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Mother was not capable of making decisions. Obtained monies without children knowing and went on trips. Now bank wants money or she will loose her home. Is this legal?
I live with my mother and provide for all of her care giving needs. She also, took out a reverse mortgage on her home when financial problems mounted due to misuse of credit cards, and she was unable to pay her mortgage. This caused creditors to hound her with phone calls daily. A reverse mortgage sounds great when it is presented to you because the realtor will stress only the positives of this deal. it will enable your parent to live in his/her home without the worry of a monthly mortgage payment. However, what you don't know can definitely hurt you. I looked up some information about a RM on the internet and found many reasons not to go this route if you can possibly afford to continue making payments. I am my mother's heir to her home and found out that I cannot continue to live here after her death. Yes, the bank wants the entire owed mortgage to be paid within three months after the parent dies. In order to sell the home, (which will give the heir an extra 6 months to a year to stay in the house), you must take your parents' will and death certificate to probate court. This was all sounding so complex and caused me great worry about how and where I was going to live after her passing. (I am 62 and have little assets as well as poor health). It is enough to worry about the daily housekeeping chores and taking care of your parent's personal needs, but to be confronted with not knowing where you are going after you have poured your emotional well-being into your mother's care and continual comfort, it is surely a slap in the face. In answer to your question, your mother may continue to live in her home with a Reverse Mortgage until her death, however, her heirs will be the ones to suffer a huge loss both emotionally and Financially. I don't understand why your mother has to pay the bank back now while she is still living unless there was something else not clearly stated to her at the time she signed over her home. God bless you and good luck in figuring all of this out. I am a Christian as well as a widow, so I know God will provide for my needs when the time comes. We must continue to fight the good fight and trust God with our whole being.
This might sound tough what I am about to say, but it was your mom's prerogative to obtain a reverse mortgage...Her equity to spend however she wanted...
check the laws in your state. there is a great deal of information on the internet on RM's. Typically the money is NOT due for repayment until the house is sold or the mortgage holder dies. Also, the bank doesnt care if you use the money for trips or presents or paying bills. That is your choice. However, something does not seem clear here and I wonder if you have all the accurate information. You also say she was incapable of signing a contract. If that is so, I would wonder about the validity of the arrangement. I highly recommend speaking with an elder law attorney about this before you wait much longer or take any actions. I would be concerned about elder abuse if she had been coerced into signing something she did not understand.
I agree with prsimon ^ Mortgages, Home Equity loans and Reverse Mortgages are handled by Banks, Lenders and Mortgage brokers, not Realtors. It doesn't make sense why the bank all of a sudden wants their money back. All of the Mortgage applications and contracts from customers are reviewed by financial attorneys so if your mother is of unsound mind and was given a RM, then this was done illegally and unethically. I would try to gather all of the paperwork and RM information from your mother and consult a lawyer of your own. After your mother is gone, either you and your siblings or your mothers heir(s) will be responsible for satisfying the debt.
Forgive me for the error of choice of words. No, it is not a realtor who handles RM's but like you said above...mortgage brokers, etc. Hope you find out why your mother took out RM without anyone in your family knowing about it. If you are an heir to her home or have POA, delve into the business of RMs and find legal help with a good Elder Attorney. Often elder attorneys will offer free workshops regarding your rights, etc. Good luck and God bless You.
VW49 - your mom is likely out of compliance with the RM agreement. Please go over the Rm agreement to see what the policy reads.
If you do a RM there are 4 things that can be a problem for compliance and cause the RM to be due and payable IN FULL:
FAILURE TO PAY - property taxes, homeowners/flood/wind insurance. Owner must have in place and pay for any & all insurance required by the RM. Often that is much more than what they were doing. They may have never had flood or windstorm or earthquake before but now MUST have all that as it is a new mortgage done. This can be alot of $$ too. MOVING TO A NEW RESIDENCE- if reverse mortgage property stops being your primary, you are out of compliance with loan. So if you move into a NH, you are required to pay your loan.
