The Reverse Mortgage Trap
So you are thinking about a Reverse Mortgage? Well before you make that commitment there are some issues that you should address before you sign on the dotted line. The ads for Reverse Mortgages are impressive to say the least, especially when the pitch men are such notable characters, Robert Wagner formerly of the Hart to Hart TV series and Fred Thompson, former U.S. Senator and presidential candidate and actor on Law and Order. Both
men present themselves well, mature and believable. But, is what they are pitching for you? As with most ads what is not said is often more important than what is said. For example, in most financial ads, the interest rate and credit requirements are prominently displayed-not so with reverse mortgage ads. And, what about the fact that the interest rate on the reverse mortgage is compounded, that is an important fact to know for anyone considering a reverse mortgage. The Comptroller of Currency had this to say about the reverse mortgage. While reverse mortgages can provide real benefits, they also have some of the same characteristics as the riskiest types of subprime mortgages-and that should set off alarm bells... Now the aforementioned is warning enough. However, the latest twist involves a suite that A.A.R.P. has filed against HUD (Housing and Urban Development.)
The litigation centers around Lenders who are requiring newly widowed people who want to stay in their homes to pay off the balance of their mortgages quickly, even if it is much more than the value of home and because they cant or wont, the lenders are foreclosing the mortgages. Why is this happening? Some spouses did not have their names on the mortgage for a variety of reasons. Some spouses did not have their names on the mortgage to qualify for a larger loan. Or, the spouse was not 62 years of age, which is a threshold requirement. In either event, without realizing it, they put themselves in jeopardy of loosing their homes. This is yet another warning sign of the potential of this financial product that applicants should be aware of.
If you are thinking about a reverse mortgage get as much financial and legal help as possible before you sign.
Cook County Recorder of Deeds
Eugene Gene Moore
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