How Reverse Mortgages are helping people in Foreclosure
There is a new company in my building that is buying pools of distressed mortgages and working out the resolutions with the homeowners. What I have been finding is that many of these homeowners are over 61 years old and can be helped with a Reverse Mortgage.
Reverse Mortgages rescuing senior homeowners from foreclosure is nothing new. In fact, most Reverse Mortgage lenders make you check a box off on their initial paperwork to indicate if the borrower is in foreclosure or not. If the borrower is in foreclosure, it is understood that the loan process must be expedited.
What is new is the propensity for short sales that are allowing many senior homeowners who's Loan To Value (LTV) was pretty high, to now negotiate a much lower sale where the loan fits into Reverse Mortgage parameters.
Let me explain: If your home is worth $250,000 and you have a first mortgage for $225,000, you are not going to qualify for a Reverse Mortgage even if you are over 90 years old. (Reverse Mortgages give more money as you get older.) BUT if the lender will accept a short sale amount of $160,000, you can get a Reverse Mortgage if you are as young as 66. (Note: Every situation is different, please consult with a qualified Reverse Mortgage Loan Officer. These numbers are just one example.)
There are a lot of short-sales taking place today as lenders realize that the housing market is getting worse for a while (see Monday's post for more information about that) and that they need to cut their losses. A Reverse Mortgage is really a win-win situation because the homeowner keeps the house with no payments, no collection calls or pressure from the lender to pay anymore. The lender gets paid off (albeit less than the original balance) which in many cases would be impossible otherwise because the homeowner would not qualify for ANY other program due to their credit.
On Monday I will discuss why the current housing crisis is just beginning and why I belive that the housing market will continue to deteriorate for several more years. This means that NOW is the best time to take a Reverse Mortgage
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