I had a senior who waited to tell his family that his home was in foreclosure until a week before the sale. We made several phone calls and the mortgage company (reluctantly) gave us 30 days to close a reverse mortgage to save the house. Well, as often happens with RM’s the house needed a few repairs and the thing dragged on past the 30 days. The mortgage company refused to grant any more extensions. The loan on the house that was in default was a FHA loan, so I called HUD. It took several days to get the right person on the phone, but HUD slapped the hand of the mortgage company and gave us the the couple of days we needed to finish up our loan. This house too had a very low loan to value.

Regarding my suggestion that appraisal conditions should be different from homes for sale is spelled out pretty well in this article from USA Today:

The national median home price of single family homes sold during the first quarter fell 13.8% to $169,000 year over year, and 6.2% compared with the last quarter 2008, according to the National Association of Realtors (NAR). That was the largest year-over-year decline in the 30-year history of the report.

NAR attributed much of the loss to two factors: First-time homebuyers, who are often entry-level buyers, accounted for about half of all purchases during the quarter. And many buyers took advantage of the deeply discounted prices of foreclosed properties and short sales. These “distressed properties” typically sell for 20% less than traditional homes, according to NAR. These homes also accounted for about half of all transactions.

“Traditional homes in good condition have held their value much better, so owners shouldn’t be overly concerned about median prices,” said NAR president Charles McMillan, in a prepared statement.

Sales volume was weak as well. Homes sold at a 4.59 million

I would consider an rm refinance to fall into the “traditional Homes” catagory. I am especially peturbed by the new mortgagee letter requiring appraisers to adjust for declining market conditions. My last appraisal was valued LOWER than all previous sales!

If Treasury is allowing banks to value their distressed assets at higher than “mark to market” then there should be a similar provision for rm’s.

Sheriff Durante,
I own a consulting company whose job it is to guide senior applicants thru the preparations to do reverse mortgages when lenders no longer feel they can help them. We see these circumstances often and fight the same issue. What you did for these folks is so very exemplary and deserves to given special notice by HUD/FHA as a sign that the banking industry remains broken for the thousands of seniors who do not have someone like you in their corner. Thanks for being there when it counted,