Posted by anotaryinva on 7/25/13 10:45am
Msg #477998

Reverse Mortgages

I thought I read a post (if I did I can't find it now) that some of you do not do rm's. I don't normally but got a call for one and thought why not, I'm not that busy. Saw these terms on the HUD and was a little shocked, should I be or is this perfectly normal?

[] No. [x] Yes, it can rise to a maximum of 12.941%. The first change will
be on 10/1/2013 and can change again every month after 10/1/2013 . Every
change date, your interest rate can increase or decrease by 10.00%. Over the
life of the loan, your interest rate is guaranteed to never be lower than
2.750% or higher than 12.941%.

Reply by ME/NJ on 7/25/13 10:51am
Msg #478001

Yes RM interest rate changes every month, there should be a set max rate, did one yesterday and max rate was 12.61 or 12.91%

Intro rate was 2.75 with APR of 2.95% AAG I do 3-4 a month. With the housing market in my area most people won't be able to get the home back within 5-7 years unless they hit the lottery.

All numbers are based on a home going up in value, but in the last 3 years in my area they have gone down only in the last six months have they remained stable.

Reply by NJ_Notary on 7/25/13 1:42pm
Msg #478018

I couldnt agree more ME/NJ. I have seen a slight increase in prices in NNJ but nowhere near anything to write home about. In SNJ I am seeing the DOM for resales decrease slightly as well - again a notice, but nothing to write home about yet. I think we are just scratching the surface of being able to possibly see the light at the end of the tunnel or as Simon Cowell once said "tickling the outside corner of the box." Until we get the backlog of foreclosures out of the judicial system and on the market I dont think we are going to make as much progress as other states are doing right now. Like many other things New Jersey is one of the last on the wagon.

I also do a good amount of RMs. Have any of your borrowers utilized the funds as an investment vehicle? I had two recently that did that - without the cashout. Although both were independently wealthy, both were very savy in their observation of utlizing it as investment vehicle (also made sense for their particular needs/situation). Curious if others have had their borrowers doing the same.

Reply by ME/NJ on 7/25/13 2:07pm
Msg #478020

Can't answer for other companies but AAG has two forms that forbid any funds from cash out to be used for investments or insurance annuities that BO must sign.

Reply by MW/VA on 7/25/13 7:50pm
Msg #478062

A correction on this issue of how they use the funds. It's

their money & no co. can truly control what they do with it. The whole point of not using it for an annuity is that there are fees for an annuity, and fees for the RM. Paying double fees wouldn't make any sense. Also, it has to be made clear that the co. underwriting the RM didn't do so to ge the borrowers to purchase an insurance product like an annuity. There was a scam going around a few years ago that has unsuspecting seniors doing just that. It was really designed as a scam to get all their equity.

Reply by Lee/AR on 7/25/13 12:39pm
Msg #478011

While they appear to be horrendous...Yep...normal. And they do have their place in the scheme of things. If doing an RM, the Bs should never plan on moving or getting married or bad things are gonna happen.

Reply by anotaryinva on 7/25/13 4:13pm
Msg #478037

Thanks everyone, I guess I was alittle bit shocked when I saw monthly rate changes and how high it got potentially go. It looks like they aren't taking any cash out, paying off their current mortgage, they have about 60% equity.