Reverse Mortgages

What happens when your mortgage is fully "reversed" and you're not dead?

What happens when your mortgage is fully "reversed" and you're not dead?

You join the "Bailout Conga Line."





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What happens when your mortgage is fully "reversed" and you're not dead?

If I have it straight, you can do lump sum or monthly payout. You don't pay back until you die (clearly you don't pay back then but your estate does) or you move.

IIRC, once you've maxed out on the reverse mortgage, you still get to live in the house as long as you can. You just don't get to take any more cash for equity from it.

Most of the time, it's not a good solution if you're got multiple income streams in retirement. But for the people who only have social security plus their house and are scraping by on less than $1,000 a month in SS, a reverse mortgage can sometimes make their retirement years significantly more comfortable without them having to leave a home and area that they love.

Who owns the home in a reverse mortgage?

Who owns the home in a reverse mortgage?

Homeowner.

Who owns the home in a reverse mortgage?

Homeowner.

...with a big, fat, honking lien from the lender attached.

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Homeowner.

With what type of restrictions?

If I have it straight, you can do lump sum or monthly payout. You don't pay back until you die (clearly you don't pay back then but your estate does) or you move.

You have to pay it back when you die? I thought the way it worked was that you basically sold your home to someone in increments - that's what the infomercials tell me anyway!

With what type of restrictions?

You must continue to live in the home, use it as your primary residence and pay all taxes and insurance.

You have to pay it back when you die? I thought the way it worked was that you basically sold your home to someone in increments - that's what the infomercials tell me anyway!

The difference from what is drawn is netted out from the sale if one moves or the property becomes part of an estate.

Here is a link from HUD describing it. There is nothing nefarious about these "loans" Like was stated above, seniors can draw the equity from their homes without qualifying from an income standpoint. The loan to values are significantly lower, so no need to worry about 100% financing or elderly standing on line for bailout money. This affords them the opportunity to travel, makes upgrades, etc; or supplement their incomes. Unfortunately, with cut backs in Medicare, inflation, losses to stock portfolios,and increased real estate taxes, these may become increasingly popular in that respect-- possibly to the chagrin of any heirs. We tried to talk my in-laws into getting a reverse mortgage and give them this bumper sticker.




Top Ten Things to Know if You're Interested in a Reverse Mortgage - HUD

How do I receive my payments?
You have five options:

• Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term - equal monthly payments for a fixed period of months selected.
• Line of Credit - unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.
• Modified Tenure - combination of line of credit with monthly payments for as long as you remain in the home.
• Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

There is nothing nefarious about these "loans"

...let's discuss the fees associated with these loans...and the way they're pitched to the elderly as a road to salvation.

I've seen posts on mortgage broker blogs where the sleeziest of sleez-bag-former-subprimates asking each other the best way to get into this business. Just because granny has to go for counseling before signing on the dotted line doesn't mean she's not being ripped off.



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...let's discuss the fees associated with these loans...and the way they're pitched to the elderly as a road to salvation.

I've seen posts on mortgage broker blogs where the sleeziest of sleez-bag-former-subprimates asking each other the best way to get into this business. Just because granny has to go for counseling before signing on the dotted line doesn't mean she's not being ripped off.



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Of course there are fees, just like in any loan there are fees and closing costs.

Are there sleezy people that do reverse mortgages, I'm sure there are-just like in all businesses there are good and bad people involved.

I actually work with the elderly and disabled and have for over 12 years now; protecting the vulnerable citizens of Texas has been and continues to be my career.

My hubby is good at what he does and he is ethical in what he does. He doesn't do loans that won't actually help the client, he takes his time and talks to his clients and their children, he won't do a loan when the kids are pushing and it seems suspect. For people who are cash poor and want to remain in their home, this can be a very helpful program. This program has saved people from eviction due to back taxes, it has given people the ability to repair their homes and pay for needed medications and such.

Indeed it does take away from the children's inheritance but it's the parents money anyway and children don't have an right to their parents' money. For me, I'd rather my grandparents use their money to take care of themselves and live life to it's fulles than worry about leaving me anything except for loving memories.

Of course there are fees, just like in any loan there are fees and closing costs.

Are there sleezy people that do reverse mortgages, I'm sure there are-just like in all businesses there are good and bad people involved.

I actually work with the elderly and disabled and have for over 12 years now; protecting the vulnerable citizens of Texas has been and continues to be my career.

