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 & Updates

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.  However, there are changes coming to the program, and coming fast. The FHA’s 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. I recently spoke with Jerry Hanley of Security One Lending.  We discussed Reverse Mortgages on the radio show, “Land Title Talk,” last week.  He said changes are coming soon to Reverse Mortgages—there is a reduction in the amount of the loan starting October 1st, and come January 1st, the FHA will be looking very hard at insurance. Reminder:  Even if you have a Reverse Mortgage, you have to keep paying your Taxes and Insurance.  The great thing about a Reverse Mortgage is that you are going to get your money, but one of the negatives is that […] Read More

Mother Hubbard’s Short Sale

Once upon a time, Old Mother Hubbard was going to have to move.  She went to her cupboard to fetch her poor dog a bone and found there was none, and also realized she had the cabinets packed full of negative equity in her house.  Widowed and living on a limited income, she could not make the mortgage payments and she owed more than her house was worth. She could have simply walked away from her house, taking her dog with her, and leaving the property vacant and unkept, or let the bank foreclose, which would very likely have the same effect.  But instead, Mother Hubbard decided to short sell her house. Mrs. Hubbard washed the windows and kept the lawn, just like you would with any house you were trying to sell.  She cleaned the bathroom and swept the floors, and had all the minor repairs done so that her house would sell quickly and for the best price—which would give the bank a faster return at the highest amount. As with any other home sale, Mrs. Hubbard was able to remain living in the property and caring for it until the purchase occurred, at which time she and […] Read More

Take Out the Trash

Living upside-down in home equity can seem like topsy-turvy land:  up is down, left is right, and everything else is wrong…but you still have to take out the trash.  That great real estate investment that you call home may not be supporting you with the financial backbone you were counting on, but you have to live there…and so do your neighbors. Mow the lawn, take out the trash, and upkeep the property.  Even in foreclosure, it is generally in your best interest to maintain the place.  Not only does it help sustain property value of the area, but it may help you with a short sale…which could help you avoid a foreclosure on your credit. (A short sale occurs when the lender agrees to accept less than the mortgage balance.) A short sale is not the ideal situation, but it can be the best thing for the universe.  It may be able to bring the most money for the property at the time…as opposed to a foreclosure or REO (Real Estate Owned).  A short sale can be the best for the bank, the homeowner, and for the neighborhood.  It gives the bank at least some money, it gets the homeowner […] Read More