15,000 Floridians with Reverse Mortgages Facing Foreclosure and Homelessness

[Plinker]

RM FORECLOSURES:

From the Naples News, 2019

15,000 Floridians at Risk of Foreclosure and Homelessness:

Earlier this year, an 83-year-old woman lost the home she has owned for more than 40 years.
She is one of thousands of senior Floridians facing the same outcome. But what sounds like a great deal can have serious pitfalls. Instead of providing a secure financial future for senior homeowners, nearly 15,000 older Floridians out of the 85,000 currently holding reverse mortgages are in danger of losing their homes in the coming years, according to data from the U.S. Department of Housing and Urban Development.
Already, 16,654 reverse mortgage holders have gone into foreclosure in the five years that ended December 2017, the most by far in the U.S. and nearly double the second-most — in California.
Reverse mortgages don’t get a person out of debt, they put people into more debt. It may solve an immediate cash-flow problem, but may not provide any long-term financial security. And homeowners whose circumstances change in ways they didn’t anticipate find themselves without their most valuable asset at an age when they need it most.

I had no idea it was this bad.
TV appears to be a mecca for these and similar sales pitches. A fee-only fiduciary financial planner can determine what is appropriate and will provide alternative options.

[manaboutown]

Even after reform reverse mortgages can lead to losing one's home. The myth is the borrower cannot lose. The reality is the lender cannot lose as taxpayers end up not only covering up any and all of their possible losses but assuring their profits - and they are some profits!

Reverse mortgages are dangerous products pushed on naive vulnerable seniors using the hard sell. Remember Fonzie (Henry Winkler) and Magnum P.I. (Tom Selleck) on TV commercials pushing them?

[valuemkt]

I'm sure the prolific advertiser and commenter on this site will conjure up a bunch of gibberish to continue to try to convince us that they are a great deal.

[Jayhawk]

RM FORECLOSURES:

From the Naples News, 2019

15,000 Floridians at Risk of Foreclosure and Homelessness:

Earlier this year, an 83-year-old woman lost the home she has owned for more than 40 years.
She is one of thousands of senior Floridians facing the same outcome. But what sounds like a great deal can have serious pitfalls. Instead of providing a secure financial future for senior homeowners, nearly 15,000 older Floridians out of the 85,000 currently holding reverse mortgages are in danger of losing their homes in the coming years, according to data from the U.S. Department of Housing and Urban Development.
Already, 16,654 reverse mortgage holders have gone into foreclosure in the five years that ended December 2017, the most by far in the U.S. and nearly double the second-most — in California.
Reverse mortgages don’t get a person out of debt, they put people into more debt. It may solve an immediate cash-flow problem, but may not provide any long-term financial security. And homeowners whose circumstances change in ways they didn’t anticipate find themselves without their most valuable asset at an age when they need it most.

I had no idea it was this bad.
TV appears to be a mecca for these and similar sales pitches. A fee-only fiduciary financial planner can determine what is appropriate and will provide alternative options.

I have no dog in the fight (you may since you are active on this topic) but you and the others who hate this product always choose to ignore the obvious -- "If they run short, they don't pay taxes, insurance or do repairs and don't have additional resources to draw on. The bank has little choice but to foreclose to protect the security on the loan."

So whether a person has a Reverse Mortgage, a Regular Mortgage, a Home Equity Loan, or NO LOAN AT ALL, when the person fails to pay taxes (and normally insurance) on the property a lien is created and they will be foreclosed if they don't pay. If they can't or don't pay these items when they have a loan requiring NO PAYMENTS, what makes you think they would pay if they didn't?

I took the quote above directly from the article you posted but left out this fact.

[manaboutown]

I'm sure the prolific advertiser and commenter on this site will conjure up a bunch of gibberish to continue to try to convince us that they are a great deal.

Yes, he never ever directly answers or actually even responds on point to legitimate questions about the many financially disasterous downsides.

