Reverse Mortgage: The Good, Bad and the Ugly.
As someone who prides himself in the mortgage advice I give out on a daily basis, I was alarmed to find some negative articles within the Reverse Mortgage realm. Over the weekend when I actually have some time to myself to relax (HaHa!), I decided to google on my iphone the key words Reverse Mortgage. What I found almost right out of the gate was not what I had hoped. The articles that were popping up on my screen as recently as October 15, 2012 all the way up to present day of October 21, 2012 were those of customer dissatisfaction. These were not here in Florida where we are counseling home owners on reverse mortgages but in other states such as Utah, NY, etc. What I was reading was that of borrowers horrifying situations about how they were left in a bind because of certain structuring of a reverse mortgages they took out as far back as 2008. Now keep in mind that a Reverse Mortgage, like any other loan program is not dangerous at all. I just want to set the record completely straight on this right now. The analogy I like to use (and this might ruffle some feathers so do not mean to offend) is that of guns. Guns themselves are not dangerous. They can be used for good. However, if you used incorrectly or improperly, they can reek havoc. The same can be said regarding a Reverse Mortgage. It seems, per the reports, that borrowers were coerced or counseled to leave the youngest borrower off of the application. What this did was give the advantage to the loan officer or broker to make more money on the transaction. By leaving the youngest borrower off the application it created a scenario in which the oldest and only borrower was able to qualify for more of a lump sum AND in turn the LO was able to make more of a commission. Later down the road in these specific examples the husband or the only one on the application and title passed away leaving the wife who had been advised to stay off the title for qualifying purposes virtually homeless because the only one tied to the property legally is now gone and the bank is now calling the loan due after the 12 month grace period.
I was really sad to read these articles. Sad because Reverse Mortgages are a great loan program that help hundreds of thousands of seniors with some sort of financial need. The problem is there are still these type of loan officers out there who like in the sub prime era are trolling and looking for those to misinform for their own financial gain. This shows me that the mortgage industry still needs to do some cleansing. It’s been a long slow process and hopefully we can get to where the good loan officers out number the bad ones.
This is my chance to voice my opinion, to be completely transparent on what is out there and for seniors who have worked hard all their lives to be cautious. Look for those of us who want to advise you properly. To tell you if this program is not for you or how it can benefit you. And above all advise and structure a Reverse Mortgage to tailor YOUR needs. Not the loan officer or broker. In doing so you can do your part in eliminating the discomfort.
Green House Mortgage prides itself in hiring only the best upstanding citizens and licensed mortgage loan originators. To learn more about us or to learn more to see if a reverse mortgage is right for you or someone you know, please contact us for a FREE consultation.
