[Stu from NYC]

Originally Posted by Topspinmo

So what you saying the lender didn’t make no money off the loan

Not at all.

When we used the line of credit, and we did, we paid interest on the loan.

The advantage is no cost to set up the line of credit as opposed to the cost of setting up a reverse mortgage.

[retiredguy123]

Originally Posted by joseppe

There's nothing wrong with Reverse Mortgages if you understand what they are and how they work. There are situations with any financing that can put you into an unfavorable condition. Most of the NaySayers don't understand what a RM is or how it works. I've had many mortgages and one reverse mortgage. Even though I should not have used the reverse mortgage when I did it did not turn out bad for me. In fact it worked out quite well and gave me some advantage over having a regular mortgage.

I find that people tend to label things they don't understand as 'Wrong' or 'Bad' and sadly many other people adopt that opinion rather than taking the time to find out for themselves.

I'm not an advocate of Reverse Mortgage, but I would not say there's anything wrong with them.

I disagree. I understand what a reverse mortgage is and how it works, but I don't think it is appropriate for most people. I think that many people, who buy a reverse mortgage, are sold the product by a commissioned broker, who doesn't fully explain the pros and cons or the alternatives. And, many of those people, who shouldn't buy a reverse mortgage, do so without understanding what it is and how it works. This is also true for many other financial products sold by brokers who want to make a commission.

[Plinker]

Originally Posted by retiredguy123

I disagree. I understand what a reverse mortgage is and how it works, but I don't think it is appropriate for most people. I think that many people, who buy a reverse mortgage, are sold the product by a commissioned broker, who doesn't fully explain the pros and cons or the alternatives. And, many of those people, who shouldn't buy a reverse mortgage, do so without understanding what it is and how it works. This is also true for many other financial products sold by brokers who want to make a commission.

I couldn’t agree more. This was the entire point of my original post. I received 4 offers in the mail just in the past week for free chicken dinner seminars. It makes perfect sense why TV is a breeding ground for unscrupulous sales tactics. After all, what better place for the fox to set up home if not next to a bunch of chicken coops?

[JohnN]

Originally Posted by Plinker

I couldn’t agree more. This was the entire point of my original post. I received 4 offers in the mail just in the past week for free chicken dinner seminars. It makes perfect sense why TV is a breeding ground for unscrupulous sales tactics. After all, what better place for the fox to set up home if not next to a bunch of chicken coops?

a free chicken dinner? well why didn't you say so!!! LOLOL

otherwise, you're right on.

[Stu from NYC]

Originally Posted by Plinker

I couldn’t agree more. This was the entire point of my original post. I received 4 offers in the mail just in the past week for free chicken dinner seminars. It makes perfect sense why TV is a breeding ground for unscrupulous sales tactics. After all, what better place for the fox to set up home if not next to a bunch of chicken coops?

I like to go when they have it at some of the better restaurants here in the Villages.

Do not go back for a second visit with these guys but often do learn something that is useful to me.

[Plinker]

Just look at the numbers! It’s clear why the lenders don’t care. They are made whole and we pay the price

RM Example:
Directly from the Federal Reserve website. Notice the fee total of $11,625. Notice there is no line for “commission”. I can guarantee you paid it. The house was valued at $275,000 and mortgage-free. Also, notice the total owed after 5 and 10 years. EYE POPPING!

“Account Opening Fees:
Loan Origination. $4,735
Inspection. $500
Title Search & Insurance. $595
Appraisal. $295
RM Insurance Premium. $5,500 (if your home valued higher, it’s 2%)
TOTAL: $11,625
Also, monthly fees:
Servicing Fee: $35/mo.
RM Mortgage Premium: 0.5% annually
Monthly Interest charges on the draw.
Initial line of credit was $186,974
Amount owed after 5 years: $51,025 + $186,974 = $237,999
Amount owed after 10 years: $97,764 + $186,974 = $284,738”

Can you imagine how much the taxpayers are going to be on the hook for after 15, 20 or even 25 years depending on the age of the borrower and their life expectancy?
Answer: Billions

[manaboutown]

In 2018 taxpayers were on the hook for over $13,000,000,000 from reverse mortgage foreclosures.

"“They want to stop the bleeding,” Lynn Drysdale, an attorney who works with Jacksonville Area Legal Aid, said of lenders. “They have to go through a foreclosure before they can file a claim with HUD (Housing and Urban Development).”

Because the loan is federally insured, the government will make up most of the difference between what is owed on the mortgage and what is recouped from the sale of a foreclosed home. The defaults have caused a drain on the government’s Mutual Mortgage Insurance Fund, according to a Federal Housing Administration report to Congress. The insurance fund had $2.11 billion in fiscal year 2018, but it had to pay $15.75 billion to cover claims filed by reverse mortgage lenders, leaving the fund's reverse mortgage portfolio more than $13 billion in the hole, the report stated."

https://www.naplesnews.com/story/new...ss/1192702001/

[Stu from NYC]

Originally Posted by manaboutown

In 2018 taxpayers were on the hook for over $13,000,000,000 from reverse mortgage foreclosures.

