Reverse Mortgage, A Non-Negotiable Instrument

Take a dollar bill in your wallet; it says, “This note is legal tender for all debts, public and private.”  Whoever holds that note has the right to enforce it, that is a note.  Most Mortgage Notes are unconditional to pay sum certain with interest, so most Mortgage Notes are negotiable instruments.  In Florida, whoever has the right to enforce the Note has the right to enforce the Mortgage.  In a Reverse Mortgage, is the promise to pay unconditional? A Reverse Mortgage puts a lien on your house and you have an equity line.  The lender is either going to give you a line of credit up front, or along the way, and when you die, the mortgage is due. A Reverse Mortgage is NOT unconditional; you do not have to pay it.  The Note itself says that the lender’s only way to collect is to sell the property.  It is not negotiable because it IS conditional.  Thus, a Reverse Mortgage is non-negotiable; you cannot transfer it by just signing the back of it.  There is a simple fix—Assignment of Mortgage—but most lenders do not do that. With a regular Mortgage Note, if you endorse it in blank you can […] Read More

Reverse Mortgage Reminder: Pay Your Property Tax

Tis the season to pay your property taxes…even if you have a Reverse Mortgage.  Property taxes and insurance are the homeowner’s responsibility in a Home Equity Conversion Mortgage (HECM), a.k.a. Reverse Mortgage. The FHA’s Reverse Mortgage is for homeowners 62 or older and allows them to withdraw funds from the equity in their primary residence in a fixed monthly amount or a line of credit or a combination of both. A Reverse Mortgage can be the right thing in the right circumstances.  Sometimes a Reverse Mortgage can be the best solution to help an older person live more comfortably—able to afford medicine, food, and basic living expenses—however, it is not right for everyone.  There are positives and negatives which the homeowner needs to know and understand, for instance: Even if your lender is sending you a monthly mortgage payment, it is up to you to pay taxes and insurance on the property.    Read More

Property Taxes on a Reverse Mortgage

Yes, you have to pay property tax on a Reverse Mortgage, and insurance too. A Reverse Mortgage (Home Equity Conversion Mortgage or HECM) is for homeowners 62 or older and allows them to withdraw funds from the equity in their primary residence in a fixed monthly amount or a line of credit or a combination of both.  But the homeowner is still responsible to pay for taxes and insurance on the property. Reverse Mortgages are not right for everyone.  There are positives and negatives, but sometimes they are the best solution to help an older person live more comfortably—able to afford medicine, food, and basic living expenses.  Even if you have a Reverse Mortgage and enjoy receiving a monthly mortgage income (instead of an expense), you still have to pay your taxes and insurance.   Read More

Foreclosure on a Reverse Mortgage

Once upon a time there was a little old woman and a little old man who lived in a little old house they could ill-afford to pay for, and so they took out a reverse mortgage.  Then the little old man and the little old woman expected to live happily ever after, receiving a monthly income from the equity in their home instead of having to make mortgage payments.  However, they forgot to pay their property taxes, and so the bank foreclosed. A Reverse Mortgage (Home Equity Conversion Mortgage or HECM) is for homeowners 62 or older and allows them to withdraw funds from the equity in their primary residence in a fixed monthly amount or a line of credit or a combination of both.  But the homeowner is still responsible to pay for taxes and insurance on the property. To foreclose on a regular mortgage, you just have to be the holder of the note, which has to be a negotiable instrument (similar to a check, which can be cashed even if someone steals it because a check is a negotiable instrument).  The problem with foreclosure on a reverse mortgage is that the reverse mortgage note is not a […] Read More

‘Inheritrance’ – a.k.a. Fear of Reverse Mortgages

‘Inheritrance’ is the mindset of an heir who, under the spell of money, is unwilling to support his parents financially and who views Reverse Mortgage as a threat to his inheritance. If your father has fifty-four grandchildren and if each of those grandchildren gave him $100 a month, he probably would not have to worry too much about his finances.  Or you could give him $5,400 a month.    On the other hand, for someone 62 or older living on a fixed income who has increased expenses—medical hardship, higher utility bills, needs to help out a family member, major home repair—a Reverse Mortgage could be a way to help them meet their financial goals. A Reverse Mortgage (Home Equity Conversion Mortgage, or HECM) is for homeowners 62 or older who have paid off or paid down the mortgage on their primary residence.  The program allows them to withdraw funds from the equity in their home in a fixed monthly amount or a line of credit or a combination of both. My perspective on Reverse Mortgages is that it is not a product for everybody.  To begin with, you have to be 62 or older (and there are other requirements), and there […] Read More

