Judge Voids Reverse Mortgage, Says Counseling Fails to Prove Competency

In a ruling last month, Charles J. Thomas, a New York Supreme Court Judge voided a reverse mortgage and its subsequent refinancing on the grounds that the borrower’s mental illness made her unable to understand the reverse mortgage.

In the case, Matter of Doar, 31393/07, the borrower, Ms. Hermina Brunson, took out a reverse mortgage with Financial Freedom on her home in Queens for $300,000 in December of 2001, refinancing for $375,000 in June of 2003.

However, at the time, Ms. Brunson was being treated for chronic paranoid schizophrenia. By the end of 2001, her psychiatrist testified that Ms. Brunson was hearing voices, believed her neighbor was trying to take her home away from her, and claimed that she no longer had the deed to the home.

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Despite the counseling session lasting 45 minutes over the phone, the judge wrote that it was “not meant to be perfunctory or a mere rubber stamp of the banking or mortgage industry. It was intended to secure that the rights of elderly homeowners were protected.  The mortgagee is entrusted with the responsibility of conducting an inquiry of the applicant’s understanding of the mortgage agreement.”

Judge Thomas continued, “There is no evidence that Ms. Brunson understood the terms of the mortgage or the Counseling Certificate that she signed on June 20, 2003.” He faulted the counselor for not unearthing the borrower’s mental illness and her delusions regarding her home. Most significantly for the industry, Judge Thomas ruled:

While the Certificate of Counseling is an indication that information was given to the homeowners it is not dispositive of the issue of the mortgagor’s knowledge and understanding of the implications of a reverse mortgage or that the National Housing Act has been satisfied.  That determination rests ultimately with the court.

As a result, the responsibility is on the lender to prove that the borrower understood the reverse mortgage, regardless of whether or not they received a counseling certificate.

The judge further faulted the counseling process, noting that there was no evidence as to the qualifications of the counselor, whether the counselor spoke to Ms. Brunson or only to her brother, if Ms. Bunson’s questions were answered, and what information the counselor provided.

While recent counseling reforms such as the qualification of the counselor addresses some of these issues, this is still a situation that could be repeated today.

In the ruling, Financial Freedom was ordered to void the mortgage, but the Guardian of the borrower is directed to reimburse Financial Freedom for monies paid out at the closing which includes taxes, water charges, and the New York City Department of Social Services liens.  It is unclear whether Financial Freedom will appeal.

Matter of Doar, 31393/07

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  • When the courts talk about reasonableness they mean the duty that is rnowed to another. Here, it meant the duty the broker/lender owes to rnthe client. Reasonableness is not about what the client wants. rnAlso, in law, reasonableness is an objective, not subjective rnstandard. Here’s a good definition I pulled down from Wickipedia: rnThe reasonable person is a legal fiction of the common law rnrepresenting an objective standard against which any individual’s rnconduct can be measured. It is used to determine if a breach of the rnstandard of care has occurred, provided a duty of care can be proven.rnThe reasonable person standard holds: each person owes a duty to rnbehave as a reasonable person would under the same or similar rncircumstances.[1][2] While the specific circumstances of each case rnwill require varying kinds of conduct and degrees of care, the rnreasonable person standard undergoes no variation itself.[3][4]rnThis standard performs a crucial role in determining negligence in rnboth criminal law-that is, criminal negligence-and tort law. The rnstandard also has a presence in contract law, though its use there is rnsubstantially different.rnThe standard does not exist independently of other circumstances rnwithin a case which could affect an individual’s judgment.rnrn– rn_____________________________rnrnCalifornia Advocates for Nursing Home Reformrnhttp://www.canhr.orgrnTel: (415) 974-5171rnFax: (415) 777-2904rnrn————————-rnrnThis message should in no way be construed as implying any type of rnlegal or contractual relationship, nor should any part of this rnmessage be construed as legal advice.

  • John b, driving 700 miles to do an application is just stupid. The fact that you would do that is proof that even face to face, you must be such a moron that you couldn’t be trusted to validate anybody’s mental state. rnrnYou really think the product is enhanced because the senior spends some time with someone like you?

