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Old 06-12-2019, 03:32 PM
 
3,247 posts, read 845,371 times
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Quote:
Originally Posted by BBCjunkie View Post
I actually learned something new from the long texts and the included links: That a reverse mortgage servicer can commence foreclosure proceedings merely by virtue of the senior/borrower failing to respond to correspondence!

In other words the borrower can be completely current in paying property taxes and/or homeowners insurance but if they accidentally don't respond to a mailing (which could just as easily have gone astray whilst in the USPS system, as not ... I fairly regularly get mail in my street box that belongs to my neighbor, or a piece of mail sorted into my PO box that was supposed to go into an adjacent or one-digit-off box number) sent by the servicer.

Now that is scary.

My ex-FIL was legally blind and had a caretaker come in daily, plus one of his sons would stop by twice a month to pick up his (FIL's) mail and take care of whatever needed to be paid, etc. I'm sure there are plenty of seniors in similar situations, which means it'd be easy for the other person to accidentally not respond to a letter from the RM servicer either.

I can kind of see the logic (no response might mean the borrower has died) but as someone who used to work for a foreclosure attorney, it seems waaaay too easy for these reverse mortgages to end up in foreclosure.

Also 120 days is not nearly enough time for an heir to figure out what they can do with the house after the borrower dies. It should be 6 months, minimum.
I completely agree on that last point. I posted a link in a previous post, if you have the time.

My grandfather's death was in early September 2018, and my mother, who wanted to purchase the home, had 90 days. Through a sequence of events that could only be Hollywood movie-worthy, she began her mortgage application process within the 90 days. The fine print says CeLink can extend the deadline 3 months at a time, up to a maximum of 1 year, if there is an heir financing or a sale pending. It was a labyrinth of toll-free numbers, auto-attendants, and delayed correspondence on part of the RM company.

When it was all said and done, she obtained a non-conforming mortgage for the balance, and closing was completed almost a month after the initial deadline. Slowly but surely, she received notice that the loan had been satisfied and the lien was released.
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Old 06-12-2019, 03:39 PM
 
Location: Saint John, IN
11,043 posts, read 3,984,632 times
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Reverse mortgages are scams on seniors and should be illegal IMHO. Yes, OP next time post a link instead!
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Old 06-12-2019, 03:44 PM
 
Location: Southwest Washington State
21,848 posts, read 14,356,798 times
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Quote:
Originally Posted by CGab View Post
Reverse mortgages are scams on seniors and should be illegal IMHO. Yes, OP next time post a link instead!
If OP had posted a link, few of us would have read it. I think a summary of the article plus a link is the best approach.

I have always been suspicious of reverse mortgages. My mother sold her condo and the money was placed in CDs, during the time when interest rates were higher. The money was kept until she needed it for increasing care costs. That's what I would do if I had to. But if your property is of low value, selling might not get you the money you need to pay for late in life care. That's the nightmare. Good care is expensive, and even then, it might not be all that good.

We do have a safety net for this circumstance, but it is better to reserve savings for this event in our lives, should be live long enough to need it.
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Old 06-12-2019, 03:50 PM
 
Location: Idaho
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Initial thread post edited to conform to the City-Data Terms of Service.
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Last edited by volosong; 06-12-2019 at 04:02 PM..
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Old 06-12-2019, 04:11 PM
 
Location: northern New England
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Just curious, how much do you get with a reverse mortgage? I know it is nowhere near the value of the house. Say you had a house worth $100,000, what would you get with a RM?
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Old 06-12-2019, 04:27 PM
 
5,097 posts, read 2,484,007 times
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Quote:
Originally Posted by VTsnowbird View Post
Just curious, how much do you get with a reverse mortgage? I know it is nowhere near the value of the house. Say you had a house worth $100,000, what would you get with a RM?
Some numbers are mentioned in the article, but I didn't calculate the percent - guessing about 70% of value of property. However, when house prices went up, it was possible to take more money out of the property.
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Old 06-12-2019, 04:41 PM
 
3,247 posts, read 845,371 times
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Quote:
Originally Posted by VTsnowbird View Post
Just curious, how much do you get with a reverse mortgage? I know it is nowhere near the value of the house. Say you had a house worth $100,000, what would you get with a RM?
At the time this RM was originated in the SE USA (mid-2008), home value was approx. $150k, RM was about 2/3 of that. Balance over the next 10 years increased to approx. $140k while the home was appraised for $220k's in late 2018.

For those who are curious, "I wonder what the ______ is?"

Zestimate is just a hair over $150k but tax value was just revised in last 12 months to mid $190k's.
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Old 06-12-2019, 04:42 PM
 
71,502 posts, read 71,674,131 times
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Quote:
Originally Posted by VTsnowbird View Post
Just curious, how much do you get with a reverse mortgage? I know it is nowhere near the value of the house. Say you had a house worth $100,000, what would you get with a RM?
It depends on rates ...a 65 year old can get about 50% of the value at 4% but only 38% at 6% . Age and how you take payments also effect the amount ...a lump sum gets less then a payout via a credit line
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Old 06-12-2019, 07:06 PM
 
1,629 posts, read 561,428 times
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Quote:
Originally Posted by VTsnowbird View Post
Just curious, how much do you get with a reverse mortgage? I know it is nowhere near the value of the house. Say you had a house worth $100,000, what would you get with a RM?
According to one of the links in the OP, a common rule of thumb is that the maximum percentage you can get is calculated as the age of the borrower minus 12: Thus an 80 yr old borrower, minus 12 = 68 = maximum 68% of home's appraised value at the time. (There is a max of $726K for 2019)

So in your $100K example, the 80 year old applicant could not borrow more than $68K against the house.

Another link included this:

A reverse mortgage is a "non-recourse" loan, which means borrowers or their estates will never be obligated to pay the lender more than the loan balance or the current value of the home, whichever is less.

Which brings up an interesting scenario. Suppose 80-yr-old Mr Jones borrows $68K today with a 5% interest RM on that $100K house and lives to be 92. Unless my calculations are off (which is possible, lol) the loan balance after 12 years would be around $175K, right? According to the information quoted above, if the property is only worth, say, $150K twelve years from now, the lender would "lose" $25K because the maximum due is the lesser of the two values ($175K loan balance due vs. $150K property value.) Seems to me that RM lenders would not want to issue these in areas where property values don't have a good chance of increasing over time (i.e., economically depressed regions.) Or am I missing something?
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Old 06-12-2019, 08:32 PM
 
Location: Grove City, Ohio
10,129 posts, read 12,378,690 times
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I have always had a problem with Hollywood celebrities trying to sell me something. Show me something using their honest side persona, I never trusted them.
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