Ironically, he proudly claims to have been selling them for many years, which would of course been during the "Wild West' days when they were pitched to thousands people who eventually lost their homes.

Seniors face foreclosure in retirement after failed reverse mortgage (https://www.naplesnews.com/in-depth/news/investigations/2019/06/11/seniors-face-foreclosure-retirement-after-failed-reverse-mortgage/1329043001/)

[Stu from NYC]

I'm sure the prolific advertiser and commenter on this site will conjure up a bunch of gibberish to continue to try to convince us that they are a great deal.

Have not seen cousin Brucie on this site for some time. Maybe he found a new line of work.

[gatorbill1]

Did that person who keeps flooding our conversation site with reverse mortgage garbage see this???

[manaboutown]

Have not seen cousin Brucie on this site for some time. Maybe he found a new line of work.

Oh, I am sure he is busy closing deals on RMs and cashing huge commission checks.

[John_W]

I have a reverse mortgage for 3 years through Citizens Bank. The only way you can be forced out is if you fail to pay your taxes and insurance. They asked me the second year to send them a fax of my insurance, that's the only contact I have with the bank in 3 years.

The only other way is if you no longer live fulltime in the home, they will force you to sell the home. After the home is sold and they pay off the amount you have taken, plus initial closing costs, in my case $9,000 and interest, in my case about $200 a month. Right now I would owe them about $65,000, I took a $50,000 draw in the beginning.

If you own your home, you have a lot of equity that is going to waste if you never plan to resell, which in my case I don't plan on moving again since I've been in this home ten years. If I were to sell the home, we would pay back the bank $65,000 and the rest would be ours, and this is for receiving $50,000 three years ago.

[manaboutown]

I have a reverse mortgage for 3 years through Citizens Bank. The only way you can be forced out is if you fail to pay your taxes and insurance. They asked me the second year to send them a fax of my insurance, that's the only contact I have with the bank in 3 years.

The only other way is if you no longer live fulltime in the home, they will force you to sell the home. After the home is sold and they pay off the amount you have taken, plus initial closing costs, in my case $9,000 and interest, in my case about $200 a month. Right now I would owe them about $65,000, I took a $50,000 draw in the beginning.

If you own your home, you have a lot of equity that is going to waste if you never plan to resell, which in my case I don't plan on moving again since I've been in this home ten years. If I were to sell the home, we would pay back the bank $65,000 and the rest would be ours, and this is for receiving $50,000 three years ago.

John, I hope and pray it works out well for you and your wife. Each case is different and from reading your prior posts explaining your rather unique personal situation and well thought out rational I can understand why you chose the path you took after you and your wife educated yourselves thoroughly prior to taking out an RM.

BTW I always enjoy your thoughtful helpful posts and the incredible photographs many contain.

[Dond1959]

The problem with reverse mortgages is not that you can be foreclosed upon, as stated above that can happen with any mortgage. The problem with the product is the high fee level that is charged. As long as people are competent when signing up for these products they are perfectly legal.

If you plan to move or can’t pay your taxes and insurance this is a bad product for you as you will be headed to foreclosure. Not sure if The Villages have volunteers who provide free financial advice, but getting some financial advice before using this product makes sense.

[Topspinmo]

Even after reform reverse mortgages can lead to losing one's home. The myth is the borrower cannot lose. The reality is the lender cannot lose as taxpayers end up not only covering up any and all of their possible losses but assuring their profits - and they are some profits!

Reverse mortgages are dangerous products pushed on naive vulnerable seniors using the hard sell. Remember Fonzie (Henry Winkler) and Magnum P.I. (Tom Selleck) on TV commercials pushing them?

Maybe the can’t loose, but may be left with nothing. :shocked:

[RGD1213]

Maybe the can’t loose, but may be left with nothing. :shocked:
Left with nothing? Chances are you would be dead, so probably wouldn’t make much difference. If someone wants to use the equity in their home while they can, and if they don’t have heirs (or don’t care about leaving $$$ for heirs), RM is an option for someone to make that choice. It is a personal choice/decision. And don’t forget, advertisers on this site pay money so you can enjoy this site for free. You should be thanking him. I really don’t see why users on this site bash him. If you don’t like what he says, don’t open the link!