  • Much as we might like it to be so, it is almost impossible to legislate ethical conduct. All you can do is to make sure those licensed to work in reverse mortgages know the subject thoroughly and that the companies they work for conscribe to an established code of conduct. rnrnStiffer penalties for violations are an important step as well. I’d rather see L.O.’s be required to perform 50 hours of senior community service per year, working with non-profits etc.rnrnAs for the face to face counseling suggestion, that is not only impractical but does not afford the senior any benefit. The reason we go to their homes by and large is a matter of convenience. Besides the level of counseling is not where it needs to be. Most of my clients know more than the counselor by the time we have gone through the preliminary process. Going to their homes certainly doesn’t imply they have some kind of cognition, sensory problem. I do think the process should require that applications be done face to face except in those rural areas where it would prove impossible to do. I have driven 700 miles in a day to do an application. It is not a mail order product.rn

  • This case applies to a single set of facts and, as it is not an appellate decision, does not set a precedent for future cases. However, it does bring attention to the need that we take reasonable steps to assure our elderly customers have the capacity to understand and enter into a complicated reverse mortgage contract.rnrnThe cited case is not one of dementia, but of another mental illness that is not normally associated with aging; therefore, its applicability to our industry is limited. Nevertheless, a prudent originator will want to be reasonably certain the customer has the capacity to enter into a contract. rnrnBecause the likelihood of dementia increases with age, we should be on the lookout for its symptoms primarily in the case of more elderly customers. For example, Alzheimer’s rarely affects persons below 75 years of age, but by the time they are 90, most people will suffer from some degree of mental impairment. rnrnNeither we nor the HECM counselors are qualified to diagnose mental disorders in our customers. To protect our elderly customers, we should ask them to involve family members or other trusted advisers who have known them for a long time. Such persons are more likely than we are to detect changes in their loved one’s behavior that might be an indication they have cognitive impairment.

  • Critic,rnrnI could not agree with you more. I concur with everything you said and Irnsupport you and all that have the philosophy you have, and me! You have arngood weekend and lets keep fighting. Together we are strong, divided we arernweak.rnrnThanks,rnrnJohn Smaldone

  • No telephone interviewing or counseling should be allowed period. If the applicant is not physically able to attend counseling then a counselor should be found who will go to the borrowers home to do. It then obtain a letter from a doctor saying the the borrower is OK. If you can’t find a counselor This will eliminate the problem since both the LO and and counselor can evaluate the true mental condition of the Senior. We need to eliminate all nonface to face stuff. I don’t think the government ever meant this to be a telephone soliciation opportunity.

  • It is not always easy to determine our senior clientu2019s mental illness during the times that we meet with them as originators. A counselor who only meets with them for an hour or so is unlikely to determine if one has mental illness. Even with mental illness there are times one can be rational and behave u201cnormally.u201d rnrnWhat concerns me if you read the documentation the doctor determined mental illness in 2000. At that time the doctor should have stated the borrower was not able to make decisions and required the guardian be appointed not waited until 2008 for that appointment.rnrnAdditionally it states that adult protection was called in at the end of 2001 (looks like about the same time the 1st RM was being done) and they took no action and closed the case. Adult protection representatives are more likely to observe and determine mental illness and move it to the next level of getting a guardian u2013 certainly more so than an originator or counselor.rnrnIt looks like there were many steps and many persons along the way that should have made the determination of Ms. Brunsonu2019s mental illness and set up a guardian before the reverse mortgage was completed. It should NOT fall on the originator, counselor or the lender to determine the mental capacity of a senior. Even if we do think there many be some issues we need letters from doctors to determine the incapacity. Yes, it is important that we involve family and/or advisers in the process but that is not always an option or desired by the borrower.rnrnIn this case the temporary guardian is stating that Ms. Brunson signed the mortgages under duress of her brother. A sister testified that there were signs of mental illness in 2000 so why didnu2019t she appeal to the courts for a guardian at that time?rnrnItu2019s now obvious that Ms. Brunson has mental illness however the doctor, family and adult protection should have been the ones to determine this and take action. Not wait until years later and decide that an originator, counselor or lender was responsible for making the diagnosis and being responsible for her actions. Maybe the doctor should be charged with negligence for not reporting to the courts that a guardian be appointed. After all, according to the testimony, he determined Ms. Brunson couldnu2019t make decisions for herself back in 2000 even before the reverse mortgage was in place.rnrnThe document does not state why the home was in foreclosure. Is the lender the scapegoat for other issues? Makes me wonder if itu2019s not family/estate or someone just trying to get more money out of the home and some of the decision makers in the case donu2019t understand reverse mortgages and have their own negative bias against them. Or is it buyeru2019s remorse to request that the mortgage be voided?rnrnI sure hope that Financial Freedom appeals this case! I sure donu2019t want this to be setting a precedent that years later one can go after a lender to void a reverse mortgage (or any mortgage for that matter).

