Posted by OR on 7/2/08 9:48pm
Msg #254014

I have a question about the 2 Dot and Notes in a Reverse...

I have a question about the 2 Deeds and 2 Notes in a Reverse Mortgage. I was taught that the first one put you in debt and the other second one took you out after you die. I had a broker tells the borrower it was so that you couldn't do a second reverse mortgage? That both of them were filed at the court house so that when an abstractor look at you deed they would see 2 notes and note it so a lender would not give you a 3rd mortgage. Would someone please let me know which it is or if there is a different reason to have 2 of each. Thanks in advance to whom answers this.

Reply by SheilaSJCA on 7/2/08 10:37pm
Msg #254017

Its neither of those- it has to do with the lender and the loan being insured by HUD, (or whoever it is insured with), in case the lender, closes up shop, and stops paying you. HUD will step in and take over and pay you.

Reply by BMoon_FL on 7/2/08 10:38pm
Msg #254018

The first mortgage is always to the lender. The second mortgage is to the Department of Housing and Urban Development. The second mortgage goes into effect the moment the borrower turns one hundred. The same applies to the two notes. It is not true that a person cannot get another reverse mortgage. I have done two for people that had already done one earlier. Hope this helps.

Reply by PAW on 7/2/08 10:46pm
Msg #254019

Partially correct.

The first note/mortgage is to the primary lender. The second note/mortgage is in favor of the Secretary of HUD.

There is also a safeguard when there is a 1st and a 2nd mortgage on a home the prevents an additional reverse mortgage. But, the homeowners are free to refinance a reverse mortgage just like you can do for a forward mortgage. As for a 3rd mortgage/lien (subordinate to the 1st and 2nd already in place), the lender or contractor (in the case of a lien) may be hard pressed to grant a loan knowing it would be in the 3rd position. But that depends on lots of different circumstances.

Reply by OR on 7/3/08 12:20am
Msg #254028

Thank you that helps a lot. One Dot to the primary lender and the other one is to Hud. Now I just read diferant 2 reasons for that is. One was if the primary lender goes under and the other reason was if borrower lives longer then 100. Are they both correct?

Reply by OR on 7/3/08 12:29am
Msg #254030

Re:Got to love Active/Rain..the answer is

"Why are there 2 Deeds of Trust? The first Deed of Trust represents your lenders lien on the property. The second represents HUD as they assume the second position because HUD is insuring that the homeowner will continue to receive loan payments in the event that the lender becomes incapable of making these payments."
Great job guys in answering my question. Have a great Forth of July.