Posted by Charm_AL on 10/6/05 4:36pm
Msg #69183

how do we feel about R/M's?

Got a call this afternoon from *N/D...just took the exam for certification to do reverse mortagages for Wells Fargo thru *Nationwide Docs. It's a requirement now that the NSA get certified. I know the basics about the process, anybody care to share opinions on this type of loan?

Reply by Charles_CA on 10/6/05 4:40pm
Msg #69184

Its my opinion only. I personally don't like them. It is up to everyone to determine their own destiny, we are all adults. if someone wants a reverse mortgage and they undestand the documentation and the consequences who am I to contradict their stupid decision

Reply by MB_AZ on 10/6/05 5:09pm
Msg #69189

When you're in your 70's and need income...I don't think it's stupid to do a reverse mtg. They at least get to stay in their home and don't have to sell for the money they need. The few reverse mtgs I've done, all parties knew what they were doing and what the consequences could be.

Reply by CarolynCO on 10/7/05 12:03pm
Msg #69317

The reverse mortgage signings I've been involved in are pretty sad. All but one have been so they can eat and be able to flip the switch so they don't have to sit in the dark. One, my new *grandma* did it to enjoy life -- she bought a new car and she's been to Vegas many times to gamble. Before he died, her husband made sure that she would be able to live comfortably after he was gone. For her, the R/M is so she can have some fun and excitement with the remainder of her life and not live as a hermit. Unfortuantely, I believe she and her R/M are the exception.

Reply by PAW_Fl on 10/7/05 12:17pm
Msg #69322

I've done both, pretty much equal in that some "had" to do it to survive and others "just because". I told my in-laws that they earned their money, invested it in their house, they should spend their money their way. None of the kids want the house after they're gone, so why not let the bank have the problem with it. Anything left over would be split with the kids.

I did one a couple of nights ago for a couple that have been married 48 years. Never had a mortgage. Even paid cash for the new house (over $250,000). The kids told them to enjoy their earnings. They earned it. So, they took out a reverse mortgage, with NO cash out, NO monthly payments, just a line of credit that doesn't have to be paid back, if and when they use it. That way, when they are ready to go on their 'around the world' vacation, they will have the money to spend as they desire. Good for them.

Reply by Cheryl_NV on 10/7/05 7:42pm
Msg #69450

Can someone please explain what a reverse mortage is?

Reply by PAW_Fl on 10/7/05 7:46pm
Msg #69452

With reverse mortgages, homeowners receive payment from a lender--in the form of a lump sum, line of credit, or fixed monthly payment--rather than making monthly mortgage payments. The loan does not have to be repaid until the last remaining borrower passes away, the home is sold, or the borrower permanently moves out of the home. It’s a great alternative for financially strapped seniors who would otherwise be able to remain in their homes.

The AARP website has excellent information that you can read.
http://www.aarp.org/money/revmort/

Reply by PAW_Fl on 10/7/05 7:53pm
Msg #69455

I forgot to add...

A complimentary site to the AARP information can be found at http://www.reverse.org/.

Reply by PAW_Fl on 10/6/05 5:10pm
Msg #69190

I've been doing RevMtgs for Wells for quite some time. I don't know what the "certification" would be, nor why it is being required. Anyway, on to your question.

Reverse Mortgages have their place, just like many of the other 'loan' products out there. I know some call them 'stupid' and I take exception to that remark. I wouldn't say that anyone is 'stupid' for taking out a reverse mortgage any more than I would call someone who takes a ballooned ARM, 'stupid'. It's their decision and usually the 'borrowers' are very well informed, especially with Wells products. My opinion matters not.

Reply by Charles_CA on 10/6/05 5:20pm
Msg #69192

It's my opinion, it's worth what you paid for it! NM

Reply by B__CA on 10/6/05 7:54pm
Msg #69221

What is your reason for saying that?

I'm curious as to why you would say that. I agree with Paul. I did a signing recently the house would easily sell for 650,000.00 but they owe about 130,000.00. He is about 75 and she is 62. They will no longer have to pay a mortgage and will be able to travel alot. She will be able to afford the home if something happens to him. I do alot of these and most of them are for borrowers that live in homes that are on the lower income scale. It makes the differece of being able to afford medicine, food and any extras and a surving spouse being able to stay in the home once one of them has past on.

Reply by BrendaTX on 10/6/05 8:00pm
Msg #69223

Re: What is your reason for saying that?

No opinion as to good or bad, but I am not crazy about the closing costs on these loans.

Each I have seen is around 10% of the loan amount.

Reply by SarahBeth_CA on 10/6/05 9:01pm
Msg #69230

Re: What is your reason for saying that?

I haven't done a R/M yet. One thing I have not learned about them is how long the borrower recieves payments for (I'm sure they are all different). I would like to go off the premise of house worth 650,000.00, they owe 130,000.00, he's 70, she's 62. Are we talking 30 years on that type of loan?

