Reverse Mortgage Settlements

Reverse Mortgages are like the name implies in that it is a mortgage or lien against the interest of real property, but instead of you paying the bank each month, they will pay you a share of your equity. Many seniors hear horror stories about these types of transactions but over the years I have completed many of them and they are a relief to many of my clients when there are no other sources of income. Many homeowners that have owned their homes outright for many years almost forget that they homes have appreciated in value since they bought or since they have made that last mortgage payment.

The last estimate I read was that America was sitting on over 3.5 Trillion in equity even after the financial crisis of 2008. You can only image what the number was before the crisis. We have met older couples and widows as well as widowers that were on their last leg overwhelmed with taxes, other financial obligations and increasing medical expenses. Some see the Reverse Mortgage as a welcomed relief to these seniors just trying to last until their next Social Security check. Many times there is a full house including the clients, and all of their children as well as their grandchildren running around grandma and grandpa’s house because the children show up to make sure their parents are not taken advantage of.

Reverse Mortgages have rules and those rules have to be followed as well as a mandatory class all of these clients have to attend to educate them about their prospective Reverse Mortgage. Keep in mind that these reverse mortgage loan packages are very long and some lenders have over 150 pages of documents to either sign or initial. So sometimes this reverse mortgage settlement can take anywhere from one hour to over two hours to include explaining all of the documents. The majority of the time, the loan officer or lender will show up at settlement and accompany the settlement agent during the closing. Keep in mind that these types of transactions do have a right to cancel and it is just like a refinance and it is 3 business days to comply with the federal rule.

There are restrictions for Reverse Mortgages and very complex in some cases so it is extremely important to work with a lender or loan officer that specializes in these types of transactions. There are loads of resources and articles on the internet so buy your mom or dad an Ipad and get them on the internet to learn more about their options. Estate planning firms and other Insurance professionals are restricted from using the funds derived from a reverse mortgage to purchase an annuity as this is also one of the major rules that have to be followed. Also many settlement agents do not know how to explain these types of transactions because they are not mainstream and only apply to a distinct population segment but over the years and completing 14,000 real estate settlements we can honestly say that there were only about 200 reverse mortgages that we completed. We hope to help you when it is time for you or your loved ones to think about working with a professional in lending and settlements for your next reverse mortgage transaction. We would be happy to help.