News 06/16/2011: Wells Fargo Reverse Mortgage Closes… Read More »
Should I get my Reverse Mortgage from Wells Fargo?
We hear this question quite often. After all, Wells Fargo Bank is one of the nation’s largest banks and does more reverse mortgages every year than any other lender in the United States. And since they are already handling many borrower’s banking needs, it seems only natural for most of these borrowers to check with their bank first when they do make the decision that a reverse mortgage is right for them. But is that the best decision?
Firstly, almost all reverse mortgages being done today are the government-insured Home Equity Conversion Mortgage (HECM or “Heck-um”). Prior to 1988 when Ronald Reagan signed the legislation which made the reverse mortgage an FHA-insured product (FHA being the Federal Housing Administration, a division of the Department of Housing and Urban Development or HUD), reverse mortgages had unsavory features such as shared appreciation which could allow lenders to set appreciation rates.
By setting appreciation rates that were not consistent with the market results, lenders could easily wind up owning borrowers’ properties. With the modern FHA regulated and insured product, borrower safeguards were added. Many of the myths of reverse mortgages still persist today but borrowers retain ownership of their homes and the product is constantly being refined by HUD to further protect borrowers. So that gets us back to the question of whether or not a borrower should seek a large lender like Wells Fargo Bank to obtain their reverse Mortgage or a small lender like All Reverse Mortgage Company.
With Wells Fargo you must get better guarantees, right? NO. A HUD HECM is the same no matter which lender you use to get the loan and HUD makes the same guarantees. Well then, since Wells Fargo is bigger, they must be able to do the tougher deals…right? Again, no. HUD, through FHA administers the program and sets the ground rules. In fact, at All Reverse Mortgage we have been able to do several loans on properties located in condominium projects denied by Wells Fargo Bank, for borrowers with trusts that Wells Fargo Bank could not accept and for properties denied by Wells.
In fact, at All Reverse Mortgage, the specialists who process your loans have underwritten loans (which means they hold a HUD Designated Underwriter CHUMS number and have been approved by FHA to underwrite the loans, they are not just paper pushers), have insured the loans, have sold the loans to Wall Street and were part of a team who wrote a jumbo proprietary reverse mortgage product and sold it to Wall Street. They really are experts when it comes to reverse mortgages. Well then, you must be thinking that because they are bigger, Wells Fargo Bank must be able to give their borrowers a better rate or lower fees.
Here again, the facts bear out that All Reverse Mortgage is consistently lower in their origination fees, available margins and their fixed rates.
Use our new comprehensive reverse mortgage calculator for a quick quote or call us Toll Free at (800) 565-1722 for a complete analysis. Because we are approved with just about every source offering reverse mortgages, we have access to the best programs, lowest rates and fees.
A quick glance at a map provided by Google Maps will show the reader just how many branches Wells Fargo has in California alone. This is a pretty good explanation as to why they have such a strong hold and originate so many reverse mortgages…
Does this mean that we are trying to say anything bad about Wells Fargo Bank? Absolutely not! but if you are like us and you believe that you should not have to pay what could amount to thousands of dollars of your home’s equity for the “privilege” of getting your reverse mortgage with one company, when you can get the same FHA-insured loan with another company for much less and in most cases much more quickly, then we believe that you should contact us at All Reverse Mortgage Company.
The HUD Lending Limits are the same for all companies and the HUD insurance affords the same protection to all borrowers regardless of which company you choose for your reverse mortgage. We believe that since that’s the case, you should save thousands of dollars and also get the best possible service. Give us a call and let us prove that to you with a simple quote. After all, it’s your equity and there is no reason to throw thousands of dollars of it away just for the privilege of using one company over another for the same product.
