Reverse Mortgages, the next boom or does it just seem like it?

[Bobby Bucks]

Since things slowed down, the only area that has picked up for me is reverse mortgage assignments. The good part is the borrowers are almost always retired which means they’re home all day. The interest rate never seems to be a concern so they’re not switching lenders or talking about it and usually they’re pleasant and not pushy. I used to avoid reverse mortgage assignments other than REO closeouts, but there seem to be many more due to the graying of America. I recall some people being judgmental about the product saying it’s mostly sleazy lenders taking advantage of people, but I’ve noticed a big difference in the last year in the caliber of borrower. Two of them were financial people and said they ran the numbers and the reverse mortgage plan fit their long term needs and goals. Who am I to pass judgment on borrowers or lenders? I suppose you can say the same thing about any loan with B or C paper. Borrowing money with one’s home as equity seems to be an American past time. This golden advice is brought to you free of charge by your old pal Bucks and you’ll notice than unlike all the early morning appraisal email tips you receive daily, I haven’t told you what E & O policy you should buy, what software to use or what type of electronic dildo to use measuring houses, that’s entirely up to you.

 

[TC]

I'm partial to the Doc Johnson model.

 

[Mark K]

Odd are they use some of the $$ and they can continue to live in their existing home. Better than selling to down size and using virtually all of the proceeds to buy a small home, not to mention the hassle of moving. There's a tremendous amount of equity locked up in those homes and, used wisely, its not a bad idea. Spend it, let the heirs/kids fend for themselves. Not really that different than people that refi every few years to pay off credit cards, car loans, etc., using their home as an ATM. However, those days may be coming to an end.

I did it for my mom. After dad died she was trying to live on SS only, about $1,100/month so I made her the offer of a reverse mtg. since she owned the house free/clear. I had $$$ sent from my account to hers automatically every month. When she died, my rev. mtg was paid off at the closing of her home and then we three kids split the balance of the sales proceeds.

 

[Fernando]

It's nice to have reverse mortgage. I assume one doesn't have to pay taxes on the money.
And why should the heirs enjoy the money.
Get the equity and visit the world.

 

[Charles West]

It's a life saver to have equity. I'm going to sèe if I can cash out on my last single family home, pull that equity then sell her a couple two or three years later.

 

[ZZGAMAZZ]

Since things slowed down, the only area that has picked up for me is reverse mortgage assignments. The good part is the borrowers are almost always retired which means they’re home all day. The interest rate never seems to be a concern so they’re not switching lenders or talking about it and usually they’re pleasant and not pushy. I used to avoid reverse mortgage assignments other than REO closeouts, but there seem to be many more due to the graying of America. I recall some people being judgmental about the product saying it’s mostly sleazy lenders taking advantage of people, but I’ve noticed a big difference in the last year in the caliber of borrower. Two of them were financial people and said they ran the numbers and the reverse mortgage plan fit their long term needs and goals. Who am I to pass judgment on borrowers or lenders? I suppose you can say the same thing about any loan with B or C paper. Borrowing money with one’s home as equity seems to be an American past time. This golden advice is brought to you free of charge by your old pal Bucks and you’ll notice than unlike all the early morning appraisal email tips you receive daily, I haven’t told you what E & O policy you should buy, what software to use or what type of electronic dildo to use measuring houses, that’s entirely up to you.

It's possible to make a reserve mortgage purchase as well. One thing I don't understand is whether the borrower benefits correspond with the appraised value....

 

[ZZGAMAZZ]

It's nice to have reverse mortgage. I assume one doesn't have to pay taxes on the money.
And why should the heirs enjoy the money.
Get the equity and visit the world.

heirs get an opportunity to repurchase the property from the mortagor when the borrower dies.

 

[Mark K]

heirs get an opportunity to repurchase the property from the mortagor when the borrower dies.

They don't have to purchase the property; the estate already owns it. The heir(s) simply pay off the mortgage if they want to keep the property.

 

[Bobby Bucks]

Odd are they use some of the $$ and they can continue to live in their existing home. Better than selling to down size and using virtually all of the proceeds to buy a small home, not to mention the hassle of moving. There's a tremendous amount of equity locked up in those homes and, used wisely, its not a bad idea. Spend it, let the heirs/kids fend for themselves. Not really that different than people that refi every few years to pay off credit cards, car loans, etc., using their home as an ATM. However, those days may be coming to an end.

I did it for my mom. After dad died she was trying to live on SS only, about $1,100/month so I made her the offer of a reverse mtg. since she owned the house free/clear. I had $$$ sent from my account to hers automatically every month. When she died, my rev. mtg was paid off at the closing of her home and then we three kids split the balance of the sales proceeds.

I did a closeout for a guy a couple years ago when his mother passed. This guy is a financial whiz, super broker on Maggot's Mile, Boca Raton (just kidding Eric) . He explained in detail how it was the best plan possible for her at the time, factoring in cost of moving, disruption, downsizing hassle, etc. It was the first time I had ever heard the positive side of it. I started the thread because I see appraisal opportunities with these assignments because I think they're only going to continue to increase. There is a lot of more equity in most retirees homes in the last few years.

 

[Bobby Bucks]

It's possible to make a reserve mortgage purchase as well. One thing I don't understand is whether the borrower benefits correspond with the appraised value....

I had one recently that was a purchase assignment. I called the client to be sure the engagement letter was correct and it was.