[Stu from NYC]

I have a reverse mortgage for 3 years through Citizens Bank. The only way you can be forced out is if you fail to pay your taxes and insurance. They asked me the second year to send them a fax of my insurance, that's the only contact I have with the bank in 3 years.

The only other way is if you no longer live fulltime in the home, they will force you to sell the home. After the home is sold and they pay off the amount you have taken, plus initial closing costs, in my case $9,000 and interest, in my case about $200 a month. Right now I would owe them about $65,000, I took a $50,000 draw in the beginning.

If you own your home, you have a lot of equity that is going to waste if you never plan to resell, which in my case I don't plan on moving again since I've been in this home ten years. If I were to sell the home, we would pay back the bank $65,000 and the rest would be ours, and this is for receiving $50,000 three years ago.

Everyones situation is different and glad your RM worked out for you

[Plinker]

I have a reverse mortgage for 3 years through Citizens Bank. The only way you can be forced out is if you fail to pay your taxes and insurance. They asked me the second year to send them a fax of my insurance, that's the only contact I have with the bank in 3 years.

The only other way is if you no longer live fulltime in the home, they will force you to sell the home. After the home is sold and they pay off the amount you have taken, plus initial closing costs, in my case $9,000 and interest, in my case about $200 a month. Right now I would owe them about $65,000, I took a $50,000 draw in the beginning.

If you own your home, you have a lot of equity that is going to waste if you never plan to resell, which in my case I don't plan on moving again since I've been in this home ten years. If I were to sell the home, we would pay back the bank $65,000 and the rest would be ours, and this is for receiving $50,000 three years ago.


Excellent post! I believe your statements to be spot-on accurate. I would add that if the borrower had a live-in child, friend or caregiver that had been assisting them for many years and are not on the RM loan documents, they would be homeless, as well. A RM may be appropriate but the last person to determine that is the salesman. You clearly have done your homework on RM’s.
The purpose of my posts has nothing to do specifically with reverse mortgages, per se. If a huckster was peddling index annuities, variable life insurance, payday loans, etc. the only thing different would be that I would attempt to show how there are other options and many potentially devastating consequences of people not doing their due diligence before signing on the dotted line.
I started a business at the age of 29 and sold it 28 years later before my wife and I retired to TV. I was inundated with carnival barkers calling and showing up unannounced trying to sell me everything imaginable all under the guise of only trying to help me. We all know who they were trying to help!
One of my elderly relatives was about to fall victim to the tune of tens of thousands of dollars to one of these commission-based salesmen. Fortunately, I learned about it just in time to halt the transaction.
Upon moving to TV, I found my mailbox stuffed with free chicken-dinner offers. I literally received 4 such offers only two weeks ago over a period of a few days. Apparently, TV is fertile ground, providing easy prey and victims to these sleazy practices. So, the reason for my posts is that I find it absolutely despicable when unscrupulous salesmen take advantage of individuals that may be lonely, lost a spouse or simply not quite as sharp as they once were. Few things irritate me more than when unsuspecting people could end up losing a lifetime of savings built over decades of hard work.

[coralway]

PT Barnum was right

[dewilson58]

They lost their houses because they could not pay RE Taxes & Insurance, NOT because of a reverse mortgage. They would have lost their house without the RM and probably sooner.

:ho:

[valuemkt]

They lost their houses because they could not pay RE Taxes & Insurance, NOT because of a reverse mortgage. They would have lost their house without the RM and probably sooner.