Links of Interest:
|Jerry3/10/10 3:08am||Great article, you’re right it sure does pay to shop around. I found this to be helpful in my search, thanks for all the great content on your website!|
|Mary Ann7/10/10 2:15pm||My husband and I took out a reverse mortgage from Wells Fargo in 2002. My husband was at least 62-I was not. My husband passed away in Feb.2010-two weeks later, they THREATENED me with forclosure-and continue to do so!! I have a lawyer involved-I signed the papers, to the loan-my name is on the deed of our home, AND- our house was mortgage free until this. We only took out monies on a “need” basis-now they want to foreclose on our home-even tho I live there, and will until I die!! We only took out $20,000-$30,000 at the most-but they want the entire amount that our house is worth-which is in the $170,000 to $180,000 range. I wish we had this info before. HELP!!!|
|Michael Branson7/13/10 11:34pm||The Loan Officer should have been honest and very open with you about what happens on a reverse mortgage when you take one spouse off in order to qualify. We never advise it unless the borrowers have absolutely no other choice or they have other options in place that they can use in the event of the death of the spouse who is on the loan (such as a life insurance policy or other payment available which would retired the reverse mortgage debt).Having said that, Wells Fargo Reverse Mortgage needs to call the loan due and payable under the terms of the Note and Deed of Trust at this time, they do not need to foreclose if you can make other arrangements. They are not entitled to your home and can only foreclose as a last resort to collect the outstanding funds due on the reverse mortgage. You do have options, and hopefully one will work for you. You can refinance the loan at this time in only your name and if you are now 62 or over, since you have not used very much of the mortgage proceeds, you probably would qualify for a reverse mortgage on your own. If you are not yet 62, then with that small a balance, you can always look into traditional financing via a First Trust Deed or a Home Equity Line of Credit (HELOC). If you are not yet 62 and do not qualify for a traditional mortgage, maybe you can look to family to help you with financing until you do turn 62 at which time you could qualify for the reverse mortgage loan and pay the interim financing off with a new reverse mortgage at that time.I don’t know all your particulars, but if you would like to call me at our office, I would be happy to discuss these options with you and see if they would work for you. If you have turned 62 since 2002 and your balance is less than $50,000 on a property valued at $170,000 or more, I am confident that you would have no problem now obtaining financing in your own name.|
|Polly Stover12/7/10 3:59pm||My parents took out a reverse mortgage several years ago and now due to health issues my father has been placed in a nursing home and I have been trying to get my mother placed in an assisted living facility. I called Wells Fargo yesterday to attempt to draw the remaining balance available on their line of credit. We were honest with the rep and told her that we did intend to move my mom out of the house in the near future. The rep got very rude with us. She said she would not allow us to withdraw any more money from the account because we intended (not a done deal) on moving my mother out of the house in the near future. They never even asked about my father. We were going to use the money to pre-pay funeral costs and then immediately put the house on the market to sell and re-pay the mortgage. The rep starting telling me that if we did not sell the house within 6 months, that Wells Fargo would foreclose on the house and I asked if they did that, would my parents get any of the proceeds above the loan balance back and she said “NO”. The house is worth at least $80,000 and they owe approximatey $35,000. I was so offended by the rep’s manner and her explaination of how Wells Fargo would seize the house, I have decided to call my Attorney General and complain about elder abuse that you people are perpetrating on our elderly citizens. You take advantage of them when they are at their most vulnerable and then as soon as you see an opening, you jump in to seize control and suck them dry financially. I pray that get help from his office to shut you down. I will also contract my attorney to file suit if you attempt to follow through on any of your threats. I hope that anyone out there that reads this, please call a local social worker, contact the state for assistance, talk to your children about your financial situation before you take out a reverse mortgage. Do not use Wells Fargo as a resource for anything. Over the years, I had a mortgage on a house with them and they were fine, but today I choose to give my business to morally responsible businesses. Mortgage companies are not doing you a favor, they should be appreciative of people giving their business to them. You pay dearly for any loan you get, there are no favors here. Borrowers should be treated with respect and given good customer service, not treated as less than human because they got old and medical bills ate up all their savings.|
