Should You Throw It Into Reverse

By
Services for Real Estate Pros with Ward County Notary Services

I saw a article in AARP about a lawsuit against the largest reverse mortgage lender, now settled, and I am wondering if you were aware of the lawsuit?

I am in the age group that a reverse mortgage appeals to most. I have thought about it myself... but I stop when I think about how the reverse mortgage may affect my children. There is a good chance my son Timmothy may want to stay in this house many years after Carol and I pass on.

Frankly I don't think the lawsuit is a big a deal and the court must not have either or the fine would have been a lot more than $1.3 million dollars.

My take on this is I would not rule out doing business with this company due to the suit. As always it's "buyer beware". I know what my home is worth and if I thought someone was exaggerating the value I'd do my due diligence to find the truth.

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Comments (23)

Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Bob,
Reverse mortgages are a controversial topic.  I have a friend who got into a bad one However, I know others who it allowed to stay in their home and lead a good quality of life that their monthly income did not.  Sadly, many of the people who need the reverse mortgage option are too trusting or not capable of doing adequate due diligence. 

Jan 25, 2022 03:58 AM
Bob "RealMan" Timm

Perfectly said Carol Williams . It's a tool that works well when applied to the right situation.

Jan 25, 2022 07:14 AM
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks for sharing Robert!!! Great information!!!

As always it's "buyer beware". I know what my home is worth and if I thought someone was exaggerating the value I'd do my due diligence to find the truth.

Jan 25, 2022 04:03 AM
Bob "RealMan" Timm

Exactly Sham Reddy CRS . If someone thinks the numbers are exaggerated they should hire an appraiser of at least check with the county assessor.

Jan 25, 2022 07:16 AM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

I too am reluctant to invest in something that uses a well known actor that probably would never use the product. Just my thought Bob....

Jan 25, 2022 04:04 AM
Carol Williams

I've thought the same thing, Paul. What would Tom Selleck know about needing a reverse mortgage?

Jan 25, 2022 07:15 AM
Bob "RealMan" Timm

That is true Paul S. Henderson, REALTOR®, CRS Sometimes I'm amazed at what old favorites are tagging their name to.

Jan 25, 2022 07:17 AM
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I was talking with someone that does reverse mortgages and people should definitely know what they are getting into before they go this route.  It seems like they are very beneficial in some situations.

Jan 25, 2022 04:43 AM
Bob "RealMan" Timm

I know it used to be in North Dakota you had to have a special license to sell reverse mortgages Brian England . I think they were very careful to make sure the borrowers knew what was going on.

Jan 25, 2022 07:20 AM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Bob. The upfront costs of a reverse mortgage are indeed onerous. It is a big money maker for the providers. That said, in the right situations, it may be worth the cost. Different strokes for different folks. Enjoy your day.

Jan 25, 2022 04:57 AM
Bob "RealMan" Timm

I actually did not know that Wayne Martin (big upfront costs) but as you said it may be worth it in the end for certain borrowers.

Jan 25, 2022 07:21 AM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker/REALTOR® - Kalispell, MT
Helping your Montana dreams take root

Everything we do is "buyer beware" and reverse mortgages are the same. I'd think anyone who wants one needs to do a lot of research and work with someone they trust. There are situations where they are a great idea.

Jan 25, 2022 05:09 AM
Bob "RealMan" Timm

It's a tool Kat Palmiotti and you don't use a hammer on a screw. As you said research helps determine what tool you need to use.

Jan 25, 2022 07:22 AM
Peter den Boer
Atlanta Communities - Woodstock, GA
MBA,GRI, Associate Broker, Realtor

I think most people looking into reverse mortgages have not done their homework well enough. This product has a niche where it would be a smart move, but it is certainly not for everybody.

Jan 25, 2022 05:18 AM
Bob "RealMan" Timm

Yup Peter den Boer . I checked it out for myself thinking it may work to pay for my kids college costs... nope! Not the correct tool.

Jan 25, 2022 07:24 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Bob -  As with everything it is buyer beware.  If it sounds too good to be true it is.

Jan 25, 2022 06:47 AM
Bob "RealMan" Timm

It sure sounded good on television Grant Schneider but I did not need to dig very deep to find it was not right for me.

Jan 25, 2022 07:25 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Bob, I have never really thought this type of loan was a good idea, but my neighbor got a divorce last year, and would have had to sell, had she not taken out a reverse mortgage.

Jan 25, 2022 06:53 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Now there is an application I had not thought of Joan Cox . I guess there is more than one good application to this tool.

Jan 25, 2022 07:26 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Bob,

One of my friend's mother had one, although she did not need it.  She just liked the person who came over. I took a lot of legal work to get rid of it.  A

Jan 25, 2022 07:49 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Wow! What we won't do out of loneliness Ron and Alexandra Seigel . I can totally see it, like a bad marriage. 

Jan 25, 2022 09:13 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Bob,  I have people on my block and want my advice on the topic and I just and not a fan of it.  I want my kids and grand kids to remember me for what I split up to them, just my opinion.

 

Jan 25, 2022 09:48 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much, Bob, for sharing this article.

I have thought about using a reverse mortgage for our next home but have not explored the negative aspects of this product. We have no children so that is not one of our concerns.

Jan 25, 2022 10:18 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

That is a good and honorable thought Will Hamm . I respect your opinion.

Jan 25, 2022 11:24 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

It may be perfect for you Roy Kelley . I know that with your legal background you will investigate and make the right choice.

Jan 25, 2022 11:34 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

I hadn't heard of this lawsuit, Bob.  Reverse mortgages have been a blessing for some; but they aren't for everyone.

Jan 26, 2022 10:08 PM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

I think reverse mortgages are a very specific tool Myrl Jeffcoat and that is why they work for a few but certainty are not for everyone.

Jan 27, 2022 05:48 AM
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
Carolina Life RealEstate & Relocation 919-602-8489

I didn't see the lawsuit. My MIL had a reverse mortgage. It allowed her to travel and do some fun things while she was living. After she passed and we sold her house, there wasn't a lot monetarily left after the reverse mortgage but there were a lot of memories. I think it can be a good fit for some.

Jan 28, 2022 05:51 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Absolutely Carla Freund . Your mother in law understood how the tool worked and knew it would meet her needs. Either she was very smart or had an excellent financial advisor.

Jan 28, 2022 06:24 AM
Carla Freund

She is an ex-Realtor! Honestly she probably heard about it from a church friend.

Jan 29, 2022 12:29 PM