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Saw this news release today on a report on reverse mortgages. Thought some might be interested. Here's a snip. There is a link to the full report in the article:
"As the market for reverse mortgages grows, concerns are mounting that an increasing number of seniors are being misled into signing up for a complicated financial product that may squander their equity prematurely or put them at risk for losing their homes. In a new report released today, advocates for consumers and seniors are calling for stricter oversight of the reverse mortgage market and new consumer protections for borrowers. 'Reverse mortgages are a very risky deal for borrowers who don't understand the complicated terms of the loan and how quickly fees and interest charges can add up,' said Norma Garcia, senior staff attorney for Consumers Union, the nonprofit publisher of Consumer Reports. 'Reverse mortgages should only be a last resort for seniors who want to stay in their homes and have no other alternatives to supplement their income.'"
"Seniors are particularly vulnerable to misleading marketing: Recent research has indicated that seniors are particularly susceptible to fraudulent marketing. University of Iowa researchers concluded that 35-40 percent of elders studied had impaired decision making abilities that made them especially vulnerable to misleading advertising."
What would they like to do? Appoint a guardian for everyone over 60? Nuts to them. I'll live my own life and make my own decisions.
Reverse mortgage defaults are triggering foreclosures: HUD's Office of the Inspector General found that an increasing number of borrowers had defaulted because they had not paid their taxes or homeowners insurance premiums as required. As of March 2010, 20,631 reverse mortgage loans were in default. Reverse mortgages are likely to generate an even greater number of foreclosures when borrowers die and their heirs are not able to take possession of the home by paying off the mortgage.
I do understand where where they are getting there facts from. when a borrower dies and their heirs either can not afford to take over the home or do not want it the home is then sold on the open market not foreclosed on.
Protect non-borrowing spouses and tenants: Spouses and tenants whose names are not on the reverse mortgage loan should be notified about their limited rights to remain in the home after the borrower dies or permanently moves out of the home.
before any reverse mortgage can be completed the borrower and the non borrowing spouse must go through consumer credit counseling which is done by a third party. They go into detail about what the rights are of the non borrowing spouse and that they would have to move out after the the borrowing spouse passes away or they can buy the home.
Saw this news release today on a report on reverse mortgages. Thought some might be interested. Here's a snip. There is a link to the full report in the article:
"As the market for reverse mortgages grows, concerns are mounting that an increasing number of seniors are being misled into signing up for a complicated financial product that may squander their equity prematurely or put them at risk for losing their homes. In a new report released today, advocates for consumers and seniors are calling for stricter oversight of the reverse mortgage market and new consumer protections for borrowers. 'Reverse mortgages are a very risky deal for borrowers who don't understand the complicated terms of the loan and how quickly fees and interest charges can add up,' said Norma Garcia, senior staff attorney for Consumers Union, the nonprofit publisher of Consumer Reports. 'Reverse mortgages should only be a last resort for seniors who want to stay in their homes and have no other alternatives to supplement their income.'"
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Let's face it, mortgages, of any type, can be misused, misunderstood, abused, etc. by both borrowers and lenders.,,and at any age.
That is part of the reason
for the latest housing bust. I'm not sure I buy into the risky deal part of
the article although I understand that perhaps some elders "could" make a decision without fully understanding the circumstances (as could a younger person). My mom, at 80, took out a reverse mortgage about 6 years ago and it has allowed her to live a much easier life. Her income went from $500 mo. in SS to $1500 (SS and mortg. income). She also has a "home improvement" account she can use to fix up her old house. She has no plans of moving (a big factor in deciding if you want to go reverse mortg.) and is healthy (another big factor).
When the time comes, my brother and I have two years to sell the house and pay back the mortgage company with the profits or qualify for a separate mortgage and take over what is owed in the form of a new loan. If we can't/won"t do that, the mortgage company will sell the house and after they are paid back, the difference (less commission) will be distributed to us as her heirs.
If there are no $$...do we care? Nope. The extra income has allowed her to live better, she has been able to travel a little, visit her kids, etc. We are happy she did it. It's her house. I hope she spends her last $$ with her last breathe.
I argree there is no risk to a reverse mortgage. using the FHA insured reverse even if the property ends up valued at less that what is owed there is no recourse to the heirs. As far as ownership of the home - it doesn't change, many folks are misled through the media that the lender ownes their home however it is no diffiernt that a regular mortgage loan where the lender has no ownership but only holds a deed of trust.
As far as foreclosures are concern, a lender can not forclose on a reverse as there are no payments.
I argree there is no risk to a reverse mortgage. using the FHA insured reverse even if the property ends up valued at less that what is owed there is no recourse to the heirs. As far as ownership of the home - it doesn't change, many folks are misled through the media that the lender ownes their home however it is no diffiernt that a regular mortgage loan where the lender has no ownership but only holds a deed of trust.
As far as foreclosures are concern, a lender can not forclose on a reverse as there are no payments.
A lender can foreclose on a reverse if you do not pay your taxes home owners insurance or keep up with maintenance
A lender can foreclose on a reverse if you do not pay your taxes home owners insurance or keep up with maintenance
The same terms exist with the traditional Forward Mortgage. With ANY mortgage, the Lender can foreclose if you don't pay taxes, insurance, or take care of your property.
Let's face it, mortgages, of any type, can be misused, misunderstood, abused, etc. by both borrowers and lenders.,,and at any age.
That is part of the reason
for the latest housing bust. I'm not sure I buy into the risky deal part of
the article although I understand that perhaps some elders "could" make a decision without fully understanding the circumstances (as could a younger person). My mom, at 80, took out a reverse mortgage about 6 years ago and it has allowed her to live a much easier life. Her income went from $500 mo. in SS to $1500 (SS and mortg. income). She also has a "home improvement" account she can use to fix up her old house. She has no plans of moving (a big factor in deciding if you want to go reverse mortg.) and is healthy (another big factor).
When the time comes, my brother and I have two years to sell the house and pay back the mortgage company with the profits or qualify for a separate mortgage and take over what is owed in the form of a new loan. If we can't/won"t do that, the mortgage company will sell the house and after they are paid back, the difference (less commission) will be distributed to us as her heirs.
If there are no $$...do we care? Nope. The extra income has allowed her to live better, she has been able to travel a little, visit her kids, etc. We are happy she did it. It's her house. I hope she spends her last $$ with her last breathe.
When I first saw reverse mortgages I thought that it was a scheme, but you explain it quite well. Everyone who does a reverse should take all parties into the process.
Quote:
Originally Posted by bookersnook
A lender can foreclose on a reverse if you do not pay your taxes home owners insurance or keep up with maintenance
Good point but it is as Rainmand pointed out it is the same as any mortgage.
Quote:
Originally Posted by rainmand
The same terms exist with the traditional Forward Mortgage. With ANY mortgage, the Lender can foreclose if you don't pay taxes, insurance, or take care of your property.
So true let your property fall into disrepair and see what happens.
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Reverse Mortgage corrections