:ho:

Not sure I agree with your conclusion. All of a sudden you're "given" a pot of money .. kind of like winning the lottery. What percentage of people that win the lottery are broke within 5 years ? Look it up .. So since you have limited time left, you spend and charge to beat the Grim Reaper .. and guess what ? They beat him for a while, and outlive that Pot of Gold. Formerly responsible, but financially ignorant people no longer have any money left to pay the bills, like taxes and insurance .. QED

[dewilson58]

Not sure I agree with your conclusion.


Not my conclusion..................it was in the article quoted. The OP just wanted to spread negative headlines.



Paul Harvey

[retiredguy123]

In addition to people with reverse mortgages, people who have VA loans with "no money down" also often lose their homes to foreclosure. Both VA mortgages and reverse mortgages are Government programs because the banks won't provide these loans without the taxpayers footing the bill when the loans go south. Banks are smart enough to know that these loans are not based on sound financial principles, so they won't risk their own money. But, they are happy to use taxpayer money to facilitate the loans. You can say that someone lost their house because they didn't pay their taxes, but that is not the fundamental reason. Financing a house properly and responsibly requires the homeowner to have "skin in the game", which these people don't have. That is the basic reason why there are so many foreclosures with the loans. Take away the Government guarantee and the mortgages will disappear, as they should. Several GAO audits have confirmed it.

[Jayhawk]

getting some financial advice before using this product makes sense.

That is actually the LAW.

[Stu from NYC]

That is actually the LAW.

The question is are they giving valid financial advise explaining the negatives.

My feeling is they do not give a balanced opinion.

[manaboutown]

The question is are they giving valid financial advise explaining the negatives.

My feeling is they do not give a balanced opinion.

The required counseling can merely consist of a short phone call at a cost to the borrower of $100. "Counseling" was mandated by the government as part of its attempt to reform lending practices. I do not consider the required phone call true counseling which would require an in-depth analysis by an independent well educated fully accredited professional financial planner.

[Garywt]

I have a reverse mortgage for 3 years through Citizens Bank. The only way you can be forced out is if you fail to pay your taxes and insurance. They asked me the second year to send them a fax of my insurance, that's the only contact I have with the bank in 3 years.

The only other way is if you no longer live fulltime in the home, they will force you to sell the home. After the home is sold and they pay off the amount you have taken, plus initial closing costs, in my case $9,000 and interest, in my case about $200 a month. Right now I would owe them about $65,000, I took a $50,000 draw in the beginning.

If you own your home, you have a lot of equity that is going to waste if you never plan to resell, which in my case I don't plan on moving again since I've been in this home ten years. If I were to sell the home, we would pay back the bank $65,000 and the rest would be ours, and this is for receiving $50,000 three years ago.

So you took it as a lump sum and not monthly payments.

[Garywt]

They lost their houses because they could not pay RE Taxes & Insurance, NOT because of a reverse mortgage. They would have lost their house without the RM and probably sooner.

:ho:

I agree, you stop paying taxes for whatever reason your going to lose your house at some point.

[dewilson58]

well educated fully accredited professional financial planner.
No such thing.
Never seen a billionaire financial planner........or even $100mil......maybe $10mil, but extremely rare.


:1rotfl:

[Stu from NYC]

The required counseling can merely consist of a short phone call at a cost to the borrower of $100. "Counseling" was mandated by the government as part of its attempt to reform lending practices. I do not consider the required phone call true counseling which would require an in-depth analysis by an independent well educated fully accredited professional financial planner.

Cousin Brucie would never stand for that would he?

[Miriam2940]

I have a reverse mortgage and this article confuses me. I don’t believe a reverse mortgage adds any more debt than a regular mortgage and I don’t have monthly mortgage payments to worry about. If people’s homes are going into foreclosure it’s because they can’t pay their bills but not because of a reverse mortgage. Everyone in this country is hurting and seniors are no exception.