  • Prescott,rnrnReasonableness is a very subjective standard. Some people believe that seniors should be free to make their own decisions while others believe seniors should be counseled at every turn.rnrnSome seniors want to pursue their independent lifestyle and the family is legitimately divided over that proposition. What bright line test is actually available in such cases?

  • Robert,rnrnThese are the issues those of us with older parents face every single day. As your parents begin losing their hearing and laugh more than they normally would have had in the past, just to hide the fact they cannot hear so well, you wonder how much they hear when they are “signing away their home.” Or as their eyes get weaker and they can no longer read the fine print but sign away; something they never would have done 10 years before.rnrnI speak to my father and mother-in-law daily and our concern grows with time. You do not want to take their independence but it is scary to think of them on their own. Today my father is more dependent on me than ever before and my mother-in-law more dependent on my wife. We both know one thing, we will not live to see a reversal.

  • John,rnrnOne of the biggest disappointments about this industry is its laissez-faire attitude in its discipline towards those LOs who show little descretion in how they treat different seniors. Some desperately want to believe and convince others that all seniors should be treated as competent.rnrnEmployers need to increase their training specifically in these matters. We need guidelines and support when getting involved in such matters. I have called some seniors who were more than lucid in the morning but were totally incompetent at night. It makes one wonder how many others we dealt with only during morning hours who had similar problems that went undetected.rnrnWe are not doctors nor psychologists but we need to be diligent to take notice if our customers appear sufficiently competent to make the loan decision based on some objective standards. I hope employers or NRMLA will produce such guidelines. rnrnrnrn

  • HECM_DudernrnThere is much I agree with; however, I do not support your view that this case is good. While this case may be sound, normally cases like this have a tendency to expand and courts and juries begin looking for incompetency where none is indicated. As defendents will lenders now be required to produce evidence as to the mental capacity of a senior who originated their HECM 15 years ago and are now deceased?rnrnI am not bothered by your comment that too many on this website see seniors as having equal mental capacity. It makes one wonder if they have the reasoning capacity to originate reverse mortgages. But it does bother me to see one of our own embrace a case of this nature. The potential ramifications are alarming.

  • Your comment is, in my opinion, Pure B.S. Mr./Mrs./Ms iluvrms: And yes, in some cases all those folks you just mentioned do get sued and successfully, too. What I would like to know is what happened to the money she received; how much; and, why was she refinancing less than two years later. What was the total of the origination fees, by the way, and how were the fees split between the L.O and Company?

  • Robert, it is indeed unfortunate you have chosen to be part of the problem rather than the solution. You are ridiculing a serious subject. 25 percent of persons 80 years old suffer from dementia, and that percentage goes up five percent for each year above 80. rn

  • Ok, wait just a second here: LO’s and counselors are NOT QUALIFIED to determine that a senior is incompetent and this judge was dead wrong to lay blame on either the lender or the counselor. My neighbor across the street makes perfect sense to me, and it was a total shock to find out she’s been diagnosed with dementia from her son. Not one thing she’s told me for the last 6 months has been true, and there was absolutely no way that I would have known. Seniors are assumed to be “daft” enough as it is! They get no credit for being as smart as they are! Just because somebody’s old does not mean they should be treated like they don’t have a brain in their head. If I was a senior, that would really make me mad. Unless they have been diagnosed by a physician, who is the ONLY person that is qualified to make the determination, I think it’s rude and discriminitive to make them jump through hoops to make sure everybody knows they aren’t crazy! Do car dealers have to get a competency test to finance a car for a senior? Does a pharmacy have to have a note from the doctor stating competency so a senior can buy medicine? After all, a senior could take too many and kill themselves. Would the pharmacy get sued? What about Home Depot-will they be sued next for selling a senior a ladder that they fell off of? I can’t wait for some of these people get old, and find out what it’s like to be treated like a child.

  • Reverse mortgages can be great but not they are not universally suitable transactions (otherwise why would there be counseling requirement?) Often, elders and adults with developmental disabilities may have mental and verbal limitations they leave them vulnerable to financial abuse and incapable of asking for help and protection. The court stated that the u201cstandardu201d is whether or not the mortgagee had knowledge of the mortgagoru2019s incapacity before the contract was executed. The court determined in this instance that the mortgagor could have known this by the u201creasonableu201d fulfillment of its statutory obligation. u201cReasonablenessu201d is what the court was looking for, and apparently the defendant couldnu2019t show it.

