Reverse Mortgages and Foreclosure

I cringe every time I read an article about a reverse mortgage where the author is doing his or her level best to try to show how bad the program is, usually with faulty information or by citing how someone found a way to help the senior borrower part with their funds (which really isn’t a flaw in the reverse mortgage program, itself, but how someone cheated a borrower out of their money). We see how this program helps hundreds of senior borrowers every year just through our company alone and today we closed a loan for a borrower whose story deserves to be told.

Our borrower, Mrs. Norton (who has given us permission to tell her story) is a single woman in Southern California who has lived in her home for over 40 years. She told us that she has raised her children, grandchildren and now has great-grandchildren in her home. She contacted us because her daughter saw some of our advertising and suggested she give us a try.

She had fallen behind in her payments to IndyMac Bank and had contacted the bank to request a loan modification. She and her family explained to us that they spoke with the modification counselors at IndyMac numerous times and were given forms on reams of paper to complete. The borrower says after many months, when she called to request the status of her modification request, a very abrupt IndyMac employee told her that she makes $2100 a month, that her payment was less than $1400 a month and wanted to know “where all the money was going”?!

As she was explaining her ordeal to me, she asked me if no one knew or understood with gas, electricity, food, taxes, insurance, and other expenses, that $700 a month for her and her family was not very much money to live on. Ms. Norton contacted a Loan Modification company who promised that they would be able to help her.

She gave this company $2600 as that was their fee and after a time, they went out of business and did nothing for Ms. Norton except also require her to also fill out a lot of paperwork for nothing. She said she then contacted an attorney who charged her $1600 and kept telling her that they “were working on it”, but she still received a notice from the bank that her home was going to foreclosure sale on the steps of the courthouse on August 20th for non-payment of the mortgage payments.

Even though Ms. Norton’s outstanding loan was only $225,000 on a property with an appraised value of $450,000, her house was going to foreclosure sale with the first bid to be the bank’s. If no one bid substantially higher, she would lose her home and have nothing. She had plenty of equity in her home, and even though when she started her delinquency IndyMac Bank owned a reverse mortgage company, she knew nothing about reverse mortgages and IndyMac Bank did not tell her about this option or offer to place a reverse mortgage for her. When she contacted us on August 11, 2009, she was only 9 days away from losing her home of 40+ years.

We moved without delay and met with her to take her application on the same day she contacted us. Needless to say, the borrower was extremely motivated and called until she found a counselor who could counsel her immediately. The appraiser made an appointment and completed the assignment within 48 hours.

The escrow company, Interim Escrow, who has handled hundreds of reverse mortgage escrows, did their job exquisitely and had title and all escrow conditions ordered on a rush and satisfied within 24 hours. The reverse loan division of Met Life Home Loans recognized the immediate need of this borrower and their staff came through when they were needed the most.

Ms. Norton, accompanied by children and grandchildren came into our office and then we all went to escrow together, after business hours, to sign her loan documents while members of the Met Life team stayed in their office until 10:00 PM EDT to get all the loan documents to escrow. It took the rep’s help at Met Life as well as the attention and assistance from the legal and compliance departments, their underwriting and funding departments and escrow all working late to get everything together.

The borrower signed her loan documents as members of our company all copied and stacked loan documents. We rushed the documents over to UPS who informed us that we were too late, we missed the cut-off. But even UPS got into the act when we explained that this was to save a senior borrower’s home and the woman there caught the truck for us and we made the delivery back to MetLife's closing department!

If it were not for the combined efforts of everyone, everywhere along the way, the loan could not have been funded by August 19, 2009…just 8 calendar days and 6 business days after initial application.�Her house is saved and the borrower and her entire family are ecstatic.

Obviously, not every loan can be closed this quickly. Everything fell together with no snags and every entity in the transaction worked together to pull it off. But here is a story that needs to be told. This woman’s home was saved with a reverse mortgage and if she had been given the information to apply for it earlier, she would have avoided thousands of dollars in foreclosure fees and saved herself the agony of getting right to the day before the foreclosure sale before she knew it would be saved.

But in the end, we stepped up and so did all of our service and lending partners to help this senior borrower save her home.

This is just one of the most obvious examples of the good reverse mortgages can do when things go right but one that can be repeated in a similar fashion all over the country. The borrowers aren’t always in foreclosure and it doesn’t always close the day before the auctioneer’s gavel goes down, but the borrowers’ needs are all very real and you can just ask Ms. Norton how she feels about her reverse mortgage!