Posted by snoopdogMs on 2/25/08 11:07pm
Msg #237157

Reverse Mortgage-double dip?

I closed a reverse mortgage this evening that had the individual receiving 2 lump sums of 25K and about 50K. The 25K was for her personal use but the 50K was intended to be invested. Can the loan officer also offer her some kind of investment plan for her money? Is this standard for the officer to be concerned or have an interest in her cash out as far as investment? It smacks of conflict of interest to me as this officer has indicated he has something to offer her. Just curious and maybe ignorant of what officers can or cannot do.

Reply by ME/NJ on 2/25/08 11:20pm
Msg #237158

Not your concern..Hear of Primerica

There setup is get you in a loan and the money you save can be invested in there other programs. Your job is to prove who the person is and watch them sign all the documents in the right place.

Anything else you keep quiet and let people make there own choice.

Reply by Linda Juenger on 2/26/08 1:05am
Msg #237163

Sometimes there is a form in the pkg that says money cannot

be used for investment purposes. I've seen it several times. Still, not our call.

Reply by Sylvia_FL on 2/26/08 12:36pm
Msg #237222

Re: Sometimes there is a form in the pkg that says money cannot

I have seen the form that asks if the money is to purchase an annuity.

I have never seen anything anywhere that stops someone using the money for investments.

Having said that I would be suspicious of a loan officer that was offering the investment plan.

Becca posted this link:

http://www.in.gov/sos/press/2008/022008.html

Reply by sue_pa on 2/26/08 7:39am
Msg #237170

as the others said, not our concern.

I personally believe that reverse mortgages will be for many, the next legal 'scam' coming down the pike in the lending business. Certainly for a few they're a great deal. For most, I personally don't believe they are very informed (yes, I know they receive 'counseling') or they have weighed all the options and don't realize the ramifications of these loans other than the quick "fix" placed before them.

Reply by Becca_FL on 2/26/08 10:00am
Msg #237182

I'm going to disagree with Mike and Sue on this one. I agree with Sue that RMs will likely be where many scamming LOs will end up, but I believe that we do have a responsibility to help protect the elderly. Every state has an elder abuse hot line and all it takes is one call. You don't have to make accusations, just alert someone that something didn't seem right.

What this LO is doing could in fact be a violation of TILA laws. Have you ever read a RM third party fees disclosure? Read one and you will see that FHA cases have very strict guidelines on how the loan is to be disbursed what needs to be disclosed on the HUD and that "no portion of the initial disbursement of loan proceeds shall be used for any payment to or on behalf of "an estate planning service firm."

I am fortunate enough to work with honest, ethical and caring LOs that follow the law and are truly interested in the best interest of their client. It's unfortunate, but there are scumbags out there that are giving RMs a bad name. If I suspect a law is being broken or a fraud is being committed, I feel it is my obligation to alert the proper authorities.

Reply by DianeCipa on 2/26/08 10:38am
Msg #237188

I agree with you, Becca. n/m

Reply by ME/NJ on 2/26/08 10:43am
Msg #237190

As a NJ Notary, we ask people if they understand what they are signing, prove who they are and witness the signature. Even the way you explain doc's could put you in a load of trouble.

This from a lawyer - If you say this is what the doc's mean (you're in trouble in NJ)

As mentioned there is a fine line between Notary and SA and cross it you are no longer a third party to the deal.

If I knew all the laws and had the authority to give guidance at a closing I would be paid an attorney fee. NJ everyone has a right to an attorney to represent the interest of the BO, if they want to use that right is up to them.

I have seen plenty of deals that would make me cringe, not my place to say what is right for the BO.

Reply by sue_pa on 2/26/08 10:52am
Msg #237193

agree

Even if I feel bad, I don't feel my job title gives me any authority to watch out for the elderly or anyone else. Why don't I have to watch out for the young, naive couple who still thinks no one would rip them off. What about the middle aged couple who is just dumb and struggles along daily, never getting ahead because of poor decisions?

Reply by sue_pa on 2/26/08 11:19am
Msg #237197

also

Being 'elderly' certainly doesn't mean people aren't intelligent, well informed, or need any type protection. I don't understand why, with the little bit we are exposed to, we should assume because someone is 'making a deal with their LO' that it's a bad situation. I have quite a few 'elderly' relatives that would go balistic if some good intended person reported their activities to any type agency - because they don't need any help from anyone. Should I be in such a position when I'm 'elderly'...

Reply by Dennis D Broadbooks on 2/26/08 11:32am
Msg #237202

Careful, Sue...

...you're getting awfully close to divulging your age!

Reply by Sylvia_FL on 2/26/08 11:33am
Msg #237203

Re: Careful, Sue...

Dennis
Sue is 29 Same as me

Reply by sue_pa on 2/26/08 11:37am
Msg #237205

Re: Careful, Sue...

No Sylvia, I've had a "few" birthdays since then - I'm "32" !!! Much more mature than I used to be !!!

Reply by Sylvia_FL on 2/26/08 11:43am
Msg #237208

Re: Careful, Sue...

32 looks good on you
But I could have sworn you were only 29 now

Reply by Becca_FL on 2/26/08 11:49am
Msg #237210

I can see the headline now Notary found guilty of fraud

in massive reverse mortgage fraud case. By NOT alerting someone of the intent to commit fraud, you are as guilty as the slime ball that concocted the fraud, it could be called conspiring, IMO.

http://www.in.gov/sos/press/2008/022008.html

http://www.hud.gov/buying/rvrsmort.cfm To report RM fraud.

