What happens when a senior has equity in his home but can’t qualify for a reverse mortgage? A traditional line of credit you may say? But what if you have no real means of paying the HELOC back? Then you share a situation with 64 year old John Thiel.
“He didn’t qualify for a reverse mortgage because he didn’t have enough equity in his property, because the market value went down and because from one year to the next, his loan for $112,000 jumped to $121,000 for the payoff,” Dunbar said.
Dunbar said the value of Thiel’s home dropped 32 percent from last year, when he applied for a refinance loan in May 2007. The lower market value and Thiel’s age means the most he can get in a reverse mortgage loan is $70,406.
“In his situation, he could lose his house. Unless he can come up with $650 on a monthly basis, and that’s all but roughly $240 of his income,” Dunbar said.
Thiel’s story was told in the April 17 edition of the Record-Bee. He said despite community response to his story, not a drop of money has landed in a WestAmerica bank account named “Save our home” that he opened. Lake County Bee Record.
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Recently Featured in the Yuma Sun, home to many retirees in Arizona and the country overall, one reader gives their feedback on a recent article that the Sun wrote that was critical of reverse mortgages.
The many choices of information sources these days tends to confuse us more and more. It is no wonder that so many of us don’t believe or trust anyone. Choice is not always a benefit.
The recent article on reverse mortgages in The Sun is a case in point.
Several points made in the article are just plain false.
1. Reverse mortgages “are very complicated.” Not so. An RM is simply another kind of mortgage where you are able to use the equity out of your house to supply money in your retirement. The difference is that you don’t make payments on a reverse mortgage in your lifetime and the lender is paid for his investment after you are deceased. Full Story.
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Although competition is big for the senior reverse mortgage industry, there are still companies that are finding ways to squeeze more fees from their senior clientèle. I strongly believe companies that are looking to corner the market such as Bank of America and their soon to be acquired subsidiary Countrywide Home Loans, will find their numbers higher as they look to constantly lower rates in an effort to make their money from servicing and creating banking relationships. The Chicago Tribune, writes that
A reverse mortgage can be a financial lifeline, but consumer advocates are worried that some people are taking them out with too many strings attached.
Some lenders inappropriately push older homeowners to the products or sell them additional high-cost annuities, a new AARP survey claims. And some experts say (more…)
]]>Ronald Marron, a San Diego attorney who represents three elderly women who bought Financial Freedom’s reverse mortgages and were also sold deferred annuities from other companies, called the financial products “an equity stripping scheme” and “a liquidity time bomb.” Marron’s client, Ernestine Boach sued Financial Freedom in San Diego County Superior Court.
Financial Freedom, a subsidiary of Indymac Bank, denies it abused clients and issued written testimony to the Senate Special Committee on Aging contending its products enhance the lives of seniors “by providing financial security and independence.”
Click here to see Financial Freedom’s testimony.
Click here to see Marron’s press release.
Reverse mortgages enable homeowners to get a steady stream of income from their home equity. Marron said his clients were charged high fees for the deferred annuities, which also kept the cash from the reverse mortgages out of reach for several years. His clients would have been forced to pay penalties to cash in the annuities before their maturity date, Marron said.
U.S. Sen. Claire McCaskill, D-Mo., is planning to introduce legislation to protect consumers of reverse mortgages, which have become increasingly popular among retirees.
The Special Committee on Aging will hear testimony from representatives of the Department of Housing and Urban Development, the American Association of Retired Persons and others with knowledge of reverse mortgages.
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If you are looking into reverse mortgages, there are several things that you can do to protect yourself from falling victim to these types of scams.
Speak with a HUD approved reverse mortgage counselor. The counselor will help you understand reverse mortgages and help you evaluate your situation.
Obtain several offers from (more…)
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Local banks and mortgage companies are pushing a unique mortgage loan that sounds more like you just won the lottery.
Instead of making monthly payments, you receive monthly payments and you don’t have to pay it back until you sell you home. It’s called a reverse mortgage.
But proceed with caution.
Reverse mortgages have been around for some time, but they’re being heavily market right now, in part because of all the long-time homeowners who are sitting on a gold mine in equity.
The loans are marketed to homeowners who may have limited income, but a wealth of equity in their homes. You must be at least 62 years old.
Here’s how it works.
Say you have $100,000 in equity in your home.
You can take out $50,000 - or any amount you choose - and pay nothing back for as long as you live in the house.
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