  • We may not be able to tell that someone is mentally ill but we sure can see if someone is not fully able to understand what they are doing and or being manipulated. rnrnThis could be the event with the greatest impact on our business for years to come. This will not go away..nor should it.rnrnThere is no question that the number of lenders and consultants will shrink.

  • Robert, the key word in your statement is “hope”. Until one reaches 80, one will not know his./her condition. (Maybe not even then; however, family members will surely know.) I believe this Industry has to mature to the point, forced by HUD/FHA because an FHA HECM is not possible without the FHA Insurance aspect, that Loan Originators are compensated on a salary or salary plus commission basis. And don’t think this can’t happen: HUD/FHA forced the Industry to make all Loan Originators W-2 Employees, remember. (I remember telling the first Company I worked for of this Regulation–the Part Owner/Manager said I was “Nuts” until I showed him the Regulation and Mr. Montgomery’s letter confirmation.) In years passed I covered the Pacific Northwest and Alaska, giving talks at High Schools while recruiting Aircraft Mechanic students. The world famous private Technical in Oklahoma operated their sales territories by have salespeople like me get $100.00 Application Fees from struggling families (How many times have I heard from different sales managers: “Come now, Nelson, everbody has a hundred dollars. You just have to find Grandma’s cookie jar.” In time, because the school was living off the Federal Guaranteed Student Loan Program (which the Student still had to pay back, even though the boy/girl had dropped out of school before graduating), the Feds stepped in (Thank God) and said “If you are going to utilize the Federal Student Loan Program, you will change the way Sales Represenatives are paid so young people are not high pressured to sign up for schooling which may not be appropriate. Providing a base Salary for Loan Originators would I think reduce some of the “pressure” on Seniors to take out an FHA HECM when it isn’t appropriate, I’d like to see the Feds do this.

  • The brother was counseled with the woman, which was part of the court’s concern– it was unclear how much she understood vs. how much he understood. The court was also concerned that he pressured her into signing the documents. I don’t think the brother was her legal guardian. However, a few months before the reverse mortgage (and after her diagnosis of paranoid schizophrenia), the woman had transferred the deed to herself and her brother so that they were joint tenants with the right of survivorship. Hope this helps clear some things up!

  • HECM_Dude: I sure hope when I’m 80 that I don’t need to involve my family members if I choose to pull some money out of my house. Are you prepared to step down as a decision maker for yourself when you turn 80 and let your family members make decisions for you because they “know best”?

  • Good day,rnrnThis is very interesting and scary at the same time. What kind of a precedence is this going to create? We either have buyers remorse as Tim pointed out or bad counseling.rnrnWhen I say counseling, I don’t necessarily mean the HUD appointed counseling agency. I am not saying that this is the case but could the LO have noticed problems with the borrower not responding properly?. Not only that but did the loan officer do the proper job for the borrower. Was the loan officer thorough in his or her explanation of all the documentation. Did the loan officer ask questions of the borrower to make sure she understood what she was getting with a reverse mortgage? Was their any family members involved when the loan application was taken or did the LO talk to any family members before the application was taken? rnrnDon’t miss understand me, I am not saying the LO did anything wrong. However, this is just another round of bad publicity that the public will capitalize on and look at it like we have another crooked company scamming seniors. It seems in this case, their are a lot of unanswered questions. This Judge set a standard we may all pay for in the future. Lets hope this is an isolated case that we do not see occur again.rnrnJohn A. Smaldone

  • Let this be a warning to those who, driven by an appetite for commissions at all cost, argue that all seniors are mature adults who are able to make informed decisions. The sad truth is some seniors no longer have the capacity to enter into contracts, and this court’s ruling is a welcome remedy. rnrnDementia is a progressive disease that creeps in very slowly. Family members will recognize it first because of changes in their loved one’s behavior. Strangers will not recognize dementia in its early stages, unless they are trained professionals, and even then it is not possible to make an accurate diagnosis. rnrnFor this reason, it is important to involve family members in the process, especially in the case of customers over 80 years of age. Family members know best their loved ones and their needs. If you suspect a prospective customer lacks capacity, don’t take chances. Get a written opinion from his or her doctor; involve a trusted relative (preferably one who has power of attorney), and use common sense. If the family is against their elderly loved one obtaining a reverse mortgage, it might be safer to steer clear.

