Letter: Be wary of reverse mortgages
- Posted by admin on October 24th, 2007 filed in Reverse Mortgage Info
If the government is willing to insure and ensure any reverse mortgage loan with a financial mortgage lender will be paid off so that elderly, needy folks can remain in their homes, why do we need a third party in on the deal? Specifically, reverse mortgage firms that are not the financial backers. Those firms send you their pretty brochures and tempt you with what you can do with all that equity you can receive in your house - take a trip, buy that car you’ve always wanted , and no questions asked.
They qualify you for the loan, sure they will. It’s to their advantage to do so. However, the financial mortgage holders - the banks or investors - will ask you plenty of questions about your income, your creditors, your last income tax filing. If those financial mortgage holders qualify you but you’ve signed up with that reverse mortgage firm, which is not the financial backer, that firm is first in line to take a slice of your equity in your home. Forget the trip, the car - it’s a big chunk they take, plus they want a monthly fee for the duration of the loan.
If the financial mortgage lender does not qualify you for a loan you still pay the reverse mortgage firm that you signed up with. You pay an appraiser’s fee, a counselor’s fee and other tagged-on expenses. In my opinion, those reverse mortgage firms that are not the financial providers are a scam.
- Kathleen E. Carreau, Magalia
Found here.
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October 24th, 2007 at 11:22 am
I read this letter which was posted in the online version of the Chico, CA newspaper this morning. Unfortunately, it left no way to post a response directly.
There is so much misinformation out there relating to reverse mortgages, and people have stirred up emotions based on half-truths, or worse…non-truths. I’m sure most reverse mortgage professionals share my experience in spending a great deal of time informing people of what a reverse mortgage isn’t, as much as sharing what it is. In this case, the letter writer believes that the government insurance is to guarantee to the borrower that the lender will keep their end of the deal. She also states that monthly fees will be required. Of course, all of this is completely false.
We have an uphill battle when misinformation like this is being distributed without the ability to set the record straight directly.