Seniors in Michigan in foreclosure may find themselves owning a home with negative net worth one minute, and then owning a home with no payment and 40 % equity the next. Yes, you heard right, no payment and equity. How can a person with bad credit in foreclosure end up having a home with equity and a mortgage with 6% interest, no monthly payment.

There is small group of investors in the Michigan market that are cash buyers. They do bulk buys from mortgage company asset managers and REO agents. They are buying homes in bulk for 10-20 cents on the dollar. The Michigan market is so depress they are now able to buy at all time lows. They are then fixing the home up and reselling them for 52% of what a HUD appraisal comes in at. The seniors who are 62 or older can be approved for reverse mortgage are perfect for this program, their investors are willing to sell the homes to the seniors on a private mortgage or contact for deed. The sales are on short term financing until the senior is able to obtain a reverse mortgage.

A reverse mortgage lets an owner convert home equity into cash; unlike a traditional home equity loan or second mortgage, however, no repayment is required with a reverse mortgage until the borrower no longer uses the home as a primary residence.   The investor who sold the home to the senior is paid off at the time of refinance and home owner has no more payments on the home.  Credit is not the issue because the Mortgage Company is not looking to get payments on the home. The whole loan is based on the equity in the home. Currently HUD does not have seasoning requirement for time of ownership on HUD reverse mortgage.

What a great program where senior who has hit hard times with job loss or income reduction can now get into home with no payments. This a great program for a senior who has the majority of their income going to rent or house payments.   Bear in mind the senior still needs to make tax and insurance payments on the home.

About the author: Ralph Marcus Maupin, Jr. (Mark) works with bulk buyers and seniors in Michigan homeownership. He is an instructor of real estate investing at local college. You read more about him on his web site http://www.MrLeaseOption.com 

Summary:

Reverse Mortgages take a new turn in the Michigan real estate market. They are being used as tool to get seniors in to homes with no mortgage payment. Investors are selling homes to seniors with huge equity on private mortgagees. The seniors have enough equity to refinance the home on reverse mortgage resulting in no house payments.