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

[ZZGAMAZZ]

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.

Good point, although doesn't the reverse mortgage entity claim title when they issue the RM?

 

[ZZGAMAZZ]

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.

Common factors I noticed in a few dozen RM mortgage assignments in the past year: Every single one was an FHA loan, and not one of the properties had been listed on CRMLS during the past 25-35 years. [ But stil wondering how, for example, a higher OV affects borrower: or, does he or she split the difference with the lender 50/50?]

 

[Mark K]

Good point, although doesn't the reverse mortgage entity claim title when they issue the RM?

No. Its basically like any other mortgage except they pay the owner $XYZ per month or as needed, subject to the terms of the mtg. If I get a mortgage or RM, the deed remains in my name. The total amount they'll loan is based on the property value, interest rate, and probably the age of the owner (for actuarial purposes).

https://www.thebalancemoney.com/reverse-mortgage-age-requirements-5441647

If the owner/mortgagee dies or otherwise abandons the property and nobody steps up to pay off the mortgage, the lender becomes the owner. I'm not certain if they have to go thru foreclosure proceedings or if the title automatically transfers.

 

[Functional Obs]

The good part is the borrowers are almost always retired which means they’re home all day.

Not so ... I did a ton of reverse mortgage appraisals from 2013 to 2016, and I found that the homeowners were loaded up with doctor appointments. I also discovered that about half of them really didn't want the loan they were sold but went through it anyway, reluctantly. And, of course, they would tell me about it for a half hour.

Several times the homeowner wasn't there (another indication that they didn't really want the product), and one or two cancelled prior to the visit. Eventually, I quit doing FHA altogether b/c HUD was such a pain in the ***. I have not missed the RM assignments.

 

[Bobby Bucks]

Not so ... I did a ton of reverse mortgage appraisals from 2013 to 2016, and I found that the homeowners were loaded up with doctor appointments. I also discovered that about half of them really didn't want the loan they were sold but went through it anyway, reluctantly. And, of course, they would tell me about it for a half hour.

Several times the homeowner wasn't there (another indication that they didn't really want the product), and one or two cancelled prior to the visit. Eventually, I quit doing FHA altogether b/c HUD was such a pain in the ***. I have not missed the RM assignments.

If the assignments were that problematic, why did you continue with them for 3 years? It sounds like you need better clients. My post wasn’t about 2013-2016, but what’s current.

 

[RSW]

My experience with RMs is that a lot of the homes suffer from extensive deferred maintenance and don't meet the FHA' MPRs.

 

[DTB]

I'd be curious to know if any of the reverse mortgagors are suing them to fund a life insurance policy with LTC rider hybrid.

 

[Terrel L. Shields]

Who am I to pass judgment on borrowers or lenders?

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

One factor I think is many retirees have little savings, but a big factor is that they are childless. There is no one to pass it on to except maybe some distant relative. I have no children and so my niece and two nephews get the place. I already have beneficiary deeds in their name. I have a friend who has no children, no brother or sister, and his closest cousin lives in New Hampshire and is a card carrying socialist professor. That guy's brother was the only person in the family he liked with one exception. He died 2 years ago with cancer. He had 3 other cousins but one is a goof who had a stroke from drugs and is in an institution, one no one knows where she lives, and the 3rd has been in a hospital with a form of Cystic fibrosis that isn't caused by smoking and has had 2 lung transplants and she is only 65 or so. Then his wife has a nephew who is druggie, her brother has been in and out of jail and has cancer, and a sister is married to a wealthy guy. And they need to do something but don't know what.

I would suspect about 50% of the people I know are childless, estranged from their children, or had divorces and did not get to be much of a part of their children's lives. What do they do with property? Either reverse mortgage or sell it all and moved into assisted living.

 

[DTB]

I would suspect about 50% of the people I know are childless, estranged from their children, or had divorces and did not get to be much of a part of their children's lives.

That's a sad commentary on one's life achievements.

 

[Terrel L. Shields]

My experience with RMs is that a lot of the homes suffer from extensive deferred maintenance and don't meet the FHA' MPRs.

Invariably, if not when done, certainly at the end of the people's life. I knew one who blew all his pension, his wife's savings (she worked at Walmart for decades and had a tidy sum) and then tried to make ends meet by running 10 flea market booths, loaded with overpriced knickknack shelves and beanie babies. By the time he paid the gas bill servicing them from SW Missouri to Tulsa to Alma, AR, in a 10-cylinder Ford truck, he was barely breaking even. By the time he and his wife died the house was in shambles and his daughter the estate trustee, let the bank come get it. It wasn't worth fixing up. And they didn't have enough money to even bury them. She and her sister paid for the funerals out of their own pockets.