How are things going to get better in our industry if we continue to stick our heads in the sand? How many time have you sat down with a borrower that has an instant distrust in you because he was previously screwed by a LO that sent a mobile notary to his home? How many time have you had that same borrower cry and thank you over and over again for pointing out the terms of his loan so he could really understand what he was signing? And, thank you profusely for knowing how to do your job correctly because the last notary that came to his home just plopped the package in front of him and said hurry up and sign because I've got another appointment?

How is it going to get better by just letting it go?

Reply by Becca_FL on 2/26/08 11:20am
Msg #237198

I guess in NJ & PA a Notary does NOT take an oath of office

and solemnly swear to support, protect and defend the Constitution and Government of the United States and of the State they are commissioned in like Florida Notaries do...Too bad.

Snoop may have witnessed an act of mortgage fraud and you two suggest she just let it be based on what you believe the laws of your state to be? Do Federal TILA laws mean anything to you?

Reply by sue_pa on 2/26/08 11:49am
Msg #237211

Re: I guess in NJ & PA a Notary does NOT take an oath of office

Of course we take an oath - I have no idea what it actually says - every 4 years she reads it off a little index card and I say I do - takes about 20 seconds.

I just don't know why we should assume a deal is a bad one because the person is elderly. A few years ago I did a notarizations for what I called a "traveling estate planner". I personally thought anyone using this service was totally nuts - why didn't they go downtown and hire a local lawyer. I actually think that anyone buying a piece of real estate and letting a 'signing agent' touch their paperwork is totally and thoroughly crazy, although I do MANY purchase closings a month.

Bottom line for me is that people's decisions aren't my concern and unless something positively jumped out at me as illegal I just don't worry with it. As for TIL laws, I don't ever have enough info on any order (good or bad) to determine if they are being complied with.

In the case of reverse mortgages, these people have gotten along without my help for at least 62 years of their life. They've done something right to own real estate with equity - probably most of them through hard work, some through dumb luck, others through shrewd maneuvering and planning. Again, my 1/2 hour to 2 hours with them don't give me any details into their actual lives and reporting maybe/possibly/perhaps 'something' to me is just out of line.

Looks like this is one we'll have to agree to disagree.

Reply by snoopdogMs on 2/26/08 10:52am
Msg #237194

I don't think that my question implied that I said or alerted the signer to my thoughts about the LO. as I wear my best poker face in all my closings and just do my job as a notary. This was just a question about the LOs interest and for my own personal knowledge as to their role. No more, no less.

Reply by Sylvia_FL on 2/26/08 11:41am
Msg #237206

http://www.reverse.org/faqs.htm#Investing

What about "investing"?

Should you take a lump sum of cash from a reverse mortgage and invest it someplace? Except for purchasing a sound annuity, that's generally a lousy idea - unless, of course, you can afford to lose money.

Remember, to come out ahead on any investment, you'd have to earn a greater rate of return on it than the TALC rate you are paying on the reverse mortgage. And the odds against doing that safely are mighty long.

A much better alternative is to take a HECM creditline. You only get charged interest on the cash advances you've actually taken, and the remaining available credit grows larger every month. And this growth is not an "interest" earning, so you are not taxed on it.

How much could you get in a HECM creditline, and by what rate would it begin growing? Click Calculator for an estimate.

Reply by Laura Vestanen on 2/26/08 1:32pm
Msg #237234

This is why it is important to work with honest LOs only

Hi, Snoopdog

This potential conflict of interest is why I only work with LOs I already know. These LOs are honest people whose Reverse Mortgages are all backed by HUD. (The sleazeballs sell the RevMorts not backed by HUD because the LOs can get a far higher origination fee.)

Yes, the LO can offer investments. One of my LOs is also a CFP. He is so honest that he will not originate a RevMort loan when he knows that a RevMort is not the best solution for the borrower. He looks at the overall portfolio.

I realize that the notary has no formal role in whether a RevMort is a good choice for someone or if the LO is truly disclosing all the facets of the loan. But I personally will have nothing to do with LOs who do not act in the best interest of the borrower.

It scares me that BofA and WFB are pushing RevMorts. They do not have good "honesty first" track records. I think it could be a good thing for local credit unions to start offering HUD-backed RevMorts - the credit unions have to answer to their member customers.

Hope this helps,
LauraV

Reply by ME/NJ on 2/26/08 1:37pm
Msg #237238

http://www.judiciary.state.nj.us/notices/unauthpraccomm41.pdf

http://www.state.nj.us/treasury/revenue/dcr/geninfo/notarymanual.htm#Proof%20Of

Like all thing the shopper must do there due dillagance, they also have a choice to hire a lawyer.

Did I hear all of you cry foul during the Sub Prime craze? I would bet a couple of hundred loans I did years ago the homes have been sold or foreclosed on because of the nutty deals.

Everyone has a choice, sometimes the easy way out is not the best.

Reply by dickb/wi on 2/26/08 5:50pm
Msg #237264

from what i've heard hud frowns very much on.....

lenders convincing seniors from using proceeds of a rm in a lender sponsored investmet program........if the investment goes south the senior has lost his/her equity.....maybe some one else can weigh in who has more knowledge about that than i do....maybe paw.....

Reply by Laura Vestanen on 2/26/08 7:57pm
Msg #237280

You are correct, Dick

You are correct, Dick.

HUD places many restrictions on what borrowers may do with their cash out.

That is yet another reason why working with an honest loan originator is crucial. An honest LO will refer the borrowers to a local Certified Financial Planner if the borrower chooses to invest some of the funds from the cash out.

LauraV