  • Question- Was the brother counselled with the woman? Was he her legal guardian? Did the court give permission for the guardian to proceed with a Reverse? As a former Underwriter for Reverse I would have required these docs. Did he sign all of the Loan docs?

  • Isolated only until disgruntled heirs/family members learn of the precedent and pursue it, and they’ll learn of it from ‘ambulance chaser’ lawyers. Your closing advice is right on, with an emphasis on “other professionals” per nancyonreverse.

  • When the courts talk about reasonableness they mean the duty that is rnowed to another. Here, it meant the duty the broker/lender owes to rnthe client. Reasonableness is not about what the client wants. rnAlso, in law, reasonableness is an objective, not subjective rnstandard. Here’s a good definition I pulled down from Wickipedia: rnThe reasonable person is a legal fiction of the common law rnrepresenting an objective standard against which any individual’s rnconduct can be measured. It is used to determine if a breach of the rnstandard of care has occurred, provided a duty of care can be proven.rnThe reasonable person standard holds: each person owes a duty to rnbehave as a reasonable person would under the same or similar rncircumstances.[1][2] While the specific circumstances of each case rnwill require varying kinds of conduct and degrees of care, the rnreasonable person standard undergoes no variation itself.[3][4]rnThis standard performs a crucial role in determining negligence in rnboth criminal law-that is, criminal negligence-and tort law. The rnstandard also has a presence in contract law, though its use there is rnsubstantially different.rnThe standard does not exist independently of other circumstances rnwithin a case which could affect an individual’s judgment.rnrn– rn_____________________________rnrnCalifornia Advocates for Nursing Home Reformrnhttp://www.canhr.orgrnTel: (415) 974-5171rnFax: (415) 777-2904rnrn————————-rnrnThis message should in no way be construed as implying any type of rnlegal or contractual relationship, nor should any part of this rnmessage be construed as legal advice.

  • When the courts talk about reasonableness they mean the duty that is rnowed to another. Here, it meant the duty the broker/lender owes to rnthe client. Reasonableness is not about what the client wants. rnAlso, in law, reasonableness is an objective, not subjective rnstandard. Here’s a good definition I pulled down from Wickipedia: rnThe reasonable person is a legal fiction of the common law rnrepresenting an objective standard against which any individual’s rnconduct can be measured. It is used to determine if a breach of the rnstandard of care has occurred, provided a duty of care can be proven.rnThe reasonable person standard holds: each person owes a duty to rnbehave as a reasonable person would under the same or similar rncircumstances.[1][2] While the specific circumstances of each case rnwill require varying kinds of conduct and degrees of care, the rnreasonable person standard undergoes no variation itself.[3][4]rnThis standard performs a crucial role in determining negligence in rnboth criminal law-that is, criminal negligence-and tort law. The rnstandard also has a presence in contract law, though its use there is rnsubstantially different.rnThe standard does not exist independently of other circumstances rnwithin a case which could affect an individual’s judgment.rnrn– rn_____________________________rnrnCalifornia Advocates for Nursing Home Reformrnhttp://www.canhr.orgrnTel: (415) 974-5171rnFax: (415) 777-2904rnrn————————-rnrnThis message should in no way be construed as implying any type of rnlegal or contractual relationship, nor should any part of this rnmessage be construed as legal advice.

  • John b, driving 700 miles to do an application is just stupid. The fact that you would do that is proof that even face to face, you must be such a moron that you couldn’t be trusted to validate anybody’s mental state. rnrnYou really think the product is enhanced because the senior spends some time with someone like you?

  • John b, driving 700 miles to do an application is just stupid. The fact that you would do that is proof that even face to face, you must be such a moron that you couldn’t be trusted to validate anybody’s mental state. rnrnYou really think the product is enhanced because the senior spends some time with someone like you?

  • Much as we might like it to be so, it is almost impossible to legislate ethical conduct. All you can do is to make sure those licensed to work in reverse mortgages know the subject thoroughly and that the companies they work for conscribe to an established code of conduct. rnrnStiffer penalties for violations are an important step as well. I’d rather see L.O.’s be required to perform 50 hours of senior community service per year, working with non-profits etc.rnrnAs for the face to face counseling suggestion, that is not only impractical but does not afford the senior any benefit. The reason we go to their homes by and large is a matter of convenience. Besides the level of counseling is not where it needs to be. Most of my clients know more than the counselor by the time we have gone through the preliminary process. Going to their homes certainly doesn’t imply they have some kind of cognition, sensory problem. I do think the process should require that applications be done face to face except in those rural areas where it would prove impossible to do. I have driven 700 miles in a day to do an application. It is not a mail order product.rn

