Reverse Mortgage: Scam or legit financial option?

[tech30528]

You'd have to be morally bankrupt to feed off the poor and stupid like that. Sometimes just because you can doesn't mean you should.

 

[poweRob]

You callin Fred D. Thompson a liar?

Dammit. beat me to it.

 

[Lutherf]

So the heirs (kids) have to buy back the house that they grew up? This is how I see a reverse mortgage. If someone sees themselves in the position of being elderly and having only social security to rely on, and have done no financial planning at all, these people are ripe for the picking for vultures like these reverse mortgage companies. Had they financially planned, they wouldn't need the easy money, but since they didn't, this is like a DREAM COME TRUE!!11!1 I think that it goes more along the lines of the mentality of the person getting the mortgage. Too much like a get rich quick scheme.

While a few people do get themselves into that kind of situation the most common cause of old age poverty is the kids sucking up every nickel before fighting over the bones. It's good people with good intentions who use their mjodest savings to help little jimmy through rehab for the 3rd time or credit card hell for the 5th time or, in more cases than I ever imagined, let little Suzie "manage" their finances for them.

 

[Superfly]

While a few people do get themselves into that kind of situation the most common cause of old age poverty is the kids sucking up every nickel before fighting over the bones. It's good people with good intentions who use their mjodest savings to help little jimmy through rehab for the 3rd time or credit card hell for the 5th time or, in more cases than I ever imagined, let little Suzie "manage" their finances for them.

That pisses me off just as much. Kids ripping off their parents are no better than the scam artists trying to rip off the elderly.

 

[Lutherf]

That pisses me off just as much. Kids ripping off their parents are no better than the scam artists trying to rip off the elderly.

The conscious "rip off" isn't all that prevalent (thankfully) but it's mom and dad's good intentions that mess things up. The folks who end up like you suggested are most often the ones who could never say no in their younger years.

 

[iguanaman]

Most likely he was not of sound mind, and was conned into it rather then doing it from a well thought of position.

Like when they are terminally ill and in the hospital. The banks have vultures (salesmen) walking the halls who get fat commissions for swindling sick people out of their homes. The hospitals help them out too, just in case their bills aren't all paid. It's just another "revenue stream" for Banks like "Skank of America.

 

[radcen]

So the heirs (kids) have to buy back the house that they grew up? This is how I see a reverse mortgage. If someone sees themselves in the position of being elderly and having only social security to rely on, and have done no financial planning at all, these people are ripe for the picking for vultures like these reverse mortgage companies. Had they financially planned, they wouldn't need the easy money, but since they didn't, this is like a DREAM COME TRUE!!11!1 I think that it goes more along the lines of the mentality of the person getting the mortgage. Too much like a get rich quick scheme.

To me, this argument is emotional and completely irrelevant. Even if the kids grew up in the home, so what? Simply put, it's... not... their... home. It belongs to the parents to do with as they need and/or wish.

 

[Cephus]

wrong
the line of credit is the deceased's
that will go to the heirs
who can use it to buy back the mother's home should they so desire

the $160,000 could have been disbursed at closing had the client sought the lump sum. the money goes to the client/client's estate

But the bank is going to want $200k, not $160k, which is all they paid out. If their heirs don't want to pay the additional $40k, the bank gets the house and the heirs get nothing.

 

[radcen]

Like when they are terminally ill and in the hospital. The banks have vultures (salesmen) walking the halls who get fat commissions for swindling sick people out of their homes. The hospitals help them out too, just in case their bills aren't all paid. It's just another "revenue stream" for Banks like "Skank of America.

But really, that's what all loans are. Of course it's a revenue stream, just like auto loans, regular mortgages, and so on. Nobody, except maybe relatives, offers to lend money with nothing back in it for them. That's not really disputable. Thus, can a reverse mortgage be mutually beneficial in the same way that a regular mortgage or a car loan would be?

 

[justabubba]

But the bank is going to want $200k, not $160k, which is all they paid out. If their heirs don't want to pay the additional $40k, the bank gets the house and the heirs get nothing.

nope. the bank will lend 80% of the current fair market value, recognizing if they have to acquire the property for forced sale, they will realize about 80% of fair market value

thus, the note and the mortgage are in the amount of $160,000
if the heirs want the property, they can buy it by repaying the loan. if they were smart (and the property had appreciated), they would simply buy the bank's note and instruments of hypothecation


think of it this way. if you were to take out an equity loan, for the same money on the same home, you would have to make monthly payments on that $160,000 mortgage in order to prevent a default event, allowing the collateral to be exposed to foreclosure
the reverse mortgage client enjoys the same $160,000 equity, but makes NO monthly payments other than a minor monthly loan servicing fee
in the instance i am referring to, the client's line of credit has been increasing as the home appreciates
i dont see the down side - for the home owner
i can see why the heirs would not want the estate to dissipate, but too bad, its not theirs to whine about
the client is house rich and cash poor. the reverse mortgage changes that