I was in foreclosure and got approved for a mortgage?

By
Mortgage and Lending with Southern California Mortgage Professional NMLS #254430

I was in foreclosure and got approved for a mortgage?

No way! That's impossible right?  But it's true!  I was drowning in debt, my medical bills were through the roof and my home was in the process of being foreclosed on.  I didn't even have to prove income or have them run my credit report!

 

This is a real life scenario of a 78 year old widow with a home mortgage of 198,000 that was currently in foreclosure.

 

Her financial planner suggested that she contact Skyline Financial Corp. who offered her a reverse mortgage.  Her home was worth 470,000 and we were able to approve her for a mortgage of 320,540.00.  She used this new mortgage to pay off the old mortgage, cover the closing costs of 3,000 and deposit $119,000 in her bank to cover medical bills and have plenty for future living expenses.

 

A recent Wall Street Journal article reported that high levels of credit card debt and mounting health care bills have contributed to bankruptcies among 55+ year old which are at an all time high.

 

A reverse mortgage allows a  borrower who is 62 years or older to draw a certain amount of equity out of their home.  They have the choice to take it as a lump sum or as a line of credit with monthly installments to them.  They do not have to make any monthly payments and they do not have to qualify with income or credit.  This loan is based only on the borrower's age and equity in the home.

 

This is a great way to help someone who is facing losing their home, who couldn't get a home equity line of credit because they couldn't afford to pay it back.  There are many people that are unaware this program even exists.  It's our job to educate and help people that are in a bad situation, and this program could help change their life.

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. John Axt 10/19/2010 10:57 AM
  2. Daniel H. Fisher 09/03/2011 09:22 PM
  3. Donald Reich 09/03/2011 09:32 PM
Topic:
Real Estate General Information
Location:
California Los Angeles County Santa Clarita
Groups:
Everything California
FHA 203-k and FHA 203-k Streamline Loan Group
LA Connection
Posts to Localism
Tags:
reverse mortgage
reverse mortgage valencia
reverse mortgages valencia
reverse mortgage los angeles
reverse mortgage california
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Rainer
90,361
Kathy Kenney
Keller Williams, Princeton, NJ - Robbinsville, NJ
Realtor - Princeton & Central NJ Homes for Sale

I guess it's a good last resort, but I agree with Keith (#13), the whole system is corrupt.  It is designed to keep us forever in debt.

Oct 19, 2010 08:34 AM #19
Rainmaker
729,326
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota Real Estate Expert

I have not been close enough to the reverse mortgage market but its good to be aware of that option. Thanks

Oct 19, 2010 08:40 AM #20
Rainmaker
102,570
Brian Bean
Dream Big Real Estate - Riverside, CA
Homeowner Advocate, Dream Big Real Estate, S.Calif

The fees are so high on this type of loan that I have a difficult time advising my clients to seek such a product. Have their been changes to the free structures on this type of loan?

Oct 19, 2010 08:54 AM #21
Rainmaker
513,097
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Hmmmm, interesting post for sure.   I gues like most things, it's knowledge, and talking to the right person who can steer you in the right direction is the thing to do!

Patricia/Seacoast NH

Oct 19, 2010 09:20 AM #22
Rainer
115,908
Ben Benita
www.ShortSaleShop.net - Gainesville, VA
Short Sale Negotiator, Author

Thank you for sharing this incredible story!

Oct 19, 2010 09:21 AM #23
Rainmaker
894,358
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Colleen, a great example of how a reverse mortgage can help some people. Thanks.

Oct 19, 2010 09:23 AM #24
Rainmaker
1,783,916
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

The reverse mortgagae can be a great tool if used right.  The fine print is a must to read.  I have a reletiv ethat did this, and they ended up with 60% of the value and being able to live there as long as they were a live.  Then the bank got the house!   Even with the values going  done, the bank makes a nice profit.

Oct 19, 2010 09:38 AM #25
Rainer
56,401
John Axt
Prudential Gary Greene, Realtors - Spring, TX
Spring Texas Real Estate

Great post!  I hadn't thought about this creative use of a reverse mortgage. 

Oct 19, 2010 09:41 AM #26
Rainmaker
80,170
Kimberly Thurm
Koenig & Strey Real Living, Naperville, IL - Naperville, IL
Broker Consultant / Relocation Specialist ABR, CRS, GRI, SFR

I had a client in their seventies in need of some relief if they were going to stay and keep their home.  Rather than selling and having to move in with family or rent, and the rent was going to be the same as their mortgage by the way;  they did a reverse mortgage and it has worked out great for them so far.  The only thing is one of their 50 something children said - Well, now we will not have any inheritance.  There will not be any money left.  Hmmmmmmm, go figure.