[Leadbone1]

RM FORECLOSURES:

From the Naples News, 2019

15,000 Floridians at Risk of Foreclosure and Homelessness:

Earlier this year, an 83-year-old woman lost the home she has owned for more than 40 years.
She is one of thousands of senior Floridians facing the same outcome. But what sounds like a great deal can have serious pitfalls. Instead of providing a secure financial future for senior homeowners, nearly 15,000 older Floridians out of the 85,000 currently holding reverse mortgages are in danger of losing their homes in the coming years, according to data from the U.S. Department of Housing and Urban Development.
Already, 16,654 reverse mortgage holders have gone into foreclosure in the five years that ended December 2017, the most by far in the U.S. and nearly double the second-most — in California.
Reverse mortgages don’t get a person out of debt, they put people into more debt. It may solve an immediate cash-flow problem, but may not provide any long-term financial security. And homeowners whose circumstances change in ways they didn’t anticipate find themselves without their most valuable asset at an age when they need it most.

I had no idea it was this bad.
TV appears to be a mecca for these and similar sales pitches. A fee-only fiduciary financial planner can determine what is appropriate and will provide alternative options.

This is absolutely a BS post. After you do a reverse mortgage there’s only a couple ways you can lose your home. If you don’t pay your taxes and insurance on the house that is one way. Another way is if you do not make it your primary residence and live there at least six months out of the year. Otherwise you can stay in that home for the rest of your life. You also can sell the home anytime you want and pay back your loan. Any excess equity left over after your loan is paid back and still go to your family.

[noslices1]

I have a reverse mortgage for 3 years through Citizens Bank. The only way you can be forced out is if you fail to pay your taxes and insurance. They asked me the second year to send them a fax of my insurance, that's the only contact I have with the bank in 3 years.

The only other way is if you no longer live fulltime in the home, they will force you to sell the home. After the home is sold and they pay off the amount you have taken, plus initial closing costs, in my case $9,000 and interest, in my case about $200 a month. Right now I would owe them about $65,000, I took a $50,000 draw in the beginning.

If you own your home, you have a lot of equity that is going to waste if you never plan to resell, which in my case I don't plan on moving again since I've been in this home ten years. If I were to sell the home, we would pay back the bank $65,000 and the rest would be ours, and this is for receiving $50,000 three years ago.

How much will you owe in 10 years? Interest is compounded daily, so your annual pay back will go up exponentially until your payback will be more than your house is worth.

[molddude]

The 83 year old lost her money immediately to a contractor. ( that only happens to RM clients)
"Several" years later she had to enter "nursing homeS".
She was behind on her taxes, insurance , but the "journalist does not elaborate". ( falling into debt, that only happens to RM clients I guess)
The article cited many falsehoods, but what form of "news" does not these days?
Thank goodness no one else loses their home when they fall into debt.

[Stu from NYC]

The 83 year old lost her money immediately to a contractor. ( that only happens to RM clients)
"Several" years later she had to enter "nursing homeS".
She was behind on her taxes, insurance , but the "journalist does not elaborate". ( falling into debt, that only happens to RM clients I guess)
The article cited many falsehoods, but what form of "news" does not these days?
Thank goodness no one else loses their home when they fall into debt.

There are other reasons people lose their home than RM's you know.

[rmd2]

I don't understand why people are responding to this thread which has been used continuously for drumming up Reverse Mortgage business. Moderator please shut this advertiser down permanently!

[dewilson58]

I don't understand why people are responding to this thread which has been used continuously for drumming up Reverse Mortgage business. Moderator please shut this advertiser down permanently!
Who is drumming???
:shocked:

[Grunt 1946]

So, just for my information, what would happen if you took all the money on your RM out this year but were still living in the home in 2040? Does the money get paid back at that time, assuming your dead, or is there a time limit on when it gets paid back? What if the home is worth 3 times as much in 2040, can you take out a larger RM?

[bruce213]

I have a reverse mortgage for 3 years through Citizens Bank. The only way you can be forced out is if you fail to pay your taxes and insurance. They asked me the second year to send them a fax of my insurance, that's the only contact I have with the bank in 3 years.

