subscribe to all our articles via rssReverse Mortgages are not short term, hard money, bridge or balloon loans normally associated with the type of loans people are forced to get to stop a foreclosure proceeding. But for seniors aged 62 and over, a reverse mortgage can be a life-line that rescues the seniors in danger of losing their homes to foreclosure. Many seniors are faced with rising living costs with which their fixed incomes do not keep pace. Rising costs of everything from food and gasoline to new medical expenses and even the rising costs associated with some of the adjustable rate mortgage programs that some seniors found themselves taking (either by too little explanation on the part of the originator or because they felt they had no other choice to keep their payments as low as possible), leaves many seniors with impossible decisions to make. Do they make the mortgage payment, or purchase the food and medicine they need to live for that month? These decisions have placed many seniors in peril as they near or enter foreclosure on their homes.
Now for the good news! A reverse mortgage requires no income or credit qualification. What this means is that if you are behind in your payments, even if the lender has filed a notice of default, you may still get a new reverse mortgage loan – and once you get it, you will never make another payment for life. You still have to meet the other reverse mortgage criteria, but if you do a reverse mortgage may be just the right thing for you or your loved ones to live payment free and worry free for life.
So what are the criteria to get a reverse mortgage? The youngest borrower has to be aged 62 or older for the HUD government-insured mortgage. Some programs even go down lower, but they also lend much less in relationship to the overall value of your home. Your property must meet minimum requirements as set forth by HUD and must be an acceptable property type. Single family residences, townhomes, modular homes on permanent foundations, condominiums are all generally acceptable but there may be additional requirements if you have anything other than a single family detached home so be sure to let your reverse mortgage lender know what type of property you have and if you are subject to a homeowner's association, if your zoning is not residential or if your property contains excess acreage. Your property has to be in reasonably wel maintained condition with no major repairs needed (some repairs can have funds set-aside to be completed). The only real credit requirement is that borrowers cannot be in default on a federal obligation or a federally insured loan. This means that if you are in default on an SBA loan, an FHA insured mortgage or other federal obligation, you would not be eligible for a reverse mortgage. Therefore, if the current mortgage that is delinquent is an FHA loan but has not had a notice of default filed yet, you can still get a reverse mortgage. Once the notice of default has been filed, the borrower would need to be able to bring in funds to cure the default before the reverse mortgage could proceed. Those funds could come from a family member, etc. Once the reverse mortgage was completed and funded, the borrower would never have to make another mortgage payment for life!
The borrower(s) must go through counseling, the loan has to be processed including property appraisal, all title issues including trusts, conservatorships, etc must be reviewed and approved so a reverse mortgage loan is not a 4 or 5 day loan. You need to realize that if you are going to use a reverse mortgage to stop a foreclosure it's a long term solution that must be dealt with in a timely manner without a lot of extra time for delay. Contact a reverse mortgage specialist today if you or a loved one find yourselves in this situation to see if a reverse mortgage is the right solution for you.
Michael G. Branson (CEO All Reverse Mortgage Company)is a Mortgage Broker who has over 31 years of mortgage banking experience. Toll Free (888) 801-2762Patty West 1/31/08 4:26pm | - This article reminded me to bring up foreclosures and how a RM can help those facing the loss of their home. Sometimes I forget to bring that up and it is very critical at this time with insurance and medical costs on the rise. Very well writen and informative. Thank you so much. |
Alissa Scott 1/31/08 8:08pm | - I agree with this article whole heartedly. There are so many senior homeowners that are struggling to make their monthly mortgage payment. If only they were educated about reverse mortgages! I would also encourage loan officers and borrowers to negogiate with the lenders if there is a prepayment penalty on the mortgage that is being paid off. If they refuse to omit the prepay, tell them that you would be happy to call the LA times and let them know that ABC Broker took advantage of a poor elderly woman by putting her in a loan she obviously could not afford! |
Kimo Jarrett 2/1/08 4:22pm | - The RM solution is dependent on the amount of equity necessary to qualify for a RM. Unfortunately many seniors have used most of their equity to help themselves or other family members financially, so getting qualified is the challenge, isn't it?
Regardless, RM is a great solution only when any excess equity has been put to work before securing a RM. |
ALFONSO DIAZ 2/3/08 9:27pm | - I AM A REAL ESTATE BROKER AND I HAD MAKE SOME LOANS BUT I DO NOT KNOW ANYTHING ABOUT REVERSE MORTGAGES..
CAN YOU PLEASE EXPLAIN HOW IT WORK??
SOME PEOPLE HAVE ASK ME ABOUT IT.. I WISH I CAN EXPLAIN IT TO THEM
THEN I CAN SEND THE CLIENT TO YOU.
ALFONSO DIAZ. |
Joyce Boultwood 2/4/08 1:48pm | - I have been trying to help an elderly lady in her 90s who refinanced several times in order to have funds to pay for cartakers. Now her equity is almost all used up and the last refinance she was "sold" has low payments which add another $1800 a month to her principal balance. Once this payment is recalculated, she will not be able to make the payment. Is a RM available in this situation? |
foreclosurefish 2/14/08 1:47am | - Almost no one talks about using a reverse mortgage to get out of foreclosure. It is quite specialized and difficult to qualify for, but the homeowners who meet the qualifications can really turn their situation around, no easy task for foreclosure victims. And it is usually the homeowners in the appropriate age brackets for a reverse mortgage that are the ones facing catastrophic medical expenses or permanent loss of jobs, if their occupation is no longer needed in the economy. A RM can be a lifesaver for people in that situation. |