Taxes & Insurance

Unpaid taxes and insurance are a problem with any mortgage.  The same is true for a Reverse Mortgage. A Reverse Mortgage (Home Equity Conversion Mortgage or HECM) is for homeowners 62 or older who have paid off or paid down the mortgage on their primary residence.  The program allows them to withdraw funds from the equity in their home in a fixed monthly amount or a line of credit or a combination of both. With a Reverse Mortgage you do not have a monthly mortgage payment, but you still have to pay your property tax and homeowners insurance.  Sometimes a Reverse Mortgage is the best solution to help an older person live more comfortably; however, a Reverse Mortgage is not for everybody.  To begin with, you have to be 62 or older (and there are other requirements), but beyond that, it depends on your circumstances whether a Reverse Mortgage is an advantage or a disadvantage. Having an attorney look over your shoulder can help you get the deal you think you are getting.  An attorney who represents you and only you can help watch out for your interests and make sure you understand the terms of the Reverse Mortgage contract, […] Read More

Taxes & Insurance o a Reverse Mortgage

Even if you have a Reverse Mortgage you still owe taxes and insurance. A Reverse Mortgage (Home Equity Conversion Mortgage or HECM) is for homeowners 62 or older who have paid off or paid down the mortgage on their primary residence.  The program allows them to withdraw funds from the equity in their home in a fixed monthly amount or a line of credit or a combination of both. My perspective on Reverse Mortgages is that it is not a product for everybody.  To begin with, you have to be 62 or older (and there are other requirements), and there may be disadvantages, depending on your circumstances.  However, sometimes a Reverse Mortgage is the best solution to help an older person live more comfortably…and it can be used to purchase a smaller home if you do not want your kids to come back. Remember, with a Reverse Mortgage you still have to be able to pay your taxes and insurance.  Look for your tax notice in the mail in early November, or you can request your bill to be emailed to you from the St. Johns County Tax Collector’s Office via the link to their website at http://www.sjctax.us/eBill/index.aspx. Read More

Forward Changes in Reverse Mortgages

Jack and Jill went up the hill to fetch a Reverse Mortgage.  Jack fell down and broke his crown before the transaction funded and the loan was called due on Jill…but that was once upon a time.  Now things are different for married couples. A Reverse Mortgage is still not for everyone, but there have been some good changes to the program recently.  The basic qualifications are for at least one partner in marriage to be 62 years or older and to have equity in the house, then are some better provisions for what happens if that 62-plus person passes away, leaving a less-than-62 year old spouse. Reverse Mortgage is just one tool for dealing with overwhelming mortgage debt, along with mortgage modification, short sale, Hardest Hit Fund, and in some cases, bankruptcy.  The best answer is not the same for everybody.  It depends on your circumstances—how much equity is in your home, if you are unemployed, if you are retired, if you are raising children or a caregiver for a family member, or if you have a medical hardship.  There are a lot of different variables that can put a person in debt and/or make it difficult to get […] Read More

The Old Woman Who Lived in a Shoe with a Reverse Mortgage

There was an old woman who lived in a shoe.  She had so many bills she did not know what to do.  She had only $800 a month to pay for them all, and she paid $600 in mortgage then had to live very small.  Without enough income to pay for a phone, power, water, medicine, and bread, she rotated paying her bills and went worried to bed. The old woman who lived in a shoe got a Reverse Mortgage, then she had money for her bills and a little extra too.  She got rid of her mortgage payment and drew money each month, so she never ran short, not even oneth! A Reverse Mortgage is not for everyone, but if you are living on a shoestring budget with a fixed income, it could do a whole lot of good.  It is an FHA insured program for homeowners 62 years old or older, and you do have to keep paying your taxes and insurance. There are positives and negatives, but sometimes a Reverse Mortgage is best solution to help an older person live more comfortably—able to afford medicine, food, and basic living expenses. Read More

Short Sale & Reverse Mortgage

A Short Sale does not usually happen quickly and you do not have to drive backwards to get a Reverse Mortgage.  Both are strategies to deal with mortgage debt, but which has the best benefit depends on your situation (and if you qualify). A Short Sale is when the lender agrees to accept less than a full payoff of the mortgage balance.  The lender gets a smaller amount than what is owed, but generally more than if the lender finished the foreclosure and sold the property themselves.  The homeowner typically sacrifices his credit on the altar of getting the short sale done, but usually a Short Sale is not as bad on a credit score as a completed foreclosure lawsuit (or Bankruptcy). A Short Sale is often best for the universe when a borrower cannot pay his mortgage—the bank receives more than they would otherwise in foreclosure, the homeowner gets out of a house he cannot afford and can start to rebuild his credit, and the neighborhood gets a new owner faster—instead of leaving the house vacant for months—which helps maintain property value in the area.  Also the transaction stays local, benefitting the local economy—the vendors involved in the completion […] Read More