"“They want to stop the bleeding,” Lynn Drysdale, an attorney who works with Jacksonville Area Legal Aid, said of lenders. “They have to go through a foreclosure before they can file a claim with HUD (Housing and Urban Development).”

Because the loan is federally insured, the government will make up most of the difference between what is owed on the mortgage and what is recouped from the sale of a foreclosed home. The defaults have caused a drain on the government’s Mutual Mortgage Insurance Fund, according to a Federal Housing Administration report to Congress. The insurance fund had $2.11 billion in fiscal year 2018, but it had to pay $15.75 billion to cover claims filed by reverse mortgage lenders, leaving the fund's reverse mortgage portfolio more than $13 billion in the hole, the report stated."

https://www.naplesnews.com/story/new...ss/1192702001/

Wonder how much the govt collects in insurance on these loans.

[manaboutown]

Originally Posted by Stu from NYC

Wonder how much the govt collects in insurance on these loans.

$2.11B was collected in insurance premiums, I believe from regular mortgages as well as RMs. The government paid out $15.75B, most of which was paid out due to RM foreclosures. We taxpayers are picking up the tab. We supplement the industry as the lenders literally cannot lose and of course the various commissions and fees they garner for every imaginable little thing they do along the way are humungous.

[Plinker]

More proof that these are horror stories in the making. This is from a 2016 article in “Consumer Reports”.

Reverse-Mortgage Ads Still Making Misleading Claims, Federal Regulators Say:

Senior alert: Consumer watchdogs say reverse-mortgage companies are still trying to trick you with ads promising a risk-free way to tap the equity in your home.
That’s the message from the Consumer Financial Protection Bureau, which on December 7, 2016, ordered three reverse-mortgage companies to stop running deceptive ads and pay almost $800,000 in total in fines for making false promises to potential borrowers and claiming that consumers could never lose their homes.
But seniors who don’t keep up with payments on taxes, insurance, utilities, and upkeep risk defaulting on the loans and being forced to move out.
“These companies tricked consumers into believing they could not lose their homes with a reverse mortgage,” said CFPB Director Richard Cordray. “All mortgage brokers and lenders need to abide by federal advertising disclosure requirements in promoting their products.”
The CFPB says these companies, in voluminous print, television, and radio ads, and distribution of direct-marketing information kits, made false claims, including that borrowers would “always retain ownership” and “can’t be forced to leave.”
The CFPB said the ads also claimed there are no costs to reverse mortgages, when in fact you have credit report fees, title insurance costs, appraisal costs, other closing costs, and a fee for government mortgage insurance.
A Troubled History
Though a number of regulatory changes have been made to protect consumers, advertising remains a troubling component of the reverse-mortgage lending business.
Lenders barrage potential borrowers with ads featuring B-list actors such as Henry “The Fonz” Winkler and Robert Wagner aggressively pitching reverse mortgages to seniors as a risk-free way to supplement retirement income.
American Advisors ran TV ads almost daily and distributed its information kits to more than 1 million people. Its newest pitchman started in September: Tom Selleck.
This isn’t the first time the CFPB has cracked down on misleading advertising by the industry. Last year the bureau issued a report saying that many reverse-mortgage ads are inaccurate or omit important information.
The CFPB has sent warning letters (PDF) to mortgage advertisers targeting older Americans and took an enforcement action against a reverse-mortgage lender in 2015 for misrepresenting itself as a government agency.
Consumer Reports has also long been concerned about the risks of reverse mortgages and advocated for important changes for more disclosures. CR helped make it mandatory for seniors in California to fill out a detailed questionnaire walking them through the loan’s possible consequences before filling out a mortgage application.

[Stu from NYC]

Originally Posted by manaboutown

$2.11B was collected in insurance premiums, I believe from regular mortgages as well as RMs. The government paid out $15.75B, most of which was paid out due to RM foreclosures. We taxpayers are picking up the tab. We supplement the industry as the lenders literally cannot lose and of course the various commissions and fees they garner for every imaginable little thing they do along the way are humungous.

This is why private industry does a better job than the govt.

[manaboutown]

Originally Posted by Stu from NYC

This is why private industry does a better job than the govt.

I agree in general but in this case private industry is using the government to guarantee receipt of huge profits at taxpayer expense.

My heart goes out to the feckless homeowners who were talked into taking out reverse mortgages by slick talking salespeople and ended up losing their homes to foreclosure, in many cases leaving them destitute as their homes were their primary asset.

[Stu from NYC]

Originally Posted by manaboutown

I agree in general but in this case private industry is using the government to guarantee receipt of huge profits at taxpayer expense.

My heart goes out to the feckless homeowners who were talked into taking out reverse mortgages by slick talking salespeople and ended up losing their homes to foreclosure, in many cases leaving them destitute as their homes were their primary asset.

Unfortunately govt is not smart enough to charge enough for mortgage insurance to cover the foreclosures.

My point (and I was not clear) was the govt should not be in the business of guaranteeing mortgages like this. If they stopped cousin Brucie would need to find another job.