Reply by patricia on 10/7/05 8:55am
Msg #69281

Re: What is your reason for saying that?

the problem with the 75 year old man with the 62 year old wife is that the money will all be used up and she will have to move out of the house while she still has many years to live,
the proceeds from the sale will go to the lender and she will be left with no money and no
place to live.

Reply by PAW_Fl on 10/7/05 9:32am
Msg #69291

Re: What is your reason for saying that?

Apparently, you do not understand how a reverse mortgage plan is established. There will never be a forced sale on the house as long as it is occupied by a surviving "borrower". The whole concept is that a monthly loan advance or a credit line is established for as long as a "borrower" lives in the home, (Granted, this view is limited only to my experience with the HECM's that I have completed and does not cover any and all different products on the market.) When the plan is drafted, there is an estimated payout developed that shows the estimated payments and charges over the life (up to 100 years old) of the youngest "borrower". So, for a 62 year old, that plan would be established for a 38 year period. Also, taken into account is the variable interest rate and an estimated increase in the value of the property.

So, your statement, "the proceeds from the sale will go to the lender and she will be left with no money and no place to live" is far from the truth.

Reply by patricia on 10/7/05 8:08pm
Msg #69460

Re: What is your reason for saying that?

I was told by an attorney that this is the way they work and there was recently an article in the newspaper regarding a woman who had gotten a reverse mortgage and then used all the money available to her and had to get out of the house when she was just over 90
years old and she did not have the money to live anywhere except a public facility.
This is what I would fear for these younger people getting the reverse mortgages.

Reply by PAW_Fl on 10/7/05 8:26pm
Msg #69465

Re: What is your reason for saying that?

First, "younger" people do not qualify for a reverse mortgage. Reverse Mortgages are guaranteed by the government (HUD) and one qualification is that one of the homeowners must be over 62. Even with non-guaranteed reverse mortgages, the general rule is all the homeowners must be over 62.

I find it difficult to believe that newspaper article. Unless the mortgage was not a valid product, as far as I know, the lender cannot kick the owner out of their home. You can't "run out of money". Only when you sell or move from your home, or when you pass away, will the lender be able to collect on the debt, and if the home's value is less than the outstanding balance, you (or your estate) will not owe a single dollar of the difference. On the other hand, if you sell the home for more than the loan balance at that time, you or your heirs will keep the difference.

Reverse mortgages are generally "nonrecourse" loans, which means that in seeking repayment the lender does not have recourse to anything other than your home. Not your income, your other assets, or your heirs.

So even if you receive monthly loan advances until you are aged 115, your home declines in value between now and then, and the total of monthly advances becomes greater than your home's value - you can still never owe more than the value of your home. If you or your heirs sell your home in order to pay off the loan, the debt is generally limited by the net proceeds from the sale of your home.

Reply by PAW_Fl on 10/7/05 8:30pm
Msg #69467

Correction ...

I said, "... one qualification is that one of the homeowners must be over 62." Actually, I believe ALL the homeowners must be over the age of 62.

Reply by patricia on 10/8/05 8:25am
Msg #69527

Re: Correction ...

in my mind 62 is still quite young.

Reply by BrendaTX on 10/8/05 8:30am
Msg #69528

Re: Correction ...

Paul, no disrespect, but I was also thinking that I'd like to consider 62 young also.

Reply by BrendaTX on 10/8/05 11:36pm
Msg #69622

Re: PAW/FL Age & Rev Morts again...

Because I have no life to speak of, I was doing a little light reading tonight and I remembered this thread from today. Link for your reference:

http://www.window.state.tx.us/taxinfo/proptax/law04/artxvia.htm

I was like you and thought >both< Homeowners had to be over 62. However...that's not what I am seeing here...or am I wrong? (Of course, this pertains to Texas since I pulled it out of the Texas State Window on Govt.)

(k) "Reverse mortgage" means an extension of credit:

(1) that is secured by a voluntary lien on homestead property created by a written agreement with the consent of each owner and each owner's spouse;

(2) that is made to a person who is or whose spouse is 62 years or older;

Reply by PAW_Fl on 10/9/05 7:09am
Msg #69631

Re: PAW/FL Age & Rev Morts again...

I was like you and thought >both< Homeowners had to be over 62. However...that's not what I am seeing here...or am I wrong?

I don't know for sure. I too was always under the impression that either one of the homeowners had to be over 62, but I read somewhere (I'll have to find it again) that both needed to be over 62. Maybe it was unique to one plan (there are many, by many different lenders). The HUD site isn't clear, as they say the "homeowner must be over the age of 62". Well, both spouses are "the homeowner". Ambiguous at best.