The only other way is if you no longer live fulltime in the home, they will force you to sell the home. After the home is sold and they pay off the amount you have taken, plus initial closing costs, in my case $9,000 and interest, in my case about $200 a month. Right now I would owe them about $65,000, I took a $50,000 draw in the beginning.

If you own your home, you have a lot of equity that is going to waste if you never plan to resell, which in my case I don't plan on moving again since I've been in this home ten years. If I were to sell the home, we would pay back the bank $65,000 and the rest would be ours, and this is for receiving $50,000 three years ago.

Question for John W.
As I understand it you are paying monthly interest of $200.00 and you owe the bank $65000, which you could pay off anytime or when the house is sold?

[Stu from NYC]

Who is drumming???
:shocked:

I do think you know exactly whom we are speaking of

[retiredguy123]

So, just for my information, what would happen if you took all the money on your RM out this year but were still living in the home in 2040? Does the money get paid back at that time, assuming your dead, or is there a time limit on when it gets paid back? What if the home is worth 3 times as much in 2040, can you take out a larger RM?
When you die, your heirs are required to either pay off the loan, or sell the house. The proceeds from the sale are used to pay off the loan, and the heirs can keep any excess. If selling the house will not produce enough money to pay off the loan, the heirs can either allow the bank to foreclose, or they can just refuse to accept the inheritance altogether.

If you have a reverse mortgage and the house increases in value, you can refinance the loan and possibly take out more money.

[rphil11ort]

I have been in the mortgage business for over 37 years. When I moved here I took a reverse to buy my property. The new approval guidelines are that you have to have enough income or cash reserves in order to pay your taxes , insurance and maintenance. The only way they can foreclose is if you move dont pay the cost of maintaining your property or taxes and insurance. Even if you move out you have a year to year and a half to resolve what you are going to do with the loan. I have bought 2 properties that had reverse mortgages and they where both under water. What is nice about them is that if that happens they can not go after.the estate for the shortfall. If I did a regular. Mortgage when I got here it would have cost me more that $1000 per month to live.here. now I can pay all my expenses with my social security and small pension. Before you can take out an reverse mortgage you have to take a third party class to make sure you understand what you are getting involved in

[dewilson58]

I do think you know exactly whom we are speaking of
I haven't seen a salesmen on this thread.
This thread tone is against RM...............kinda unselling.
:icon_wink:

[Jayhawk]

I don't understand why people are responding to this thread which has been used continuously for drumming up Reverse Mortgage business. Moderator please shut this advertiser down permanently!

You do realize he is only advertising in the Mortgage section which is perfectly acceptable.

Or TOTV could drop advertisers and you can pay the bills for them to keep this open.

You know the poster and the topic he is PAYING to advertise. Don't open the posts and give yourself chest pains.

[John_W]

Question for John W.
As I understand it you are paying monthly interest of $200.00 and you owe the bank $65000, which you could pay off anytime or when the house is sold?

That's why you have a RM and not an equity loan, there are no payments. The bank appraises the home's value and you withdraw from a fund that is about 45% of that amount. It's paid back when both occupants die and they get the home. If the home is sold for less than the amount owed, then whoever you designated will receive the balance. The $200 a month is part of the loan that has to be paid off.

In order to qualify you must own the home outright and both occupants must be 62 years of age. The bank has calculated the length and risk of what they're doing just like you will calculate the risk of what you're doing. If I don't plan on moving, have no heirs, I don't see any risk in using cash that would not be available otherwise.

[EdFNJ]

My father had a RM and it was the best thing that could have happened for him. He died at age 93, had pulled out well over $90,000 on a condo worth $50K with his RM and after he passed the bank could do what they want with it. So far it has sat empty and foreclosed upon for 3+ years in 90 degree south Florida heat and must be rotting away from mold inside. No way he could have continued to live there without it. When he applied for the RM they appraised his little condo for $180,000 when they were selling for $50-60K.