Be Careful of the Reverse Mortgage Info Messenger
A realtor called me the other day. I was marketing the new reverse mortgage purchase money available after the first of the year.
She was sincerely interested in the program, but first decided to vent with an amazing story of pain, agony and just downright horror relating to the reverse mortgage.
First things first... The rule is you must complete this article. You can't just read what happened and then stop before I can explain. We can't have you running about telling everyone else how horrible the reverse mortgage is.
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)
It's a bit of a rareity but the home was valued less than the mortgage amount. It can happen with drastically falling values. Naturally, when her father passed away the mortgage company called the entire note due.
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.
Did this happen? I seriously doubt it. The reason is reverse mortgages are known as non-recourse loans. This means in the circumstance of the FOAFOAR the mortgage company cannot come after the heirs for the difference.
In the circumstance of a deficiency or negative equity the borrower or estate conduct the sale of the property as follows....
A realtor will be hired to market the property at a fair market value. Yes, the bank will want to know this and will check comparable sold properties to be sure. The house will sell, and the bank will be repaid the sale price minus 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.
A bunch of folklore is flying about concerning the reverse mortgage. You may have a financial obstacle in need of an answer. The reverse mortgage may or may not be a great tool for you. Make sure you have real facts at your disposal before making a decision.
She was sincerely interested in the program, but first decided to vent with an amazing story of pain, agony and just downright horror relating to the reverse mortgage.
First things first... The rule is you must complete this article. You can't just read what happened and then stop before I can explain. We can't have you running about telling everyone else how horrible the reverse mortgage is.
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)
It's a bit of a rareity but the home was valued less than the mortgage amount. It can happen with drastically falling values. Naturally, when her father passed away the mortgage company called the entire note due.
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.
Did this happen? I seriously doubt it. The reason is reverse mortgages are known as non-recourse loans. This means in the circumstance of the FOAFOAR the mortgage company cannot come after the heirs for the difference.
In the circumstance of a deficiency or negative equity the borrower or estate conduct the sale of the property as follows....
A realtor will be hired to market the property at a fair market value. Yes, the bank will want to know this and will check comparable sold properties to be sure. The house will sell, and the bank will be repaid the sale price minus 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.
A bunch of folklore is flying about concerning the reverse mortgage. You may have a financial obstacle in need of an answer. The reverse mortgage may or may not be a great tool for you. Make sure you have real facts at your disposal before making a decision.
About the Author:
Click here for indepth knowledge about the reverse mortgage in Texas and elsewhere. For pure reverse mortgage education tryTexas Reverse Mortgage Public Knowlegdge Center
posted by Debt Consolidation Loan at
5:18 AM
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