Reverse mortgage.

[STEVE COOPER]

Is there anything different involved with doing an appraisal for a reverse mortgage vs a conventional loan?

 

[CANative]

Life expectancy of the borrower?

 

[CCAAMO]

Is there anything different involved with doing an appraisal for a reverse mortgage vs a conventional loan?

Not that I've come across. The SOW always ask for the current fair market value of the home. The amount of the loan is based on the equity in the home and the age and estimated life expectancy of the owner, which is the underwriter's problem not yours.

 

[Chris Colston]

http://appraisersforum.com/showthread.php?t=128156&highlight=reverse+mortgage

Here's a recent discussion asking the same question.

Are you FHA approved?

 

[Brad Ellis]

Steve,

No. The loan amount is of course based upon life expectancy, eqwuity, etc. and it is all formulized.

Just do this as if it were a standard FHA appraisal. There is only one cash investor for these presently and they buy less than 10% of these. All the rest are HECMs (Home Equity Conversion Mortgages) and are injsured by HUD.

Brad

 

[Urbanz]

I don't touch them. In my book it is another way for private enterprise to bury their hands in the pockets of senile seniors. Reverse mortgages can be a rip off if you read the fine print. If they need money and are fiscally responsible, they should just get a cash out refi, IMHO.

The appraisal approach should be the same as any other deal.

 

[lenfishman]

Mark,

The problem with a cash-out refi is the senior still has a loan payment. A reverse mortgage has no payments.

Are there some issues with a reverse mortgage... Sure! But - take a look at the borrowers and realize they can have a better life additional tax free income.

Len

 

[TJSum]

Just from what I heard from the honest loan officers that I deal with, they say for the most part reverse mortgages are "bad deals" for the borrowers. The upfront costs are way out of line. They told me it is better for the borrower just to do a cash out refi and use the extra proceeds to pay the monthly mortgage, the costs and interest rates are lower. Just what I heard, this goes beyond an appraiser's expertise

 

[Riick]

Lender takes Title

I don't touch them. In my book it is another way for private enterprise to bury their hands in the pockets of senile seniors. Reverse mortgages can be a rip off if you read the fine print. If they need money and are fiscally responsible, they should just get a cash out refi, IMHO.

The appraisal approach should be the same as any other deal.

Don't know loans are now written the same way, but I have been to
3-4 where the Lender took posession of the property
- Either after death, or as the owner moved out of house to Nursing Home or Asisted Living.

Although there may have been a good bit of equity, the Heirs / Relatives were unable to retain the house and/or the equity.
The Contract said: In such an event the Lender takes Title. Period.

-- NOT a good deal for the owner, unless he/she outlives the initial equity and any appreciation due to time/inflation.
.

 

[Richard Carlsen]

Everybody seems to be telling you the pros and cons of the reverse mortgages. That is not really our concern. If you allow yourself to get down on reverse mortgages or any other lending program, you may be in violation of Cert 16 which states that the report is your own "unbiased" opinions, analysis and conclusions. Going into an appraisal with a chip on your shoulder against a reverse mortgage loan or any other element with regards to the lending situation, IMNSHO, disqualifies your from doing the appraisal and reporting it.

To answer your questions, reverse mortgage loans do not require anything different than a typical refi loan. However, the UW's are looking more closely at condition, remaining economic life and long terms stability in the security. I've done quite a few of these and interestingly enough, the properties that I've appraised tend to be above average in terms of condition and maintenance than one would normally expect to find. I personally like appraising reverse mortgage loans as the HO's are not going through a divorce or are not in financial trouble to begin with. I've had many a pleasant cup of coffee and chat with an HO after finishing my inspection.