Reverse Mortgage?

[oicu812nbama]

I saw a quote engine on one website that offered about half of the home value in a lump sum or a monthly payout. Right away I noticed that they would be better off taking the lump sum and putting it into an immediate annuity for a larger payout.
so josh would you want me to refer the loan to you and me handle the annuity? lol

 

[Josh]

the GAO (General Accounting Office) that outlines three problems with this consumer product:

1) the promotion of this product is often deceptive
2) the consultation before purchase is typically done over the telephone, rather than in person
3) promoters often engage in "inappropriate cross-selling"…they persuade seniors to use their proceeds to purchase annuities that generate large fees for the institution and generally are not in the best interests of the individual.

Caveat Emptor

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Adding one note of caution here. I've seen several cases where (usually) the wife was not on the RM, wether due to credit issues or age, not yet 62 at the time of the older husband initiated the RM. Well you got it, the husband dies first and the wife, not being a party to the RM has no rights to continue the RM, it is then due and payable or the property forecloses. I am seeing one of those right now, lady is 71 yrs old and was not on the RM, foreclosure just filed in Jan 2013. There should be a backstop here to eliminate the surviving spouse from being term'd on the RM whether they are a party to the loan or not. Just one of the other risks here.

I kinda hate to do this because you've been here for a while and I like you, but there are some things you've said above that are completely false. I'm not saying that a reverse mortgage is right for everyone, but a few things you've said do need to be corrected.

First, I'm not sure if the consultation you're referring to is the sales pitch or the legally required HUD consultation before they make the purchase. It's worth noting that before a senior can enter a reverse mortgage, they do have to have a consultation with an independent HUD counselor. This is a safeguard that allows a disinterested third party to help make sure the senior is aware of what they're getting into.

Next, a spouse not being on a RM for credit issues is completely false. With a reverse mortgage there are ZERO credit checks. The senior never has to pay it back, so there is no reason to do it. The spouse does have to be 62 and a half or older as well, but that has nothing to do with credit. While on this point, if the spouse isn't on the RM as well, then that's an ethical problem, not so much a problem with the product. That's like saying that annuities are bad because you shouldn't put an 87 year old in a 14 year annuity. Clearly that isn't likely the right situation for them, but that doesn't mean that 14 year surrender periods on annuities are all bad.

To the specific issue of the mortgage, is that a client of yours or a reference from the article? If it's one of your clients please shoot me a message, there may be a way of stopping that. I would need to know what state it's in, but it's entirely possible there is a safeguard. If not, I agree with you, there should be.


To the issue of number three, I'll get to that in a my next response.
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I saw a quote engine on one website that offered about half of the home value in a lump sum or a monthly payout. Right away I noticed that they would be better off taking the lump sum and putting it into an immediate annuity for a larger payout.
so josh would you want me to refer the loan to you and me handle the annuity? lol

If anyone has someone they'd like to refer to me for a reverse mortgage I'd be happy to help (provided I am or can get licensed in that state). There are tight regulations about commission splits (much like insurance), so it's unlikely there would be any type of a kickback. That said, if the client is looking to cash out some equity to put into another product like a spwl policy or an annuity. There are laws surrounding that and depending on the state it may be illegal for me to advise that, but I don't believe any state would prevent a senior from taking the money and using it for what they deem fit.

In short, sure

 

[GreenSky]

I'd really be careful referring a client to a non-RM specialist. Not picking on Josh (well maybe just a bit) but a jack of all trades is not who I would want to deal with for something like this.

Rick

 

[midwestbroker]

Talk to some mortgage firms in your area.

My wife's grandparents have a reverse mortgage on their home. Not sure the structure of the deal, but they are happy with it and none of the kids want the house.

They had theirs done by a larger mortgage firm here in KC. I would assume if there are some mortgage brokerages doing RM's here, there are brokerages all over the US doing them as well.

 

[Josh]

I'd really be careful referring a client to a non-RM specialist. Not picking on Josh (well maybe just a bit) but a jack of all trades is not who I would want to deal with for something like this.

