is what 80% of seniors want. If there are greedy children looking to acquire the property, that is a very small group of heirs. Usually, the heirs will end up with a significant value after the reverse is paid off from a sale.

Reverses only allow a percentage of the equity of the house to be used, between 55% and 80% depending on age and current interest rates. The government is protecting seniors from using up all the equity, in case they want to sell themselves.

Reverse mortgages are pure gold for seniors and should not be called a ripoff. Just be careful who you work with, be sure they are taking care to help seniors, not just write mortgages.

By: Donna Lamar

Donna Lamar — Wed, 10 Sep 2008 18:25:30 +0000

A reversed mortgage is a joke. If your house is paid off there is your Security.
Don’t ever do a reversed mortgage if you have family members that want the house and loose it because of a reversed mortgage.
Some people try to refinance the home to save it, but the company that had the house didn’t give that person a chance to refinance the home.
A reversed mortgage is a ripoff and the most expensive loan there is.

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Comment on Reverse Mortgages: The Next Subprime Mess? by Mortgage … — Wed, 28 May 2008 12:36:27 +0000

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Mortgage Discussion Blog » Late breaking news — Wed, 28 May 2008 04:09:58 +0000

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By: Comment on Reverse Mortgages: The Next Subprime Mess? by Victor

Comment on Reverse Mortgages: The Next Subprime Mess? by Victor — Wed, 28 May 2008 03:46:51 +0000

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By: Victor

Victor — Tue, 27 May 2008 23:04:46 +0000

Reverse Mortgages have been around since 1989. Thousands of seniors have taken advantage of this loan program. Sub-prime buisness as we know/knew has been around since 2004. Sub-prime is gone and Reverse mortgage is still around. If there were any RM meltdowns we would have heard them or have seen the effects by now. SO, I have not heard of any have you guys? Let’s take exception to the few unscrupulous insurance or annuity sales people that have clouded the reverse mortgage product. There are benefits to a reverse mortgage and many that spout out any myths/misconceptions about the loan are uneducated about the product. That is not their fault. The misinformation is just passed on from one uneducated person to another. People fear that which they do not know or understand. The reason we in the RM industry speak the positives regarding the reverse mortgag is that for those seniors that we do help it has been a positive impact on their lives. For those seniors who do not want it never move forward with a Reverse mortgage. There is no arm twisting. No sales gimmicks that we have to throw at seniors. The one thing that helps is the required 3rd party HUD counseling because on top of all our marketing materials they have a 3rd party company explaining further the details that we have provided the seniors. So, please look at the postives it has on seniors other than the negatives becasue those seniors that see it as a negative do not move forward with a reverse mortgage. They are automatically weeding themselves out of the process. It takes months for seniors to make a decison on reverse mortgages and it is not a slam dunk let’s get you done in a week or two. Also, you cannot lower the standards any more with a reverse mortgage becasue credit and income is not taken into consideration. I guess one way to lower the standards is to do the “fog the mirror test.” Anyway, make sure you have all the facts correct before you say negative things about a reverse mortgage that you heard from an “uneducated” person. All we ask is give the postives also.

By: whipslinger

whipslinger — Tue, 27 May 2008 16:33:40 +0000

I have been reading alot of info on sub-prime mortgages and reverse mortgages. Sub-prime, because so many people in and around my neighborhood have been adversely affected and reverse mortgages because my Mom is a widow in her late 70’s now and although her home has been paid off a couple decades back and she not only rents out her second floor to a tenant, but now my younger Brother and I are residning back in our childhood home as tenants as well. The price of heating oil is constantly going up, the cost of property taxes; which she will continually have to pay each month on a fixed income no matter what, and sewage taxes have increased. My Mom’s house has considerable equity as it is on a pristine block in our town in addition to what she and my Dad invested in the upkeep of the property. So, over the last year since Dad passed, Mom has been complaining about the rise in homeownership costs which forces her to dip into her savings each month to cover some of the expenses not adeqautely met by the three rents she collects from the home. She has willed the house to my younger Brother despite having 3 children, which really doesn’t bother me as I have no interest in the home. However, knowing what I have learned about reverse mortgages, and I confess that I am not asstute on the intricate details, but as someone previously wrote, it gives me and erie feeling that down the line; a few years from now, something is going to go horribly wrong with it, just like sub-prime, and it cannot be good. Sounds good on paper though, but I’m positive the Devil is in the details. No matter what, I don’t think I would ever recommend it as an option to my Mom.

By: Shawn

Shawn — Thu, 14 Feb 2008 16:42:48 +0000

JLP

In your opinion are there any positives to a reverse mortgage? If so what are they?

When would a reverse mortgage be the right choice as opposed to downsizing?