My hubby is good at what he does and he is ethical in what he does. He doesn't do loans that won't actually help the client, he takes his time and talks to his clients and their children, he won't do a loan when the kids are pushing and it seems suspect. For people who are cash poor and want to remain in their home, this can be a very helpful program. This program has saved people from eviction due to back taxes, it has given people the ability to repair their homes and pay for needed medications and such.

Indeed it does take away from the children's inheritance but it's the parents money anyway and children don't have an right to their parents' money. For me, I'd rather my grandparents use their money to take care of themselves and live life to it's fulles than worry about leaving me anything except for loving memories.

I agree with everything you said above and applaud your husband for being above board. There's just one thing I ask--that he, his fellow honest mortgage brokers, and the Mortgage Brokers' Association declare jihad against the predatory weasels that prey on the elderly....I hope they all get it right this time, instead of sticking their heads in thei..uh...the sand.

Somehow, I get the feeling that sometime down the line we'll be reading headlines about how tens of thousands of elderly were scammed in reverse mortgages schemes--please prove me wrong.

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I don't care about their children not having an inheritance (or as Papa Scooterbug calls it "whatever we couldn't spend") - I am worried about the elderly being scammed and losing their homes.

The only exposure I've had to the idea is on infomercials (not a good sign) and the current cluster certainly doesn't give me a great deal of confidence in the morals and non-predatory nature of mortgage brokers.......especially when their chosen clientele is a demographic considered an easy target for fraud.

...let's discuss the fees associated with these loans...and the way they're pitched to the elderly as a road to salvation.

I've seen posts on mortgage broker blogs where the sleeziest of sleez-bag-former-subprimates asking each other the best way to get into this business. Just because granny has to go for counseling before signing on the dotted line doesn't mean she's not being ripped off..

To be perfectly honest, I do not do these mortgages, so I do not know what the associated fees are. If I recall, I do not think they were much higher than traditional closing costs, but I could be wrong. Mortgage Brokers may be looking at them now as I have seen some Banks pitch them of late to Brokers, but it used to be the Banks directly that sold them, and they had specialists trained in just reverse mortgages. Not all do them, either. if I were doing them, I would always recommend that the senior investigating them do so with the assistance of a financial planner or accountant.

We wanted our in-laws to utilize it eons ago so they could do some traveling before their health deteriorated. We wanted them to enjoy their twilight years. They did not want to pay the fees associated with it even though we offered. We could care less about inheritance. All their children are financially stable.

I've seen subprimates take advantage of the elderly in the past offering subprime loans because they qualified easier. A reverse mortgage has always been a more prime type of program as far as I have been able to tell. I could see more abuse of it coming from family members who may want to line their pockets now. It's the reason I did not ever persue the program because, frankly, I did not want to be involved in family business. Buying a home and financing is stressful enough and that's all the counseling, besides credit, I ever wanted to relegate myself too.

I'm gonna buy a hover round with my reverse mortgage.

I'm gonna buy a hover round with my reverse mortgage.

My friend Angie's grandmother was a fan of her Bluebird, it would hall asphalt and the grandkids loved it when she took them for a spin running wide open!

...let's discuss the fees associated with these loans...and the way they're pitched to the elderly as a road to salvation.

I've seen posts on mortgage broker blogs where the sleeziest of sleez-bag-former-subprimates asking each other the best way to get into this business. Just because granny has to go for counseling before signing on the dotted line doesn't mean she's not being ripped off.



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fees are capped

fees are capped

...some subprime loans were "capped" too....

But all fees aren't identical from one lender to the next for an identical product.

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...some subprime loans were "capped" too....

But all fees aren't identical from one lender to the next for an identical product.

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the guidelines are the same and fees are in fact capped

the guidelines are the same and fees are in fact capped

Can you identify any risks to taking out a reverse mortgage?

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"Reverse Mortgage" sounds more like a palatable name for a loan and is not a mortgage at all, unless I'm just not understanding the process.

"Reverse Mortgage" sounds more like a palatable name for a loan and is not a mortgage at all, unless I'm just not understanding the process.

It's a mortgage alright just not the kind predicated upon income and credit. Certainty of returns is based on certainty of death which is why one must be 62 or older to qualify. Money is paid back upon moving out of the home or death. Mortagee has no interest is waiting for a 22 year old to die. Time is money.

It's a mortgage alright just not the kind predicated upon income and credit. Certainty of returns is based on certainty of death which is why one must be 62 or older to qualify. Money is paid back upon moving out of the home or death. Mortagee has no interest is waiting for a 22 year old to die. Time is money.

Also, the older you are, the more $$ you get. It's probably a better deal for those in their mid-70s who are in danger of running out of money, or already have.