  • This case applies to a single set of facts and, as it is not an appellate decision, does not set a precedent for future cases. However, it does bring attention to the need that we take reasonable steps to assure our elderly customers have the capacity to understand and enter into a complicated reverse mortgage contract.rnrnThe cited case is not one of dementia, but of another mental illness that is not normally associated with aging; therefore, its applicability to our industry is limited. Nevertheless, a prudent originator will want to be reasonably certain the customer has the capacity to enter into a contract. rnrnBecause the likelihood of dementia increases with age, we should be on the lookout for its symptoms primarily in the case of more elderly customers. For example, Alzheimer’s rarely affects persons below 75 years of age, but by the time they are 90, most people will suffer from some degree of mental impairment. rnrnNeither we nor the HECM counselors are qualified to diagnose mental disorders in our customers. To protect our elderly customers, we should ask them to involve family members or other trusted advisers who have known them for a long time. Such persons are more likely than we are to detect changes in their loved one’s behavior that might be an indication they have cognitive impairment.

  • Much as we might like it to be so, it is almost impossible to legislate ethical conduct. All you can do is to make sure those licensed to work in reverse mortgages know the subject thoroughly and that the companies they work for conscribe to an established code of conduct. rnrnStiffer penalties for violations are an important step as well. I’d rather see L.O.’s be required to perform 50 hours of senior community service per year, working with non-profits etc.rnrnAs for the face to face counseling suggestion, that is not only impractical but does not afford the senior any benefit. The reason we go to their homes by and large is a matter of convenience. Besides the level of counseling is not where it needs to be. Most of my clients know more than the counselor by the time we have gone through the preliminary process. Going to their homes certainly doesn’t imply they have some kind of cognition, sensory problem. I do think the process should require that applications be done face to face except in those rural areas where it would prove impossible to do. I have driven 700 miles in a day to do an application. It is not a mail order product.rn

  • Critic,rnrnI could not agree with you more. I concur with everything you said and Irnsupport you and all that have the philosophy you have, and me! You have arngood weekend and lets keep fighting. Together we are strong, divided we arernweak.rnrnThanks,rnrnJohn Smaldone

  • This case applies to a single set of facts and, as it is not an appellate decision, does not set a precedent for future cases. However, it does bring attention to the need that we take reasonable steps to assure our elderly customers have the capacity to understand and enter into a complicated reverse mortgage contract.rnrnThe cited case is not one of dementia, but of another mental illness that is not normally associated with aging; therefore, its applicability to our industry is limited. Nevertheless, a prudent originator will want to be reasonably certain the customer has the capacity to enter into a contract. rnrnBecause the likelihood of dementia increases with age, we should be on the lookout for its symptoms primarily in the case of more elderly customers. For example, Alzheimer’s rarely affects persons below 75 years of age, but by the time they are 90, most people will suffer from some degree of mental impairment. rnrnNeither we nor the HECM counselors are qualified to diagnose mental disorders in our customers. To protect our elderly customers, we should ask them to involve family members or other trusted advisers who have known them for a long time. Such persons are more likely than we are to detect changes in their loved one’s behavior that might be an indication they have cognitive impairment.

  • No telephone interviewing or counseling should be allowed period. If the applicant is not physically able to attend counseling then a counselor should be found who will go to the borrowers home to do. It then obtain a letter from a doctor saying the the borrower is OK. If you can’t find a counselor This will eliminate the problem since both the LO and and counselor can evaluate the true mental condition of the Senior. We need to eliminate all nonface to face stuff. I don’t think the government ever meant this to be a telephone soliciation opportunity.

  • Critic,rnrnI could not agree with you more. I concur with everything you said and Irnsupport you and all that have the philosophy you have, and me! You have arngood weekend and lets keep fighting. Together we are strong, divided we arernweak.rnrnThanks,rnrnJohn Smaldone

  • No telephone interviewing or counseling should be allowed period. If the applicant is not physically able to attend counseling then a counselor should be found who will go to the borrowers home to do. It then obtain a letter from a doctor saying the the borrower is OK. If you can’t find a counselor This will eliminate the problem since both the LO and and counselor can evaluate the true mental condition of the Senior. We need to eliminate all nonface to face stuff. I don’t think the government ever meant this to be a telephone soliciation opportunity.

