Reverse Mortgage Loan Blog

When Patricia Sacks’ companion of 17 years asked her to sign a reverse mortgage, she had no idea he would nearly wipe her out.

But he did, she discovered after he died in May.

Now she’s suing the title company and a bank involved in the loan in an attempt to recoup the money.

She claims that her late boyfriend, Kenneth Rayburn, withdrew large amounts of money from a line of credit and deposited it into a bank account he had with his son.

Sacks, 72, contends that violates a rule that states all persons named on the mortgage also must be named on the bank account in which funds are deposited.

The couple met through friends and enjoyed each other’s company.

“He was a good guy,” Sacks said.

In 1994, he bought the 1,515-square-foot, single-story house with a pool. She paid him her share in payments and it was paid off several years ago, she said.

In 2006, Rayburn approached Sacks, a substitute teacher at Safety Harbor Elementary School, and asked her to sign reverse mortgage papers. Before that, the two had always kept their finances separate.

“I was not interested,” she said. “I didn’t plan to use the monies. He felt he wanted some extra income.”

According to American Association of Retired Persons, reverse mortgages give homeowners 62 and older the opportunity to borrow against the equity in their homes. Borrowers make no monthly payments during the term of the mortgage and stay in their homes. Even if they use up the value of the mortgage, they cannot be forced out.

When they leave permanently — through death or by moving — the home is sold and the money is used to pay off the mortgage company first, with the rest going to the estate.

Don Redfoot, a policy adviser at AARP’s Public Policy Institute, said reverse mortgages aren’t bad products, but seniors should still be wary.

“A reverse mortgage is an expensive product and it is not for everyone,” he said by e-mail. “The fees are high, and the loan will cost more than a traditional loan. For that reason, consumers should think twice before using reverse mortgages for luxury items like that dream vacation.”

Sacks gave in to Rayburn thinking he would take a few thousand dollars here and there. She noticed he started buying things like a new car, a Honda CR-V, but still thought all was well.

When Rayburn died of pancreatic cancer at age 76, she discovered he had borrowed about $101,000, more than half of it going to his grown children whom she believes had nothing to do with his actions.

She filed a lawsuit in July against Harmony Title Services and Bank of America, alleging a rule that both parties be on a bank account where money was transferred was not followed.

“They didn’t follow the mortgage agreement,” said her lawyer Brandon Bellew.

Sacks is seeking $138,000 — the money Rayburn received — plus interest.

As it stands now, should Sacks, who has osteoporosis and arthritis, fall or become sick and have to relocate, she would be forced to pay back the $138,000.

“You never know what tomorrow brings,” she said. “Now I’m left very, very vulnerable.”

Sacks said Rayburn “was not a stupid man” and must have known he was leaving her in a financial bind.

But she said she also blames herself for “not minding the store” and wants to warn others about the pitfalls of reverse mortgages.

“Somebody has to pay at the end,” she said.

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