Reverse Mortgages on The State of Florida’s Watch List?

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In the article Beware of bogus debt relief, Orlando Sentinel journalist Richard Burnett writes that America’s economic recession has unleashed a plague of schemes, scams, and dubious sales tactics targeting people with financial woes.  "You have a lot of people out there who are desperate to get their lives and their debt under control," said Victoria Heller, a spokeswoman for Florida Attorney General Bill McCollum.

The state has tracked a major increase in complaints about suspected mortgage fraud this year. The biggest offenders are companies that offer "foreclosure or mortgage-rescue" services, said Scott Palmer, head of the state’s mortgage-fraud task force.

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According to the article, the state of Florida has the reverse mortgage business on its “watch list”, even though there have been few complaints year to date.  "The reverse-mortgage business is a safe, very well-regulated business, and it offers seniors some incredibly flexible cash-flow options," said Meg Burns, director of single-family mortgage products for the Department of Housing and Urban Development. "But what we’re concerned about is when someone selling a reverse mortgage starts trying to take control and tell seniors what to do with their money."

Still, some seniors aren’t happy about their reverse-mortgage. Lois Radley, 67, an Orlando resident who took out a reverse mortgage in early 2008, said that she had to pay $12,000 upfront, including fees, taxes and closing costs. And her monthly payout is half of what she expected.

"I was never told they’d be taking that much out of my monthly income," Radley said. "Now I’m stuck with it, and I still don’t have enough money to pay my bills. . . . I just want other seniors to know that this is what could happen if they aren’t careful."

Beware of bogus debt relief (Orlando Sentinel)

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  • From the article…

    “Still, some seniors aren’t happy about their reverse-mortgage. Lois Radley, 67, an Orlando resident who took out a reverse mortgage in early 2008, said that she had to pay $12,000 upfront, including fees, taxes and closing costs. And her monthly payout is half of what she expected.”

    This is a ridiculous example and the media gulps it up! Fees are always disclosed upfront (GFE & HUD counseling) and the only way her monthly payout would have been reduced would have been a lower appraised value of the home.

    As far as “taking control” we know cross selling of financial products is prohibited. So what is the article alluding to? A Reverse Mortgage can be the ultimate “debt relief” solution for many seniors going under with consumer debt.

  • I couldn’t agree with you more, Shannon. The borrower is not happy about the taxes and closing costs. Those fees are standard with any transaction and some are charged by the county or state. Not to mention the fact that there was no out of pocket expense.

    The borrower’s comments are also misleading:
    “I was never told they’d be taking that much out of my monthly income,” Radley said. “Now I’m stuck with it, and I still don’t have enough money to pay my bills. . . . I just want other seniors to know that this is what could happen if they aren’t careful.”

    Is she referring to her term/tenure payment? Without the HECM, she has NOTHING. The “journalist” makes it sound like the borrower’s income is being reduced because of the HECM. As we all know, that couldn’t be further from the truth.

    Has NRMLA replied to this?

  • I guess you can’t satisfy all people all the time. Here is just one (out of hundreds of thousands) that wants to complain about a great thing – the RM. Or maybe the loan officer should have laid out better customer expectations.

    Since I know the RM business and the Orlando area well …and with a little research, I arrived at these facts: I suspect that she assumed her house was still worth what it was in early 2006 (nearly $600k) as it is just a mile from Universal Studios in an exclusive wealthy neighborhood. She has a 3300sf home, an above average pool and lives comfortably in this 4 bedroom, 3 bath, (2500sf is air conditioned) upscale home. She paid just $243k for this wonderful property in 1996 and I suspect it appraised for nearly $500k in early 2008.

    I am sure that what she is really complaining about was the 203(b) HECM lending limit of just slightly more than $268,850k (in early 2008) maybe she is thinking that the “monthly payout is half of what she expected” is because she did her RM before the national loan limit was increased to $417k in late 2008. Maybe a re-fi is in order here?! I’ll bet she would say yes to that even with the re-fi fees! Maybe I should call her?! Her other option would have to paid more toward her mortgage over these past ten years (since 1996) …or do you think she should just get a new “forward” mortgage and start making payments again – now there is a option! Those are my thoughts! 🙂

    Tim Linger, CSA, CLTC, RMS

  • There you go Tim, It is amazing that the paper will jump at printing a bad response to something when there are thousands of good responses out there. Most of us in this business are here because we want to make a difference in the Seniors life and give them comfort in their later years through a reverse mortgage. Our hearts and souls are in what we do, however, since the subprime meltdown, there are some loan officers that have come over from that industry and they don’t explain the program correctly because they do not have enough knowledge of the program. Mrs Radley may have been strung along in early 2008 by an unscrupulous loan officer that was hoping for the FHA limit increase (as we all hoped) in January, however it did not come until November 2008. Had he waited and just kept in touch with her, he likely could have given her what she expected. However that’s assuming that the agent misled her. She may have had a mortgage with a higher payoff, her value may have come in much lower or she may have thought that she needed the money bad enough right then, to forego waiting for the limit increase. What the customer should always do, is to get references and make sure that the loan officer can answer every question they have on the subject. I have been able to give back independence and security to so many Seniors through reverse mortgages, that I hate to see the program misled or tarnished by mis-representation or more likely mis-understanding. How about the Orlando Sentinal reporter writing an article from the other side of this coin?

