When the media covers reverse mortgages it’s almost always about one thing, fees.
Sure, fees and costs are an important subject, but the San Francisco Chronicle is reporting on how reverse mortgages are holding up in this economy even though many homeowners may find themselves under water on the loans.
One San Francisco resident’s mother took out a reverse mortgage on her home in Florida about four years ago. At the time the home was appraised at $260,000 which enabled her mother to receive $160,000 from the HECM.
Because the woman’s home was paid off, she decided to receive $500 per month and leave the rest in a credit line. Today, her loan balance is about $75,000, and she has about $105,000 remaining in her line of credit. But the value of her home has fallen to roughly $80,000.
Since the FHA insures the loan, “No matter what happens to the home’s value, she will always be able to take out whatever remains on her equity line. “The lender must honor the mortgage contract as originally written,” says FHA spokesman Lemar Wooley.
Read the rest at the link below.