  • It is not always easy to determine our senior clientu2019s mental illness during the times that we meet with them as originators. A counselor who only meets with them for an hour or so is unlikely to determine if one has mental illness. Even with mental illness there are times one can be rational and behave u201cnormally.u201d rnrnWhat concerns me if you read the documentation the doctor determined mental illness in 2000. At that time the doctor should have stated the borrower was not able to make decisions and required the guardian be appointed not waited until 2008 for that appointment.rnrnAdditionally it states that adult protection was called in at the end of 2001 (looks like about the same time the 1st RM was being done) and they took no action and closed the case. Adult protection representatives are more likely to observe and determine mental illness and move it to the next level of getting a guardian u2013 certainly more so than an originator or counselor.rnrnIt looks like there were many steps and many persons along the way that should have made the determination of Ms. Brunsonu2019s mental illness and set up a guardian before the reverse mortgage was completed. It should NOT fall on the originator, counselor or the lender to determine the mental capacity of a senior. Even if we do think there many be some issues we need letters from doctors to determine the incapacity. Yes, it is important that we involve family and/or advisers in the process but that is not always an option or desired by the borrower.rnrnIn this case the temporary guardian is stating that Ms. Brunson signed the mortgages under duress of her brother. A sister testified that there were signs of mental illness in 2000 so why didnu2019t she appeal to the courts for a guardian at that time?rnrnItu2019s now obvious that Ms. Brunson has mental illness however the doctor, family and adult protection should have been the ones to determine this and take action. Not wait until years later and decide that an originator, counselor or lender was responsible for making the diagnosis and being responsible for her actions. Maybe the doctor should be charged with negligence for not reporting to the courts that a guardian be appointed. After all, according to the testimony, he determined Ms. Brunson couldnu2019t make decisions for herself back in 2000 even before the reverse mortgage was in place.rnrnThe document does not state why the home was in foreclosure. Is the lender the scapegoat for other issues? Makes me wonder if itu2019s not family/estate or someone just trying to get more money out of the home and some of the decision makers in the case donu2019t understand reverse mortgages and have their own negative bias against them. Or is it buyeru2019s remorse to request that the mortgage be voided?rnrnI sure hope that Financial Freedom appeals this case! I sure donu2019t want this to be setting a precedent that years later one can go after a lender to void a reverse mortgage (or any mortgage for that matter).

  • Prescott,rnrnReasonableness is a very subjective standard. Some people believe that seniors should be free to make their own decisions while others believe seniors should be counseled at every turn.rnrnSome seniors want to pursue their independent lifestyle and the family is legitimately divided over that proposition. What bright line test is actually available in such cases?

  • It is not always easy to determine our senior clientu2019s mental illness during the times that we meet with them as originators. A counselor who only meets with them for an hour or so is unlikely to determine if one has mental illness. Even with mental illness there are times one can be rational and behave u201cnormally.u201d rnrnWhat concerns me if you read the documentation the doctor determined mental illness in 2000. At that time the doctor should have stated the borrower was not able to make decisions and required the guardian be appointed not waited until 2008 for that appointment.rnrnAdditionally it states that adult protection was called in at the end of 2001 (looks like about the same time the 1st RM was being done) and they took no action and closed the case. Adult protection representatives are more likely to observe and determine mental illness and move it to the next level of getting a guardian u2013 certainly more so than an originator or counselor.rnrnIt looks like there were many steps and many persons along the way that should have made the determination of Ms. Brunsonu2019s mental illness and set up a guardian before the reverse mortgage was completed. It should NOT fall on the originator, counselor or the lender to determine the mental capacity of a senior. Even if we do think there many be some issues we need letters from doctors to determine the incapacity. Yes, it is important that we involve family and/or advisers in the process but that is not always an option or desired by the borrower.rnrnIn this case the temporary guardian is stating that Ms. Brunson signed the mortgages under duress of her brother. A sister testified that there were signs of mental illness in 2000 so why didnu2019t she appeal to the courts for a guardian at that time?rnrnItu2019s now obvious that Ms. Brunson has mental illness however the doctor, family and adult protection should have been the ones to determine this and take action. Not wait until years later and decide that an originator, counselor or lender was responsible for making the diagnosis and being responsible for her actions. Maybe the doctor should be charged with negligence for not reporting to the courts that a guardian be appointed. After all, according to the testimony, he determined Ms. Brunson couldnu2019t make decisions for herself back in 2000 even before the reverse mortgage was in place.rnrnThe document does not state why the home was in foreclosure. Is the lender the scapegoat for other issues? Makes me wonder if itu2019s not family/estate or someone just trying to get more money out of the home and some of the decision makers in the case donu2019t understand reverse mortgages and have their own negative bias against them. Or is it buyeru2019s remorse to request that the mortgage be voided?rnrnI sure hope that Financial Freedom appeals this case! I sure donu2019t want this to be setting a precedent that years later one can go after a lender to void a reverse mortgage (or any mortgage for that matter).

