Posted by BillyJack/NC on 7/9/12 12:34pm
Msg #426079

Reverse Mortgages

Can someone explain why Reverse mortgages are so difficult to close.
I have never closed a reverse, but I have had several calls from SS & Title Companies;
They all ask if Ive done reverse closings, upon telling them no, they thank me for being
honest, and say, we would like a notary with experience in this area!!

Reply by MW/VA on 7/9/12 12:53pm
Msg #426080

They are probably looking for someone experienced because of the nature of the transaction.
While not at all difficult, it is a little more sensitive. There aren't many more docs than a standard refi, but there are usually 2 Notes & 2 DOT's. Again, if you just follow what's in front of you, it's not a big deal. I'm fortunate enough to have completed a lot of these, and have a good reputation in the biz.
I think all you'd need to do was to review a r/m loan pkg. to see what's involved. Next time you could tell them that you've "had training" & are prepared to do them.
Also, they're not paying as much as they used to.

Reply by HisHughness on 7/9/12 1:19pm
Msg #426085

Actually, the mechanics of a reverse mortgage are substantially different from the typical mortgage. The borrower, for example, can take his proceeds in one of three ways -- or any combination of the three. Further, there are amortization documents, comparative interest docs, and others that are different.

Lenders are sensitive to the signing agent's expertise because the feds keep a much closer watch on the reverse mortgage field than other forms of lending. They don't want anybody taking advantage of us OldePhartz.

Myself, I keep hanging out at the Poodle Dog Lounge hoping one of the barmaids <will> take advantage of me. No luck so far.

Reply by GOLDGIRL/CA on 7/9/12 1:47pm
Msg #426092

Trouble in RMland

While HH was barking up the wrong tree at the Poodle Dog Lounge, I ran across this verrrry interesting article on RMs from DSNews.com that shows among other things that 10% of RMs are in default. (It also helps explain why I NEVER go to a RM without the LO being present. If they can't get their lazy ars there to explain the most basic important stuff, then neither can I):


<<<The Consumer Financial Protection Bureau released a report July 5 showing that although reverse mortgages are meant to help borrowers in retirement, they are in fact causing problems for many who don’t fully understand them.

A reverse mortgage is a type of home loan that lets older homeowners access the equity they have built up on their homes and defer loan payment until they sell the home, move out, or pass away. The original purpose of reverse mortgages was to allow these homeowners to convert home equity into an income stream or line or credit to use in retirement. Borrowers were largely expected to age in place with their loans, living in their current homes until they passed or needed skilled care.

Reverse mortgages require no monthly mortgage payments, but borrowers must still pay property taxes and homeowner’s insurance. The report showed that nearly 10 percent of reverse mortgage borrowers are at risk of foreclosure because they failed to pay those costs.

“Reverse mortgages are complex and have the potential to become a much more pervasive product in the coming years as the baby boomer generation enters retirement,” said CFPB director Richard Cordray. “With one in ten reverse mortgages already in default, it is important that consumers understand what they are signing up for and that it is the right product for them.”

The report found that many reverse mortgage borrowers do not understand how their loan balance will rise and their home equity will fall over time. In addition, the influx of new choices brought on by innovations and policy changes have made the matter too complex for many homeowners. The bureau further found that the tools currently available to help consumers understand the risks and tradeoffs are not enough. The report called for improved methods for housing counselors to help consumers understand their choices.

There are many other problems with reverse mortgages as they currently stand, the report pointed out. Many consumers are getting reverse mortgages before the age of 70 (with the most common age for a new borrower being 62, the first age at which reverse mortgages are available), and some are even getting them before retiring.

“These borrowers will have fewer resources to pay for everyday and major expenses later in life and may find themselves without the financial resources to finance a future move-whether due to health or other reasons,” said the report.

Another problem is that 70 percent of borrowers are taking out the full amount of proceeds as a single lump sum instead of treating the payment as an income stream. As a result, these borrowers have fewer available financial resources later in life. They may not be able to continue paying taxes and insurance on their homes, leading to potential foreclosure. The report found that borrowers who save or invest their money may earn less on the savings than they spend paying interest on the loan.

Finally, the bureau addressed the issue of deceptive or misleading marketing materials about reverse mortgages. The report cited examples of mailers that depict reverse mortgages as a government benefit or entitlement program in the vein of Medicare and use images resembling government seals to entice consumers. It can be difficult for consumers to tell that a reverse mortgage is a financial product, not a government benefit.

Reply by MW/VA on 7/9/12 2:07pm
Msg #426096

These articles have appeared before & are the reason

WF got out of the RM biz. IMO RM or not, seniors often run into problems keeping up with taxes & insurance. Any & all loans require that, and people could lose their homes (paid for or not) for not paying taxes.
In my experience, I have never seen a RM where there wasn't a full disclosure about the borrowers being responsible for the payment of taxes & insurance.
I know several people who took RM's during the bubble, and took more out of the property than it is currently worth. That's the risk the banks took, and another factor that might prompt defaults.

Reply by GOLDGIRL/CA on 7/9/12 2:45pm
Msg #426102

Re: These articles have appeared before & are the reason

You're right, MW/VA, about full disclosure that seniors need to pay taxes and insurance. That's one of the more obvious docs in the RM pkg. Yet, it's one thing for me to say at a refi or purchase, OK looks like you have no monthly impounds and that you're paying your taxes and insurance on your own; and quite another at a RM. They don't need to hear that from me, a notary. They need to head that over and over from their LO. And judging by this article, the message is still not getting through. So sad.

Reply by bsylade on 7/9/12 10:35pm
Msg #426188

Re: Trouble in RMland

Amen, I feel that they are not looking at all of thier options. Many would be better off selling and getting a smaller less expensive home and use the proceeds to assist in their living expenses. They are not getting the full value out of thier home and the are still paying pmi. I want to know what happen to the billions paid in MIP that was to help if someone defaulted on their loans when they did not have 20% down. bonuses you think?

Reply by pat/WA on 7/9/12 2:55pm
Msg #426105

Poodle Dog

Had breakfast there Sunday

Reply by MW/VA on 7/9/12 2:08pm
Msg #426097

Sorry that I over-simplified. I think someone (Brenda/TX)

put together a RM training manual.

Reply by John Tennant on 7/9/12 3:30pm
Msg #426110

I have the Reverse Mortgage Notebook by Brenda Stone

Very well put together and an excellent tutor/reference manual. The following year I also obtained the AARP "Home Made Money, A Consumer's Guide to Reverse Mortgages". This AARP guide further supports Brenda's Notebook". I recommend, if you are going to get into Reverse Mortgage signings, that you obtain both publications. JMHO.

Reply by bsylade on 7/9/12 10:24pm
Msg #426185

You can go on line and and study how to do them and take a test. They time and patiences(MS). It is a very serious thing they are doing and they need go over the paper work. I like it if they have another family member there to discuss the service.

Reply by dgenoway/TX on 2/28/13 9:54pm
Msg #458645

In regard to the reverse mortgages, aren't we really just notarizing the signature of the borrower? We are "supposedly" not there to explain anything, because, "I AM NOT AN ATTORNEY LICENSED TO PRACTICE LAW IN TEXAS AND MAY NOT GIVE LEGAL ADVICE OR ACCEPT FEES FOR LEGAL ADVICE."