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Lenders more willing to accept reverse mortgage in lieu of foreclosure

Here's an interesting article in today's Wall Street Journal about how a reverse mortgage can help seniors who are facing foreclosure to keep their homes. This is not news to me -- I have pulled many seniors from foreclosure with a reverse mortgage. But what is new is that with the glut of bank-owned homes on the market, more lenders may be willing to entertain reverse mortgage payoffs even though the reverse mortgage proceeds do not cover the existing lien.

"If there's a way to settle the debt that nets the investor more than it would get if there was a foreclosure and a sale, then the servicer would look at it," says Thomas Kelly, a spokesman for J.P. Morgan Chase & Co.

To read the article, go to: http://online.wsj.com/article/SB119862780200649751.html?mod=googlenews_wsj

Posted by Sylvia Williams, Ed.D/CSA on 12/26/2007 05:06 PM

Comments (22)

reverse mortgage, foreclosure

22 Comments on Lenders more willing to accept reverse mortgage in lieu of foreclosure

DEC

2007

Hi Sylvia! Wow...that's a great idea. I usually don't think of seniors when I think foreclosures and I have not thought of this way of helping them out of foreclosure... I think many times family members get involved and don't present this option. Great resource.

Sylvia, that makes sense. Thank you for offering this- I hadn't read it, but it could end up saving some of the senior homeowners.

Hey Sylvia thanks for the information and the link to the article.

Hello Sylvia - When I first heard about Reverse Mortgages, I wasn't a huge fan. After more research and thought though, I think they definately play an important role as a product to offer somebody. In my mind, the bottom line is that it helps provide a Quality of Life they may not otherwise have. What you bring up here is just another example of its strength and importance to those who would lose their house without its existence.

Thanks for the information. I never thought about seniors with foreclosures, or utilizing the reverse mtg. if the scenario is applicable.

Thanks for the article, I agree that I would not have thought of this option for seniors. I'll tuck that one away into my idea book.

I have never thought favorably about reverse mortgages, but in this instance I think that it could be a life saver. Thanks for the tip.

Lania, Laurie, John, Jason, Heather, Melina, Vicky - My worry is that some seniors still don't know this could save them. I am so glad to see mainstream media addressing it. Thanks for your comments!

it's just a short to the existing owner.

Hi Jay,

I think I get your point, but a reverse is different. The owner will get to stay in their home. The lender will take whatever the reverse mortgage can provide (and yes it may be short), but the key is that the senior keeps the home. A new lien is placed on the home with the reverse mortgage lender. That loan requires NO payments and it is not due and payable until the owner leaves the home. Thanks for your comment! Sylvia

DEC

2007

Sylvia,

Thanks for sharing the info and the link. This could be a help to seniors.

DEC

2007

Hi Lynda - I only wish that more seniors knew. I bet not even their current lenders tell them that this option exists for them. I am contacting groups like ACORN and others to get the word out. This isn't about me getting loans - it is about seniors keeping their homes. I see that you have your SRES designation -- good for you! Thanks for stopping by and commenting. ....... Sylvia

JAN

2008

Sylvia,

This is great info. We need to get the word out. I believe most seniors are not aware of this option.

Hi Cheryl, How can we get the word out? I am placing ads in the newspaper, blogging like crazy, calling every Realtor and loan officer in my area, meeting with various non-profits, and doing everything I can. I just wish someone would run a public service announcement telling people what their options are.....Thanks for commenting. Sylvia

JAN

2008

Sylvia,

It is hard to get the word out. I am glad to see some of the mainstream media picking up on this topic. I am blogging and talking about it too. You just gave me an inspiration..I am going to send an email to a local reporter who is always writing pieces about the lending and real estate market..maybe I can get her to publicize this.

Cheryl, What a great idea! Let me know how it turns out. Thanks....Sylvia

This is a great idea. I need to do some research and learn more about these. Several of my banks are offering them I just haven't taken the time.

Hi Don -- I sure hope that lenders will be open to this. Many of my reverse mortgage candidates are "short" with the reverse mortgage proceeds. You would think a lender would be happy to get a short sale vs having to foreclose. Then the senior gets to stay in the home with no payments. I think we are going to see lenders more willing to do this -- I sure hope so. Thanks for your comments! Sylvia

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