Oct 19, 2010 09:44 AM #27
Rainmaker
172,589
Kate McQueen, SRS
KELLER WILLIAMS REALTY CLEAR LAKE NASA - League City, TX
Houston Bay Area Real Estate

I'll have to ditto the first comment to this blog, from Jeff.  I think there could be room for abuse in this program but it can also be a financial life line for someone in need. 

Oct 19, 2010 09:58 AM #28
Rainer
11,612
Peggy Gaulden
RE/MAX Alliance - Albuquerque, NM

Colleen, Thanks for the education.   I don't know too much about reverse mortgages, except that I've always figured there was a "catch" to them, and I don't think there should be a "catch" to anything for the older folks in our country!  I wonder if there can be just some nice, honest, general help like good, not-too-pricey in fees & interest reverse mortgages for the older folks who are watching their medical bills go sky-high, and their social security and retirement funds drop and drop.   If this were truly a viable way to stay in your home and enjoy the golden years without added stress, then that gives people more reason to buy homes as an investment when they're younger.  This would be good info to even educate younger folks with maybe?  I dunno.  I definitely need to learn more about this.

Oct 19, 2010 10:17 AM #29
Rainmaker
342,748
Gina Chirico
Lattimer Realty - Fairfield, NJ
Real Estate Agent - Essex County, New Jersey

Colleen,

Thanks for sharing.  My neighbor next to my parents' house for 35 years lost her home not due to an actual foreclosure but because she co-signed on a loan for her son who then filed bankruptcy and the bank took her house.  Perhaps had she known about this program, she could've benefited from it as well.  Her house was paid off in full at that time and it was so sad to have seen her lose it.

Oct 19, 2010 10:37 AM #30
Rainmaker
261,618
Tere Rottink
CoastalVa Realty Inc - Virginia Beach, VA

This is a great tool but not for everyone.  I know an elderly lady who got a reverse mortgage 7 years ago and the monthly money run out this year.  She can still live in the house as I understand it, but she can't sell it.  She is in her 80's.  I don't know who recommended this scenario, as I know there are different versions of reverse mortgages, but I know that this lady is living a nightmare.

Oct 19, 2010 11:07 AM #31
Rainmaker
570,044
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Colleen,  Interesting post.  I wouldn't have thought of this strategy !  Well done !

Oct 19, 2010 12:25 PM #32
Rainmaker
96,517
Heidi Hovatter - Sonora & Twain Harte
Century 21 Wildwood - Selling Homes and Cabins in Tuolumne County - Sonora, CA
Heidi The Home Hunter

Good to know that there are still reverse mortgages and that they work for some people.

Oct 19, 2010 01:07 PM #33
Ambassador
452,658
Paul McFadden
Environment Control - Kent, WA
Janitorial. Kent, WA.

Colleen: That's a great story. I don't do reverse mortgages here but pass those off to one of my colleagues. It is true. Reverse mortgages can be a house-saver! Thanks for the post!

Oct 19, 2010 01:17 PM #34
Rainmaker
478,015
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Michigan

Did she pay cash for the house with the equity from her present home?

Oct 19, 2010 04:30 PM #35
Rainer
237,486
Donald Reich
Prudential Centennial - New Rochelle, NY

WOW!!!! This is news to me, and can really be a lifesaver to older homeowners in financial difficulty. Thanks for sharing with us, I will certainly pass this along to others!

Sep 03, 2011 09:27 PM #36
Rainmaker
572,923
Hella Mitschke Rothwell
(808) 226-1095 or (831) 626-4000
Hawaii & California Real Estate Broker

Colleen: It worked out for this lady who would have lost everthing. But my worry is for those who don't need a reverse mortgage YET. Since the mortgage is tied to an appraisal, and all appraisals are LOW in this market, they might be going into it at the wrong time. A client of mine did it at the height of the market and got a reverse loan of $850,000. If she did it now, it would only be about $450,000. See what I mean? Maybe the banks are winning one more time.

Sep 03, 2011 09:42 PM #37
Rainer
201,577
Mary Macy
Top Agents Atlanta Metro - Roswell, GA
Top Agents Atlanta Metro

Coleen, I agree with Hella, if a senior really does not need a reverse mortgage, this is the right step, if they don't and can wait for hyperinflation which will certainly be here before we all know it, that is the right thing to do.

Sep 03, 2011 10:14 PM #38
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Colleen Craig

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