BEING OUT OF THE HOME FOR MORE THAN 1 YEAR - the loan will come due. Most policies have this.
ALLOWING THE PROPERTY TO DETERIORATE - being away for a while, like a trip or cruise is allowed but if the property gets run down while you are away, the loan could be called in. I live in the New Orleans area and after Hurricane Katrina, some homeowners who had RM, got letters w/detailed questionnaire as to the status of the home, how it was being secured, status of repairs, utility information - this was all about calling in loans that were in areas with uncertainty. And Katrina was in 2005 before the real estate market tanked.
Two of the big reverse mortgage players, Bank of America & Wells Fargo, got out of the new reverse business in 2012. They were like 50% of the market too - they still service & honor the old loans but do not write any new ones. They did it because many of the homes with RM now are negative-equity so they were taking losses on those RM's (done in the go-go real estate years of the 1990's – 2005). What is left in the RM market are smaller mortgage companies, many of which did subprime mortgages.
Below are excepts from an article from the New York Times, October 14, 2012 by Jessica Silver Greenberg: “Reverse Mortgages Costing American Their Homes”
“The very loans that are supposed to help seniors stay in their homes are in many cases pushing them out. Reverse mortgages, which allow homeowners 62 and older to borrow money against the value of their homes and not pay it back until they move out or die, have long been fraught with problems. But federal and state regulators are documenting new instances of abuse as smaller mortgage brokers, including former subprime lenders, flood the market after the recent exit of big banks and as defaults on the loans hit record rates.”
MetLife was the latest major player to exit the market, in April. That followed the departure last year of the two biggest reverse mortgage lenders, Bank of America and Wells Fargo, which cited falling housing prices and difficulty assessing borrowers’ ability to repay the loans.”
“Reverse mortgages also have troublesome incentive structures that might encourage brokers to steer seniors toward lump-sum loans, which carry a fixed interest rate, rather than a line of credit with a variable interest rate, the bureau found. In a lump sum arrangement, the interest charges are added each month, and over time the total debt owed can far surpass the original loan.Brokers earn higher fees on these loans and even more money when they sell the loans into the secondary market, where they can get rates nearly double those for variable loans, according to rate sheets obtained by the consumer bureau.” If you want to read more the link to this article is: Article is amazing with over 400 comments with lots of personal RM stories in the comment. A sobering read.
VW49 - check to see if she paid her taxes. Most county assessor have all the current data available on-line and downloadable for a nominal cost. If she didn't pay her taxes, the RM holder will know and in pretty short order. Remember the key to property stuff is the parcel # rather than the address.
Tax stuff is usually sent out in Oct/Nov for taxes due Jan of the following year. Go through her check book to see if this has been paid for every year since the RM was done. If property tax not paid, then goes for tax sale Aug/Sept. All pretty serious. You can repay the taxes for up to 3 years with interest and keep it from being owned by others by tax sale in most places. So don't completely panic if you find this has happened. But it has to be dealt with. Good luck.
Actually there are 17 triggers that can cause a default on a reverse mortgage while the borrower is alive. If a trigger event occurs the lender will send a due and payable notice or repayment letter. It should (but doesn't always) say what the reason for the default is. You need to respond in writing to dispute or cure the default generally within 30 days of the repayment letter.
The second thing is many reverse mortgage lenders are predators and slick salespeople. Many isolate the elder from family members and encourage them to sign because it will be so good for them. As long as the elder has a pulse they will sell it for a commission. There is no suitability standard at all to make sure it is right for the elderly consumer. Sandy Reverse Mortgage Suitability and Abuse Expert
My 81 year old mother was in the process of obtaining a reverse mortgage on her home. She was away visiting a family member when she received a call from the bank saying she had to come in first thing Monday to sign the papers, as Wells Fargo was taking over. She did as she was told without really understanding what a reverse mortgage is. She still owed $170,000 on the property! I feel she was coerced into getting there Monday am dand should have never been approved for this with a mortgage remaining on property. The banker gave her no time to think about it or fully understand it. Is there anything that can be done 3 years' later?