    Lynette Ball,
    Reverse Mortgage Professional

  • I am happy to see the responses to this article. It is too bad that they will not be put to print a follow-up to this article. This is like telling the needy to Avoid Cash, Counterfeit Money Being Circulated in Orlando.

    Grabbing attention rather than reporting the general truth seems to be very much like the conduct of many who have brought us to this economic calamity we are now in. I guess it is the old “Pot calling the kettle black.” (From John of jkaravas.com)

  • All:

    I have contacted an Orlando Sentinel reporter (housing reporter)friend of mine that has done two RM articles for me (and even about me) over the past 8+ years.

    She might be able to reach out to this reporter or do a follow-up story herself. Don’t hold your breathe, All I did was ask and I doubt if the editor will do a f/u.

    Tim Linger, RMS

  • This is typical of the Newspapers today. They ONLY print the bad stuff to get people to read. They are a very large part of the entire economy problem as they print too much information that is the entirely wrong aspect of the big picture. Many seniors in Florida would be able to save their homes if they had the right information.

    The Orlando paper did not mention that the woman COULD NOT have closed this loan with out having a counseling session with an FHA approved agency. I would guess that the value came in much less than the original discussions and that changed the numbers.

    You are all correct that all the comments here will never make the paper; unless we send them into the different papers all over our own market areas. We need to promote the RM and not let the bad stuff be the Only news that gets printed.

    Newspapers can be a very good vehicle for us if we also use them to tell the GOOD stories also. Hey it is Christmas time. There must be many great stories …I am going to send some into the Tampa area papers and see if I can get some printed.

    Happy Holidays

    Armond LaFramboise
    Reverse Mortgage Specialist

  • Again, the media goes on a mission to find that a Senior who was “duped/mislead” into a bad reverse mortgage.Was she “sleeping” during the required counseling & did she not bother to read or ask questions about the application with full disclosures/figures at signing! Then during the 3o days of the process & at closing with final figures–did she again not bother to review what she was signing! If she wasn’t happy with the details of her mortgage–she had a 3 day right to rescind option to cancel it.

    A Reverse Mortgage is not for everyone and a senior needs to ask questions and review all documents before closing. I always take the time to explain full details of the mortgage with all parties involved–including client’s children, advisors & even their “financial expert” friends. My clients don’t have surprises at closing or after the mortgage is in place. Maybe her loan officer was not as thorough as he/she should have been.

    Reverse Mortgages are a “lifesaver” to many seniors–especially in this economy when they may have lost so much from their retirement portfolios.

  • Thanks to you all for your wonderful, professional responses: This is really why I read this web site.
    This Lady’s comment is hard to understand; what really is her problem or objection? It is absolutely great
    that one of you who works in the area of this paper will take the time to better inform this reporter;
    correcting mis-information will help the whole industry. Selling Reverse Mortgages to help a financially struggling Senior in the last years of their is truly a blessed occupation. All of you
    should be very proud of what you do for a living.

  • Unfortunatly this speaks more to a problem with the “news” writer than the HECM program, Regrefully this type of irresponsible reporting does peripheral damage and this will always occur. What we can do However, is to try to some how acknowledge that this article may never of happened if the LO was responsible to properly go over the needed facts with the borrower. I think we must be responsible to a degree for our own industry actions, although I’m not sure exactly how to accomplish this, as the old saying goes,make decisions or decisions will be made for you!
    If we continue to display an inability to police ourselves can MORE mandatory foolishness be far behind?

  • After 4 Years of offering Reverse Mortgages all I can tell you nice people is that I have never had a single complaint. Not One! If we are going to be professionals it is important to clearly outline and justify all the number in writing. It is important to
    inform and listen to the Seniors with your heart. Treat them like you would a beloved family member and by all means be Honest. Remember, the enemy uses the news media to destroy all good things. God Bless All of You and Your Families.

  • The news media should be picking up on the bad loans being made by Banks to seniors who really can not afford the payments. Case in point I have clients 83 & 85 years old talked into a interest only loan 2 1/2 years ago by Country Wide. They have been making $1400 a month payments on a $244,000 loan on a home now worth $250,000 how Country Wide ever made this loan is a bewilderment to me. I can get them a reverse mortgage to cover most of the loan balance except for about $63,000. I am going to make CW eat that balance or call Fox News to interview this couple. After all Bank of America/Country wide took $25 billion in bail out money seems to me they could spread it around to the little people.

  • We should all write letters using the Letters to the editor. I have had many of my letters published. Recent one was answering a letter complaining she was “Talked in to a nightmare” 80 year old complained she now could not sell her home and buy a new one because she owned money. I personaly called her to answer her help cry.
    True story was she recived 237,000 and spent it on cars for her and a friend gifts to friends and charities albout 180,000.Plus value fo home has decreased. Her Comment:Fha should not given me all that money so it’s our fault. She was told she could have credit line or monthly payments.which she refused.

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