Fraud: Example of an Unfair Lender

Here is a case where an unfair lender slid in some pretty nasty fees and conditions into a reverse mortgage. This example demonstrates the need to get quotes from several lenders and then go over the contract with a reverse mortgage counselor in order to understand the terms involved:

"One example involves a lawsuit filed by the San Mateo County Public Guardian which, on behalf of Berta Grey, an 83-year old woman, alleged that Transamerica Corporation unfairly and unconscionably charged her what was in effect a shared appreciation fee. This fee gave Transamerica an automatic 50% interest in the difference between the base value of the home when the loan was signed and the appreciated value of the home when the loan terminated, even though the fee bore no relation to the amount she actually borrowed. Additionally, the cost of Berta Grey's reverse mortgage soared when she was required to purchase an annuity in conjunction with her reverse mortgage. An annuity is an insurance product financed out of the home's equity to provide monthly payments to the borrower immediately or after a certain number of years. The San Mateo County Public Guardian alleged that Transamerica charged Berta Gray the cost of the annuity immediately and that interest began compounding on that fee even though she was not due to receive any payment on the annuity until six years after the loan began, at age 89. Under this arrangement, if Ms. Gray died before the six-year period ended, her estate would see no benefit from the annuity purchase, although she had paid in full for it."

Source: http://www.consumersunion.org/

Sequal supports action on misleading reverse mortgage ads

Article states that the senior australians equity release association of lenders (sequal) is trying to distance itself from the Transcomm "misleading" advertising actions.

The Senior Australians Equity Release Association of Lenders (Sequal) has made an attempt to highlight the differenct between reverse mortgages products offered by its members and the fixed-term loan offered by Transcomm Credit Co-operative.

The problem with the Transcomm Fixed-term product was that borrowers might have to pay the loan back in their lifetime.

ASIC deputy chairman Jeremy Cooper said unlike most reverse mortgage products, the Transcomm product was a fixed-term loan that meant consumers were likely to have to repay the loan in their lifetime.

He said the product had a number of features that could result in borrowers being disadvantaged.

“The Annuity Plus Reverse Mortgage allows Transcomm to reduce the amounts advanced to borrowers and, in some circumstances, even require early repayment.”

This again highlights the need to fully understand any reverse mortgage product that you care considering.

Reverse Mortgage Case Study - Home Environment Modification

A 74 year old wife needs a way to help her husband stay in their home. Her 76 year old husband has been wheel-chair bound by a debilitating stroke that has left him partially paralyzed on his left side. Their current home will not accomodate a wheel-chair and the wife does not want her husband put into a nursing home.

One solution is for them to take out a reverse mortgage on thier current home and use the reverse mortgage proceeds to add on a wheel-chair accessible addition to the home. The reverse mortgage would provide them with a $95,000 line of credit, part of which would be used to build the new addition.

They remaining part of the reverse mortgage line of credit could be used to cover any additional expenses needed to help care for her husband.

With the reverse mortgage, the husband and wife would be able to stay in their home together. The wife would not have to worry about making payments on the reverse mortgage while caring for her sick husband.

Information brought to you by www.reverse.settle-today.com and reverseannuity.blogspot.com

Reverse Mortgage Popularity on The Rise in Florida!

The biggest reason people want a he cm or  another name for the same loan, a reverse mortgage is the cost or at least a the perceived cost. 

There are several costs and sometimes they can be quite extensive depending on loan size interest rate etc...

Much of the cost revolves around the size of the loan and the fees that the loan originator charges. Other major contributors is the upfront MIP.

Many LOs are charging big fees simply because it it a very time intensive proposition to reach the their prospects and the competition is fierce. The time it takes to execute the mortgage is not the issue.  It is more about the marketing related costs it takes to capture the prospect and  convert them in to  a knowledge and paying customer.

So, the question arises, is there away to obtain a reverse mortgage without all the costs?

The answer is not really, although depending on the product itself you may be able to obtain a bank credit. The costs can be higher or lower depending on what an individual wants or needs from the mortgage but the majority of the line items or costs will remain the same assuming loan size interest rate age of borrowers are all similar.

So borrowers seeking a Florida reverse mortgage should always consult a professional.  Dont run off and assume that things are a certain way, get accurate numbers and make your decisions based on facts.

Florida Revere Mortgages are becoming more and more popular with the advent of the internet.  So do your homework and you'll find, this product might just be right for you. Click Here