|Gail Burris12/15/10 6:17pm||POLLY STOVER I WOULD LIKE TO KNOW WHERE YOU LIVE. MY HUSBAND AND I ARE THINKING ABOUT A REVERSE MORTAGAGE WITH WELLS FARGO, WE LIVE IN LAKE HAVASU IN ARIZONA AND I AM NOT TO SURE NOW ABOUT WELLS FARGO NOW. PLEASE LETME KNOW WHAT YOU THINK; THANK-YOU GAIL BURRIS|
|Michael Branson 12/15/10 11:27pm||Hi Polly,I am so sorry to hear of your issues and while I cannot begin to advise you legally, I think I might be able to help all the same. Firstly, let’s talk about what the reverse mortgage will and will not allow a lender to do. The reverse mortgage does allow your parents to live in the home for as long as they choose, without having to make a monthly payment. The reverse mortgage does not allow the lender to foreclose on the mortgage or “seize” the house unless the mortgagors (your parents) fail to live up to the terms they agreed to in the legal documents. The lender can’t just decide to foreclose, the security agreements (Note and Deed) do not give the lender the right. No lender can foreclose on a mortgage because your parents are thinking about doing something which constitutes a “qualified event” for calling a loan due and payable. The security instrument states that (among other things) one of the two borrowers must remain in the home as their primary residence and when that is no longer the case (both borrowers are no longer living in the property), then the loan must be repaid.I have never personally worked with Wells Fargo’s reverse mortgage servicing department but I would find it extremely unusual that they would make it a company policy to try to take such a hard line stance on this issue regarding the six months as well. I do work with other servicers and they must contact HUD since it is a government-insured loan to obtain approvals to progress with different stages of foreclosure and as long as the family is maintaining contact with the lender and making good faith efforts to sell the home, then the servicers and circumstances in which I have been involved, regularly extend beyond 6 months to get the homes sold, especially in this market.Finally, if the servicing agent with whom you spoke said that on an $80,000 home with a $35,000 balance you and your parents would receive nothing, that the bank would keep all the proceeds, not only was the servicing agent extremely rude but woefully misinformed! In this regard, a reverse mortgage is just like other loans. Once the balance is repaid, your parents or their heirs would still retain all equity in the home. If you sell the home for $80,000, the bank will get the proceeds to pay off the existing loan and you will retain everything above and beyond that figure. If you do not sell the property and the bank has to foreclose, then the bank’s initial offer at the foreclosure sale would be just the amount owed on the loan and if no one bid any higher on the property, then there would be nothing above and beyond the banks initial bid to pay to you and that might be what this individual was trying to say, I don’t know.But at the best of circumstances, it sounds like you are having a very difficult time communicating with the person with whom you have been talking and that individual should be working very hard to be sure you have all the facts and trying to make things easier for you, not more stressful. My absolutely non-legal advice to you is to contact Wells Fargo and request to speak with a supervisor or manager. They cannot accelerate the loan because you thought you might want to do something and they certainly cannot keep all of the proceeds if you do work with them to be certain that the home is sold and there is almost $45,000 equity still in the home. There are good and bad people and employees everywhere and it’s a shame that you may have run into one of them and not only gotten bad information but a lot of stress in the process. I think if you reach a higher level person the truth will come out and it should put everyone’s mind at ease.If I can further assist please feel free to give me a call (888) 801-2762. Sincerely, -Mike|
|cindy berthiaume1/4/11 9:04pm||my parents took out a reverse mortgage in jan. 2010 (Wells Fargo) my Mom passed away 2-3-10 and now my Dad has passed away (12-27-10) – there is a small amount left on the line of credit, we (5 children) are listed in his will and I as executor to have what is left of his estate (not much) and we were told by Wells Fargo (due to HUD rules) that we can not have the remaining balance on the loan, which we were going to use to maintain and fix his house to sell. we are in illinois.|
|Michael Branson1/5/11 7:46pm||Hi Cindy,I’m sorry for your recent loss. Wells Fargo did inform you correctly. Just as with a traditional loan such as a Home Equity Line of Credit, no one but the borrower is authorized to make any draws on the line of credit. After all borrowers on the loan have passed, no further draws are available.|
