Insight into Reverse Mtg. deals, please

[Workbox]

I am not sure if any have brought this up. But sometimes when I am doing these RM's, I can tell that they might be limited on funds. It really goes through my mind, but I just do my job and do my best to do a good job in case any question arise on the appraisal (so far, so good).

I wish the MB/LO would pay for the appraisals instead of the elderly with limited income.

 

[JSmith43]

I wish the MB/LO would pay for the appraisals instead of the elderly with limited income.

I bet there are quite a few LO's that would like to wish the same of appraisers, some just as sincerely. LO's have real families, real jobs, real expenses. Most can't survive a year or two in the business.

It is almost as bad as real estate sales. 80% -90%will be doing something else 2 years from their start, and that is during average markets.

More precisely to your point, I really think the typical RM is not a scammer. They live on referrals and scammers are one shot experts can't easily survive without referrals. A lot of the situations tug at your heart. LO's know more than they want to know all too often.

 

[Rick Neighbors]

RM Question

Mentor,

You seem to have a good grasp of RM's, so I have a question.

Recently I did an appraisal for an FHA Reverse Mortgage, double wide on 3 acres. Nice home, Mrs was alone, husband had died last year.

I finished, I thought, the lender kept asking for more comps, trying to get me to make changes to rural address issues, wanting a copy of the water company's certification, BS like that.

I charged an extra $100 for all the extra work, memos to explain again what I said in the appraisal, etc. Then it took me 2 months to get paid.

In coresponding with the lender trying to get paid, they ended up sending me a copy of the closing statement, which I never get.

This was a nice place, and ended up appraising for apx $90K. Per the closing statement, closing cost was $9,145.09, and the line that says " Gross amount due from Borrower" is $38,810.67.

I don't know how much she got. The $9K included my fee, attorney fees, backhoe company fees, etc. The company that hired me to do the appraisal made $2,000. And they had the audacity to ask me to waive the $100 I charged for the extra work!

I appreciate your input.

Rick

 

[JSmith43]

Mentor,

You seem to have a good grasp of RM's, so I have a question.

Recently I did an appraisal for an FHA Reverse Mortgage, double wide on 3 acres. Nice home, Mrs was alone, husband had died last year.

I finished, I thought, the lender kept asking for more comps, trying to get me to make changes to rural address issues, wanting a copy of the water company's certification, BS like that.

I charged an extra $100 for all the extra work, memos to explain again what I said in the appraisal, etc. Then it took me 2 months to get paid.

In coresponding with the lender trying to get paid, they ended up sending me a copy of the closing statement, which I never get.

This was a nice place, and ended up appraising for apx $90K. Per the closing statement, closing cost was $9,145.09, and the line that says " Gross amount due from Borrower" is $38,810.67.

I don't know how much she got. The $9K included my fee, attorney fees, backhoe company fees, etc. The company that hired me to do the appraisal made $2,000. And they had the audacity to ask me to waive the $100 I charged for the extra work!

I appreciate your input.

Rick

Rick,

White out the name & address & send me the closing statement. I'll either figure it out or get one of the active specialists to look at it. I'd need to know the appraised value to make sense out of all this.

Origination fee is normally 2 discount points (or $2,000 minimum); it is a double wide MH I assume, so it needed an engineering report on the foundation. $600 or so, maybe more.

Had some supports been removed that needed to be replaced, etc? Maybe that is in there. It sounds a bit steep, but I don't know the appraised value & a few other things. I never did Texas loans since they have funky rules, primarily on refinances, so I don't know the typical closing costs there.

Gross amount due from borrower??? Sometimes people RM a home and bring cash to the table. Was it ($38,000) gross amount due borrower? If so, they get the $38,000.

I think it would be very worthwhile for appraisers that do RM appraisals to have a reasonable understanding of typical costs and the variety of programs out there. If FHA limits for RM don't increase soon, custom conventional loan products will spring up like mushrooms on a dead tree root after a rain.

I had a fair amount of training a year ago, but changed companies shortly thereafter and never did a single RM at the old place. My knowledge is no where near deep enough at this point to be considered a RM expert.

 

[Rufus]

I messed up something in my quoting. I'll try again.

/2nd Edit, my fault, I was mixed up on who said what.

Move along, nothing to see here.

 

[Rick Neighbors]

Rm

Mentor,

I will PM you for your fax, or I guess I can try to scan the closing statement and email it.

Appraised for $90,000+/- and it is a Dbl Wide MFG with an approved foundation with Engineers Report I referenced in appraisal.

Had some septic issues. That was the Backhoe charge.

I was just agravated that they asked me to reconsider my extra $100 charge for all the extra work. I charged $500 for the initial appraisal, rural FHA RM, etc. $50 of that was fuel charge that I have started charging.

I couldn't believe that the RM Company made $2,000 on the deal!

Rick

 

[Riick]

If you want to think SAD, try going out to a house for the Lender, after the owner went into a nursing home, or departed.

Don't know how they are writing RMs today, but a few years ago, if you stopped residing in the home,
or died, the Lender went into possession, and the Heirs had NOTHING to say about it.
During the Boom, there was often a ton of equity.
Which went to the Bank; Owner, Heirs, out in the cold.

Have listened to radio financial discussions about these mortgages,
some say the owner could do just as well with a new mortgage,
plus If I remember correctly, a renewable term life policy.
I was going to put down the particulars, but I don't remember them well enough.

?????????????????????????????????????
---- Something like the following, but I probably have it twisted somewhere ----
Pay the mortgage monthly with the proceeds of the loan,
and take zzz dollars out per month for living expenses;
if you "win" your bet with the life insurance company (die early)
the house is paid off with insurance proceeds, and heirs get house
+ any balance.

If you "lose" you bet with insurance co., and live long & healthy,
at some key equity point you sell the house, pay off the mortgage,
and move where you like, probably with some cash in hand with normal appreciation.
??????????????????????????????????

 

[JSmith43]

Riick, perhaps you are mixing equity sharing programs with RM?

This article has it's own biases but hits on the differences. http://www.prlog.org/10059336-reverse-mortgages-vs-equity-sharing-programs-separating-fact-from-fiction.html

Riick said:

During the Boom, there was often a ton of equity.
Which went to the Bank; Owner, Heirs, out in the cold.

That isn't the case with HECM RM. If there is equity, it goes to the estate. If the home sells for less than the outstanding loan balance, the only claim of the lender is 1. the home sales proceeds, 2. the HUD insurance fund if the proceeds are short.

It is obvious why there is a higher up front MI charge than for a 203B FHA loan. When Rick N faxes me the HUD, I expect to find a $2,000 orig fee (standard minimum fee) and financed up front FHA MI among the closing costs.

Every appraiser that does FHA RM appraisals should have this basic background knowledge, straight from HUD: http://www.HUD.gov/offices/hsg/sfh/hecm/rmtopten.cfm

People getting a RM can be quite vulnerable and may absorb an attitude from an ill informed appraiser. They may talk your ear off. Having a few clues about the bigger picture, and I am sure most appraisers will do the right thing. It's not your job to poison or promote a program and an accidental poisoning by an uninformed appraiser is a real possibility.

 

[Rick Neighbors]

Rev Mort

Mentor,
I faxed you the redacted copy of the closing statement.

Just got back on here, and noticed I had a message from you.

Thanks,
Rick

 

[Pamela Crowley (Florida)]

Thank you Mentor. Great link that all appraisers should read.