Sda- your post has tagged onto a thread almost 3 years old. You may get more current answers by posting your ? as a new ?.....although it is interesting in re-reading my post from July 2013! Personally my thoughts are that as your mom did the RM 3 years ago, the RM agreement is a done deal. If the RM $ was used to pay off an existing mortgage (so your mom had less expenses each month) and whatever left either was paid as a lump sum to your mom or as a line of credit (for a draw as needed and usually the less costly financial decision) that was your moms choice. It's a legally binding agreement and existing for 3 years; it's just too late for buyers remorse IMO. Where was moms DPOA when she did this?
Thanks for your response. Unfortunately, she did not have a DPOA. She still gets around quite well - travels, etc., but I guess she just made a bad decision that she regretted immediately due to not fully understanding and not questioning the bank. (Didn't realize I was posting an answer and not a question until after I posted - oops!) I appreciate your input on this.
By proceeding, I agree that I understand the following disclosures:
I. How We Work in Washington.
Based on your preferences, we provide you with information about one or more of our contracted senior living providers ("Participating Communities") and provide your Senior Living Care Information to Participating Communities. The Participating Communities may contact you directly regarding their services.
APFM does not endorse or recommend any provider. It is your sole responsibility to select the appropriate care for yourself or your loved one. We work with both you and the Participating Communities in your search. We do not permit our Advisors to have an ownership interest in Participating Communities.
II. How We Are Paid.
We do not charge you any fee – we are paid by the Participating Communities. Some Participating Communities pay us a percentage of the first month's standard rate for the rent and care services you select. We invoice these fees after the senior moves in.
III. When We Tour.
APFM tours certain Participating Communities in Washington (typically more in metropolitan areas than in rural areas.) During the 12 month period prior to December 31, 2017, we toured 86.2% of Participating Communities with capacity for 20 or more residents.
IV. No Obligation or Commitment.
You have no obligation to use or to continue to use our services. Because you pay no fee to us, you will never need to ask for a refund.
V. Complaints.
Please contact our Family Feedback Line at (866) 584-7340 or ConsumerFeedback@aplaceformom.com to report any complaint. Consumers have many avenues to address a dispute with any referral service company, including the right to file a complaint with the Attorney General's office at: Consumer Protection Division, 800 5th Avenue, Ste. 2000, Seattle, 98104 or 800-551-4636.
VI. No Waiver of Your Rights.
APFM does not (and may not) require or even ask consumers seeking senior housing or care services in Washington State to sign waivers of liability for losses of personal property or injury or to sign waivers of any rights established under law.
I agree that:
A.
I authorize A Place For Mom ("APFM") to collect certain personal and contact detail information, as well as relevant health care information about me or from me about the senior family member or relative I am assisting ("Senior Living Care Information").
B.
APFM may provide information to me electronically. My electronic signature on agreements and documents has the same effect as if I signed them in ink.
C.
APFM may send all communications to me electronically via e-mail or by access to an APFM web site.
D.
If I want a paper copy, I can print a copy of the Disclosures or download the Disclosures for my records.
E.
This E-Sign Acknowledgement and Authorization applies to these Disclosures and all future Disclosures related to APFM's services, unless I revoke my authorization. You may revoke this authorization in writing at any time (except where we have already disclosed information before receiving your revocation.) This authorization will expire after one year.
F.
You consent to APFM's reaching out to you using a phone system than can auto-dial numbers (we miss rotary phones, too!), but this consent is not required to use our service.