|paula4/1/11 10:59am||we got a reverse mortgage with wells fargo and were told we’d be paid 4% interest if we left the money in the account and took a line of credit. now, we’re told the interest rate is 2%. wouldn’t it be better to take the money out and put it in a cd?|
|Michael Branson 4/1/11 7:21pm||Hi Paula-I’m sorry to hear that the individual at Wells Fargo Reverse Mortgage was not clear on the way the line of credit works. Not being present for the conversation, I will reserve judgment but you are not the first borrower who has told me that they were promised “interest” to be paid to them on their line of credit. That is not how the line works and I hate to hear it described as such.The Line of Credit “Grows”on the unused portion and the calculation for doing do is outlined in the HUD 4235.1 manual, Mortgagee Letter 97-15 and in some of the Appendices to the HUD manual. In short, the calculation for the increase is one that most originators do not fully understand the total mathematical formula let alone cannot explain it to anyone else. But the amount of money you are able to borrow grows as you do not access the line. It is not interest they are paying you on the line and that is a very important distinction.If the banks were paying you interest on money you had, you would be able to use that money and you or your estate would never have to repay the interest earned. Any growth in the line that you do not use, you and your heirs do not have to pay interest on and do not have to repay. However, if at some point you do decide to withdraw those funds, then you would begin to accrue interest on them and you or your heirs would have to repay them plus any interest owed when the house was sold. The line of credit is nice in that if you do not use it in the early term, it grows in size over time and gives the borrower access to more funds and the ability to borrow more against the home later if needed, but it is definitely not interest the bank is paying the borrower.With regard to your question about taking the money out and putting it into a CD, I would never advise this action but would encourage you to speak with a qualified money manager before making any investments with the money that comes from the equity in your home. Keep in mind that the loan on an equity line of credit HECM is an adjustable rate mortgage that can increase as rates climb. If you take money out and put it into a CD, the interest rate you receive on that CD may go up as rates do, but the interest you pay on the reverse mortgage will increase as well. The net effect would probably be a losing proposition.|
|Dana4/4/11 3:21pm||I am currently trying to research reverse mortgages through Wells Fargo for a young kid in NJ who is in need of some serious help. His father who is a senior citizen took out a reverse mortgage to the tune of 144,000 only last June (2010). Now he has suffered a massive stroke and is on life support which we do not think he will be coming off of. The son is only 17 and is concerned that he will lose the house. He says that in his fathers will the house was left to him. However, I do not know what his options are at this point, especially being a minor. He will turn 18 within the next 6 months but what can this mean for him? He desperately wants to keep the house to hold onto his fathers memory in the event of his passing. Can he rent it out and pay the reverse mortgage that way or is there ANYTHING he can do? Please help. I feel so awful for this poor child.|
|Michael Branson 4/4/11 8:54pm||Since the reverse mortgage is so new, there should still be ample equity in the home but the biggest issue is the fact that you have an under-aged heir who will not be able to qualify for a new mortgage. There are a number of things which can happen, but I don’t know if they will work for this minor.Firstly, if the borrower has adequate insurance, the loan can obviously be paid in full and the property kept. If the insurance is not adequate to pay the entire loan in full, are there any relatives who can make up any differences for the 6 months until the minor reaches adulthood and may be able to obtain permanent financing at that time?Secondly, and this is true with the first item above, if there is any family who can finance the property and rent to the son or to a renter until the son is capable of managing his own affairs, then that is always a possibility.The one thing that the son cannot depend on is renting the property out with the reverse mortgage remaining on the home. He may be able to work with Wells Fargo Reverse Mortgage to keep from any action being taken for the 6 month period, but he would have to have a viable plan at that time which would have to include a new loan to pay off the reverse mortgage. If the son has been working, that may be a strong possibility but not many 17 year-olds have the kind of work history needed to buy a home. Here again is where other family can really be helpful if they are available. I wish him the best but for him to keep the home after his father passes, the only way to do so is with a plan to pay off the reverse mortgage. Otherwise, the home would have to be sold and the son would retain the proceeds.|