I give up ownership of my home with a Reverse Mortgage.
Unfortunately too many retirees believe this “senior citizen ghost story” to be true and their retirement may be suffering because of that.
I can remember when someone asked my father if he owned his home, he always answered: Yes, me and the bank!
With a forward mortgage as long as the homeowner makes his mortgage payment, keeps his property taxes and homeowner’s insurance current and maintains the property, the bank cannot foreclose.
With a Reverse Mortgage your homeownership rights are the same
Even though monthly payments are not required with a Reverse Mortgage you still have to maintain the home as your primary residence. Your lender will contact you each year to verify you still occupy the home. Don’t ignore their letter, it could start foreclosure proceedings.
How do Reverse Mortgage myths become senior citizen ghost stories?
The best lies have an element of truth in them. Perhaps the truth serves as the sugar coating on a poison pill that has infected the minds of many older homeowners who fear they would sign over ownership of their home if they chose to get a reverse mortgage.
The majority of the confusion seems to be rooted in early versions of proprietary, or privately issued, reverse mortgage products. Many of the loans had shared appreciation clauses. Under shared equity provisions, the bank is not entitled to your home but rather a share of the equity when you sell or pass away. The Reverse Mortgage program signed into law by President Reagan has never had a shared equity provision.
What is a Deed in lieu of foreclosure?
Another factor adding to the confusion of home ownership with a federally-insured reverse mortgage (or HECM) is the Deed in lieu of foreclosure.
In its simplest definition, a deed in lieu of foreclosure does in fact sign over property ownership to another party. In the case of a HECM, a deed in lieu of foreclosure is typically used by the surviving heirs of a HECM borrower who find their parent’s reverse mortgage loan balance exceeds the home’s present value.
This instrument signs over the home and property back to the lender avoiding a foreclosure proceeding which saves the lender and the heirs thousands of dollars in legal fees.
The deed in lieu in foreclosure represents the conclusion of the HECM loan and more importantly the importance of the loan’s non-recourse clause, which states that no other assets other than the home can be used to secure the loan.
Heirs unfamiliar with this unique transaction could easily be left with the impression that their parents had signed over their home and thus add credibility to the myth.
The New Reverse Mortgage can be a viable retirement planning tool.
Unfortunately this “ghost story” is preventing countless seniors from having a safe and secure retirement.
Like many urban legends the truth gets obscured by misinformation and under information. Millions of families are using the New Reverse Mortgage to meet their retirement objectives largely because they sought out the truth rather than believing these ghost stories.
The New Reverse Mortgage isn’t for everyone…but it could be!
If you’re still wondering if The New Reverse Mortgage is the right solution for you but you’re not ready to sit down with one of our Reverse Mortgage Experts, then we’ll be happy to mail (or email) you Use Your Home to Stay at Home which is the official federally approved consumer booklet for those considering a reverse mortgage.
Some of this information first appeared on hecmworld.com