Folklore and the Reverse Mortgage
I received a phone call from a local real estate professional. She called in response to an ad I placed detailing how seniors can buy a home using the reverse mortgage to fund the purchase.
The realtor lady showed interest in the purchase program, but before getting needed answers, she decided to go into a long drawn-out story about a person wronged by a reverse mortgage company.
In efforts to stop the rampant spread of misinformation, falsehoods, mythology and every other "ology" you must read this entire article. You can't read the next four or five paragraphs, stop, and tell everyone you know the painful effects of the reverse mortgage.
The real estate agent had a friend, who had a friend, who had a father (Strange how rumours get started) who obtained a reverse mortgage on his home. The father passed away and the house willed to the FOAFOAR (which is much easier than saying Friend Of A Friend Of A Real estate agent)
Well, more money was owed to the lender, at the time of his death, than the home was worth. According to the realtor the mortgage company required repayment of the entire amount owed.
The property eventually sold to repay a portion of the money owed the lender. The lender forced the FOAFOAR to pay the remaining balance of forty-thousand-dollars.
Is this story possible. I suppose so, but it is highly unlikely. FHA makes up the rules for lenders in the reverse mortgage business. One of the rules states that a lender cannot force the borrower or family to make up the difference if there is a deficiency. Thus the term "non-recourse" is associated with reverse mortgages.
If a deficiency exists at the time of repayment of the reverse mortgage, either the borrower or heirs go through the same drill.
The mortgage company will require a real estate agent to list and market the property for sale. In the process the realtor will furnish comparable properties so the mortgage company knows the property will be sold at a fair market value. Eventually the home is sold and the lender is repaid the sale price less closing costs.
Per FHA rules this net amount is what the reverse mortgage lender can get from the borrower or heirs. It can't get the remaining balance, if one exists. It's not a great deal for the lender. It must write off the difference as a loss.
This is one of several myths flying about regarding the reverse mortgage. The reverse mortgage may be a strong tool for you to utilize, or a poor choice given your circumstance. But don't assume you know until you really know. Call a professional or two first.
The realtor lady showed interest in the purchase program, but before getting needed answers, she decided to go into a long drawn-out story about a person wronged by a reverse mortgage company.
In efforts to stop the rampant spread of misinformation, falsehoods, mythology and every other "ology" you must read this entire article. You can't read the next four or five paragraphs, stop, and tell everyone you know the painful effects of the reverse mortgage.
The real estate agent had a friend, who had a friend, who had a father (Strange how rumours get started) who obtained a reverse mortgage on his home. The father passed away and the house willed to the FOAFOAR (which is much easier than saying Friend Of A Friend Of A Real estate agent)
Well, more money was owed to the lender, at the time of his death, than the home was worth. According to the realtor the mortgage company required repayment of the entire amount owed.
The property eventually sold to repay a portion of the money owed the lender. The lender forced the FOAFOAR to pay the remaining balance of forty-thousand-dollars.
Is this story possible. I suppose so, but it is highly unlikely. FHA makes up the rules for lenders in the reverse mortgage business. One of the rules states that a lender cannot force the borrower or family to make up the difference if there is a deficiency. Thus the term "non-recourse" is associated with reverse mortgages.
If a deficiency exists at the time of repayment of the reverse mortgage, either the borrower or heirs go through the same drill.
The mortgage company will require a real estate agent to list and market the property for sale. In the process the realtor will furnish comparable properties so the mortgage company knows the property will be sold at a fair market value. Eventually the home is sold and the lender is repaid the sale price less closing costs.
Per FHA rules this net amount is what the reverse mortgage lender can get from the borrower or heirs. It can't get the remaining balance, if one exists. It's not a great deal for the lender. It must write off the difference as a loss.
This is one of several myths flying about regarding the reverse mortgage. The reverse mortgage may be a strong tool for you to utilize, or a poor choice given your circumstance. But don't assume you know until you really know. Call a professional or two first.
About the Author:
Get 6 more myths revealed plus five monster blunders at the Reverse Mortgage Texas Guide. To learn some great questions to ask try 5 big league inquiries for your Texas Reverse Mortgage lender.
posted by Debt Consolidation Loan at
10:42 AM
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