Rick

No doubt. I'm not even a jack of all trades, it's just something I know a little about because I recently got licensed. On anything like this I'd always defer to those more experienced than me.

As irony would have it, I just got an email from Presidential (bulk email) stating that they will not take RM proceeds to fund an annuity.

 

[oicu812nbama]

cool. thanks. will do. i market in alabama and tennessee.

i myself am a jack of all trades. i know people who used to do mortgages and they were not the brightest bulbs in the room. i have spoken with josh. i'm sure he can handle it
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if a senior puts the money in the bank and then decides to do a spia, i doubt many insurance companies are going to say no. was the verbage saying a direct check from the reverse mortgage company or that they would investigate all monies?

if a senior is going to get a higher payout from the spia than the reverse mortgage, who would complain?

 

[Josh]

Ultimately the seniors can choose to do what they want to do, that's just how at least one carrier would respond.

 

[SportsNut]

I kinda hate to do this because you've been here for a while and I like you, but there are some things you've said above that are completely false. I'm not saying that a reverse mortgage is right for everyone, but a few things you've said do need to be corrected.

First, I'm not sure if the consultation you're referring to is the sales pitch or the legally required HUD consultation before they make the purchase. It's worth noting that before a senior can enter a reverse mortgage, they do have to have a consultation with an independent HUD counselor. This is a safeguard that allows a disinterested third party to help make sure the senior is aware of what they're getting into.

Next, a spouse not being on a RM for credit issues is completely false. With a reverse mortgage there are ZERO credit checks. The senior never has to pay it back, so there is no reason to do it. The spouse does have to be 62 and a half or older as well, but that has nothing to do with credit. While on this point, if the spouse isn't on the RM as well, then that's an ethical problem, not so much a problem with the product. That's like saying that annuities are bad because you shouldn't put an 87 year old in a 14 year annuity. Clearly that isn't likely the right situation for them, but that doesn't mean that 14 year surrender periods on annuities are all bad.

To the specific issue of the mortgage, is that a client of yours or a reference from the article? If it's one of your clients please shoot me a message, there may be a way of stopping that. I would need to know what state it's in, but it's entirely possible there is a safeguard. If not, I agree with you, there should be.


To the issue of number three, I'll get to that in a my next response.
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If anyone has someone they'd like to refer to me for a reverse mortgage I'd be happy to help (provided I am or can get licensed in that state). There are tight regulations about commission splits (much like insurance), so it's unlikely there would be any type of a kickback. That said, if the client is looking to cash out some equity to put into another product like a spwl policy or an annuity. There are laws surrounding that and depending on the state it may be illegal for me to advise that, but I don't believe any state would prevent a senior from taking the money and using it for what they deem fit.

In short, sure

No concerns about disagreeing with me, I have broad shoulders and I do not guage my self esteem based on who agrees with me....

I'm no expert on RM but I am an expert on RE. I wasn't making the claims, that info came from the GAO (gubment accting offc).

I realize that RM is not credit driven, even thought I stated credit in my post. I should have referred to whether the spouse was on the title of the property, and there are credit driven reasons why they are not such a certified judgment, tax lien, etc. In this instance if they were an owner of the property the property would be subject to foreclosure (in some states, not all). Hence this would be an excludable event.

The case that I cited of the 71 yo female being foreclosed upon... she is not a client, and I have no interest in assisting her in the foreclosure, I am trying to buy the property. Her trustee is her son who is an Atty, albeit out of state. I would assume that if there was a way to help her he would be doing so... Not clear on the intricate details here but I've seen enough problems with RM's to know that there are pitfalls and that they are not for everyone.

Feel free to fire back at me over this or anything else that I post. We can disagree without being disagreeable.

 

[oicu812nbama]

doesn't the carrier have a fiduciary duty to accept the application?
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it would be crazy for someone to take half market value for their home. if they are destitute and do not want to move then they will find someone to do this for them. if i put the money in a spia that pays them more per month, then i have helped them and got paid. ain't that what this game is about?
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[sman]

I'm sure we needed to know you think your company is the best solution sarasota. Very unbiased of you. And thanks for reviving a thread no one has commented on in 25 months.