Reply by BrendaTX on 10/9/05 9:09am
Msg #69634

Re: PAW/FL Age & Rev Morts again...

Paul, I agree with you. FannieMae says both have to be over 62. Should I alert the media that the Tx Property Code is wrong?

Reply by PAW_Fl on 10/9/05 6:19pm
Msg #69650

Re: PAW/FL Age & Rev Morts again...

Yep, that's where I read it; in their "Money From Home" planner. But, I don't think all reverse mortgages are FannieMae and thus are not guaranteed by the gov't, so there may be other or different requirements.

Reply by Charm_AL on 10/7/05 9:15am
Msg #69286

I guess Nationwide got some Wells business and they are reveres. In order for me to do them, I was told by Nayionwide that I had to get certified. It's Wells training, then you take the online 20 question test.
These pkgs frequently come back missing sigs

Reply by newlysmomva on 10/7/05 12:21pm
Msg #69324

I think they are great for someone who has no family to leave anything to....or really really needs the money. My concern, though, it that some of these people really do not understand how it is going to work when they pass. I am afraid they still believe they can leave it to their heirs. I heard one tv ad recently saying...."and you still have equity to pass on to your heirs". That is why I don't like 'em.

Reply by PAW_Fl on 10/7/05 12:27pm
Msg #69330

But they do have equity to pass on. First, the "loan" or limit is not anywhere near the value of the property. Second, the financial institution recovers what is owed to them and nothing more. Any balance from the sale is returned to the estate for probate. It is imperative that even when the property is under a HECM, the owners need to have a will and executor/executrix to make sure the property is sold for market value and the excess after paying off the mortgage company is properly probated.

Reply by Charm_AL on 10/7/05 12:33pm
Msg #69333

Re: how do we feel about R/M's? PAW

Have you had the mortgage counselor sit in on any of these HECM's?

Reply by TinaG_CA on 10/7/05 1:03pm
Msg #69348

Re: how do we feel about R/M's? PAW

I have done several R/M's. Most of them were for Seattle Mortgage. They provided the borrowers with videotapes, sent out loan officers to meet with and explain the process and then, if possible, the signings took place at their branch office. The loan officer would step in once or twice to see how everything was going and if there were any questions. Almost all of the R/M's I've done, the borrower's were aware of what they were doing and were looking forward to using their equity for whatever they wanted. I never encountered anyone doing it to keep the lights on or food on the table.

Reply by BrendaTX on 10/7/05 1:04pm
Msg #69351

Re: how do we feel about R/M's? PAW

***Almost all of the R/M's I've done, the borrower's were aware of what they were doing and were looking forward to using their equity for whatever they wanted. I never encountered anyone doing it to keep the lights on or food on the table. ***

True from my perspective, also, Tina.

Reply by CarolynCO on 10/7/05 3:57pm
Msg #69421

Re: Charm - LO present

All my R/Ms are for the same company and the LO is always there. The first one he took charge of, which kind of irritated me, but allowed me to sit back and learn the ropes. It's the only signing of any kind where I've ever had to go back and get something re-siged. He told the Borrowers that they didn't need to sign the AKA statement. I protested but he again told them it was unnecessary so they didn't sign. Needless to say, I had to make a second trip. The next signing we were at, he sat back and let me take charge. When we got to the AKA statement, I explained that it was necessary, even if they had no other names.

He's a good conversationalist with the older people and makes them feel comfortable. Because all of them have lived through the Depression, I have found that they can be somewhat hesitant or untrusting when it comes to financials. This is where he comes forward and explains how the figures were determined, and how this and this is going to work.

Reply by PAW_Fl on 10/7/05 2:28pm
Msg #69388

Re: how do we feel about R/M's? PAW

Every once in a while, the counselor will attend when she can. Though, she is there to answer questions, she also knows my capabilities and doesn't interfere with the signing. But, when a question arises, thankfully she is there to explain it.

All in all, with Wells, the 'borrowers' are very well informed and there has never been any surprises with them. Other lenders to a lesser degree, but still, I have no major problems with reverse mortgages. The biggest issue has always been why there are two notes and two mortgages.

Reply by newlysmomva on 10/7/05 3:32pm
Msg #69410

"But they do have equity to pass on. First, the "loan" or limit is not anywhere near the value of the property. Second, the financial institution recovers what is owed to them and nothing more. Any balance from the sale is returned to the estate for probate. It is imperative that even when the property is under a HECM, the owners need to have a will and executor/executrix to make sure the property is sold for market value and the excess after paying off the mortgage company is properly probated."

But what if the value of the property drops? For that matter what if it drops during the persons life?

Reply by PAW_Fl on 10/7/05 3:42pm
Msg #69415

You need to pose these types of questions to the loan officers and/or counselors. I'm not trying to be a smart-alec, but don't want to pass on conjecture and false information. (IOW, I'm not sure. )