Posted by Stamper_WI on 11/11/08 10:52am
Msg #269439
New version of a reverse Mortgage?
Not sure I like the sound of this
http://realestate.msn.com/Buying/Article_usnews.aspx?cp-documentid=11293586>1=35000
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Reply by Nomad/OR on 11/11/08 11:12am
Msg #269441
Modern day Loan Sharks n/m
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Reply by Dawn/PA on 11/11/08 11:57am
Msg #269443
Scary..... n/m
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Reply by Janie Kearns on 11/11/08 12:44pm
Msg #269447
I just read the information. Variation of or uninsured variations of the reverse mortgage have been around since the early to mid 90's . Providentail Funding, a San Fransciso based company created a similar product in the 90's that forced them out of business. I personally would not encourage, nor participate in such a product. The FHA insured and Fannie Mae backed products are safe, tried, true and proven. I would seriously question this product you mention.
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Reply by OR on 11/11/08 12:58pm
Msg #269449
I am shocked. I guess it is a sign of the times. I always take my time with the older borrowers. I would hate to present a loan like that ever.
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Reply by Lee/AR on 11/11/08 3:39pm
Msg #269457
The 'bailout' lenders do get part of any appreciation when sold; the earlier it's sold, the higher the lender's share. FHA has done the same thing for years...no longer recall the percentage. Then again, standard RMs aren't exactly cheap. I don't think it's pretty, but every loan seems to have someone for whom it works.
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Reply by MikeC/NY on 11/11/08 7:19pm
Msg #269479
What works for some people doesn't work for others. I can see situations where this would be a good deal.
Historically, real estate values have doubled every 10 years (the recent boom and bust cycle may throw a wrench in that, but values are returning to where they SHOULD be according to historical trends, so maybe not). Obviously, this is not a good deal for anyone planning to sell within the next 5-10 years because of the penalties involved, but if they're planning to stay it could be a very sweet deal - current equity is preserved and the lender is taking all the risk. When they finally sell they'll give up a significant portion of the appreciation, but they had the use of that money interest-free for all those years.
As the saying goes, your mileage may vary - it will work for some but could be a disaster for others. People need to go into these things with their eyes wide open, fully informed.
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