If you do a RM there are 4 things that can be a problem for compliance and cause the RM to be due and payable IN FULL:
FAILURE TO PAY - property taxes, homeowners/flood/wind insurance. Owner must have in place and pay for any & all insurance required by the RM. Often that is much more than what they were doing. They may have never had flood or windstorm or earthquake before but now MUST have all that as it is a new mortgage done. This can be alot of $$ too.
MOVING TO A NEW RESIDENCE- if reverse mortgage property stops being your primary, you are out of compliance with loan. So if you move into a NH, you are required to pay your loan.
BEING OUT OF THE HOME FOR MORE THAN 1 YEAR - the loan will come due. Most policies have this.
ALLOWING THE PROPERTY TO DETERIORATE - being away for a while, like a trip or cruise is allowed but if the property gets run down while you are away, the loan could be called in. I live in the New Orleans area and after Hurricane Katrina, some homeowners who had RM, got letters w/detailed questionnaire as to the status of the home, how it was being secured, status of repairs, utility information - this was all about calling in loans that were in areas with uncertainty. And Katrina was in 2005 before the real estate market tanked.
Two of the big reverse mortgage players, Bank of America & Wells Fargo, got out of the new reverse business in 2012. They were like 50% of the market too - they still service & honor the old loans but do not write any new ones. They did it because many of the homes with RM now are negative-equity so they were taking losses on those RM's (done in the go-go real estate years of the 1990's – 2005). What is left in the RM market are smaller mortgage companies, many of which did subprime mortgages.
Below are excepts from an article from the New York Times, October 14, 2012 by Jessica Silver Greenberg: “Reverse Mortgages Costing American Their Homes”
“The very loans that are supposed to help seniors stay in their homes are in many cases pushing them out. Reverse mortgages, which allow homeowners 62 and older to borrow money against the value of their homes and not pay it back until they move out or die, have long been fraught with problems. But federal and state regulators are documenting new instances of abuse as smaller mortgage brokers, including former subprime lenders, flood the market after the recent exit of big banks and as defaults on the loans hit record rates.”
MetLife was the latest major player to exit the market, in April. That followed the departure last year of the two biggest reverse mortgage lenders, Bank of America and Wells Fargo, which cited falling housing prices and difficulty assessing borrowers’ ability to repay the loans.”
“Reverse mortgages also have troublesome incentive structures that might encourage brokers to steer seniors toward lump-sum loans, which carry a fixed interest rate, rather than a line of credit with a variable interest rate, the bureau found. In a lump sum arrangement, the interest charges are added each month, and over time the total debt owed can far surpass the original loan.Brokers earn higher fees on these loans and even more money when they sell the loans into the secondary market, where they can get rates nearly double those for variable loans, according to rate sheets obtained by the consumer bureau.” If you want to read more the link to this article is: Article is amazing with over 400 comments with lots of personal RM stories in the comment. A sobering read.
Tax stuff is usually sent out in Oct/Nov for taxes due Jan of the following year. Go through her check book to see if this has been paid for every year since the RM was done. If property tax not paid, then goes for tax sale Aug/Sept. All pretty serious. You can repay the taxes for up to 3 years with interest and keep it from being owned by others by tax sale in most places. So don't completely panic if you find this has happened. But it has to be dealt with. Good luck.
The second thing is many reverse mortgage lenders are predators and slick salespeople. Many isolate the elder from family members and encourage them to sign because it will be so good for them. As long as the elder has a pulse they will sell it for a commission. There is no suitability standard at all to make sure it is right for the elderly consumer. Sandy Reverse Mortgage Suitability and Abuse Expert
Personally my thoughts are that as your mom did the RM 3 years ago, the RM agreement is a done deal. If the RM $ was used to pay off an existing mortgage (so your mom had less expenses each month) and whatever left either was paid as a lump sum to your mom or as a line of credit (for a draw as needed and usually the less costly financial decision) that was your moms choice. It's a legally binding agreement and existing for 3 years; it's just too late for buyers remorse IMO. Where was moms DPOA when she did this?