  • Robert,rnrnThese are the issues those of us with older parents face every single day. As your parents begin losing their hearing and laugh more than they normally would have had in the past, just to hide the fact they cannot hear so well, you wonder how much they hear when they are “signing away their home.” Or as their eyes get weaker and they can no longer read the fine print but sign away; something they never would have done 10 years before.rnrnI speak to my father and mother-in-law daily and our concern grows with time. You do not want to take their independence but it is scary to think of them on their own. Today my father is more dependent on me than ever before and my mother-in-law more dependent on my wife. We both know one thing, we will not live to see a reversal.

  • John,rnrnOne of the biggest disappointments about this industry is its laissez-faire attitude in its discipline towards those LOs who show little descretion in how they treat different seniors. Some desperately want to believe and convince others that all seniors should be treated as competent.rnrnEmployers need to increase their training specifically in these matters. We need guidelines and support when getting involved in such matters. I have called some seniors who were more than lucid in the morning but were totally incompetent at night. It makes one wonder how many others we dealt with only during morning hours who had similar problems that went undetected.rnrnWe are not doctors nor psychologists but we need to be diligent to take notice if our customers appear sufficiently competent to make the loan decision based on some objective standards. I hope employers or NRMLA will produce such guidelines. rnrnrnrn

  • HECM_DudernrnThere is much I agree with; however, I do not support your view that this case is good. While this case may be sound, normally cases like this have a tendency to expand and courts and juries begin looking for incompetency where none is indicated. As defendents will lenders now be required to produce evidence as to the mental capacity of a senior who originated their HECM 15 years ago and are now deceased?rnrnI am not bothered by your comment that too many on this website see seniors as having equal mental capacity. It makes one wonder if they have the reasoning capacity to originate reverse mortgages. But it does bother me to see one of our own embrace a case of this nature. The potential ramifications are alarming.

  • Prescott,rnrnReasonableness is a very subjective standard. Some people believe that seniors should be free to make their own decisions while others believe seniors should be counseled at every turn.rnrnSome seniors want to pursue their independent lifestyle and the family is legitimately divided over that proposition. What bright line test is actually available in such cases?

  • Your comment is, in my opinion, Pure B.S. Mr./Mrs./Ms iluvrms: And yes, in some cases all those folks you just mentioned do get sued and successfully, too. What I would like to know is what happened to the money she received; how much; and, why was she refinancing less than two years later. What was the total of the origination fees, by the way, and how were the fees split between the L.O and Company?

  • Robert,rnrnThese are the issues those of us with older parents face every single day. As your parents begin losing their hearing and laugh more than they normally would have had in the past, just to hide the fact they cannot hear so well, you wonder how much they hear when they are “signing away their home.” Or as their eyes get weaker and they can no longer read the fine print but sign away; something they never would have done 10 years before.rnrnI speak to my father and mother-in-law daily and our concern grows with time. You do not want to take their independence but it is scary to think of them on their own. Today my father is more dependent on me than ever before and my mother-in-law more dependent on my wife. We both know one thing, we will not live to see a reversal.

  • Robert, it is indeed unfortunate you have chosen to be part of the problem rather than the solution. You are ridiculing a serious subject. 25 percent of persons 80 years old suffer from dementia, and that percentage goes up five percent for each year above 80. rn

  • John,rnrnOne of the biggest disappointments about this industry is its laissez-faire attitude in its discipline towards those LOs who show little descretion in how they treat different seniors. Some desperately want to believe and convince others that all seniors should be treated as competent.rnrnEmployers need to increase their training specifically in these matters. We need guidelines and support when getting involved in such matters. I have called some seniors who were more than lucid in the morning but were totally incompetent at night. It makes one wonder how many others we dealt with only during morning hours who had similar problems that went undetected.rnrnWe are not doctors nor psychologists but we need to be diligent to take notice if our customers appear sufficiently competent to make the loan decision based on some objective standards. I hope employers or NRMLA will produce such guidelines. rnrnrnrn

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