15,000 Floridians with Reverse Mortgages Facing Foreclosure and Homelessness
 

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.

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?

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.

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.

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

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

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

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

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.

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.

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!

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

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.