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They’ll Say Anything To Get A Reverse Mortgage Application

February 6, 2010

Senior Considering a Reverse MortgageMarie lives in a manufactured home (sometimes called a mobile home).  It’s a beautiful home built around the original form so you can’t even tell it’s a manufactured home.  Two years ago I worked with Marie but unfortunately we were not able to do a reverse mortgage because her manufactured home did not meet HUD’s requirements.  While we can do a reverse mortgage on manufactured homes they have to meet the long list of HUD’s requirements.

Two weeks ago Marie called and said she had talked with an originator of a large bank who told her that the reverse mortgage can be done on her home.  Marie said she had called me because she trusted me.  As I discussed the situation with her she said the other originator had told her that they found on the internet that her property had been reclassified.  Additionally Marie said at the suggestion of the other originator she had scheduled her required counseling.

Not believing that a manufactured home could be reclassified, I told Marie to cancel the counseling (potential cost of $125 which she didn’t need to spend if her property wouldn’t qualify) and that I would check to see what I could find out for her regarding a reclassification.

After doing some checking on the internet, reviewing HUD’s requirements and checking with an underwriter, I called Marie back to confirm what I initially thought, her property was not reclassified from HUD’s standpoint and HUD would not insure her property.  A manufactured home is a manufactured home no matter how much you have done to change the look.

Fortunately Marie had called me – if she had proceeded with the other lender she would have spent $125 for counseling, $450 to $500 for an appraisal and then found out that she still couldn’t do the reverse mortgage.  She took it in good humor, stating, “They’ll do anything to get an application.”  While I would have loved to do the reverse mortgage for her, I believe in servicing the client even if it means I won’t earn a commission.

Another call I received was from someone who was shopping for lenders.  They lived on a rural property and after talking with them about their property I determined that it would not meet HUD’s requirements because of commercial use.  This person said they were told by a large bank originator that they could do the reverse mortgage.  If they proceed in with the counseling, application and the process with the other lender when the file gets to underwriting (hopefully) or to HUD they will be very disappointed when they learn the reverse mortgage can’t be done, especially when they have paid for the counseling and appraisal, credit and flood certificate fees.

Reverse Mortgages can be lifesavers for seniors but the property has to qualify.  Keep in mind that some lenders require originators submit a number of applications as part of their employment, even if they don’t close.  These are just a couple of examples, we receive other calls on unusual properties where other originators have led the borrower to believe a reverse mortgage can be done where in fact HUD will not insure the property.  While this is not reverse mortgage fraud, I consider it to be unethical.

Work with Experienced Reverse Mortgage OriginatorSeniors should contact and work with originators who have years of reverse mortgage experience not only in originating but also with HUD’s as well as the investor’s requirements, processing, underwriting.  Ask for references.   Additionally the originator should look out for the seniors, i.e. be a senior advocate – we don’t want to get senior’s hopes up and have them pay out hard earned money if they aren’t going to qualify for a reverse mortgage.

Don’t be afraid to ask the originator questions about their knowledge and experience with the various aspects of reverse mortgages, from origination, processing, underwriting, closing, servicing, etc.  Utilize the questions in my Blog article “Don’t Let Fear Keep You From A Reverse Mortgages But Know What To Look For In a Lender.”  Additional information can be found on our website: “What To Consider When Talking With Reveres Mortgage Lenders” and “Why Choose Prestige Mortgage, LLC/Reverse Mortgage SIDAC.”

Also read how reverse mortgages have made a difference in the lives of those who do qualify:

© 2010 Beth Paterson 651-762-9648

9 Comments leave one →
  1. February 6, 2010 8:19 pm

    Great article. The trust factor that is established between clients, potential clients and loan officers is priceless. Character and competence are two necessary ingredients to establishing trust. Sadly many loan officers just do not understand this. Beth you are one of the few that understands the concept of a shared vision. Establishing expectations is key and talking about the undiscussables is essential.

  2. Bob Irving permalink
    February 7, 2010 7:33 am

    Thank you, Beth. The fact that your seniors trust you enough to seek your counsel is the best evidence of the job you do. It is unfortunate that there are still some originators who are willing to say anything just to generate an application even if it costs their client money.

  3. February 9, 2010 1:04 pm

    About a year ago I was asked to give a talk to a meeting of reverse mortgage professionals at their annual meeting in Boston. My objective was to describe what kinds of technology is available to help seniors achieve their objective of remaining at home as long as possible, even in the face of disability or early dementia. I also wanted them to know that there are people out here like me, certified nurse life care planners, who can help people like that. I don’t expect a mortgage officer to know all about what I do. As a first contact for many people who need resources, though, the mortgage officer is in a position to mention this and other services to the senior and family members.
    As the editor of the Journal of Nurse Life Care Planning I have asked for an article on reverse mortgages from a local provider for our upcoming issue on Elder Life Care Plans, so our readers will have some detailed information about this potential source of funding for our clients. I would welcome first-hand comments from you or your clients that could be used as a sidebar or supplement to this piece. Please feel free to contact me.
    Wendie A. Howland RN MN CRRN CCM CNLCP

    • February 9, 2010 2:33 pm

      Wendy, reverse mortgage originators should be aware of services like yours. Besides being able to provide resources to our clients, the reverse mortgage can pay for various services to help seniors remain at home – I view it as a team effort. I work with many care managers and home care agencies to provide this team of resources for my clients.

      I recently met with a family regarding a reverse mortgage. As I was discussing their situation I realized they needed an assessment before they could decide on whether a reverse mortgage would benefit them. The issue was how much home care was needed and how long the reverse mortgage funds would pay for the care or whether they were better off moving to senior housing. In addition to a care manager, part of the team included an elder law attorney so there was an understanding of how Medicaid would impact the services they could receive. It was true team work.

      I will contact you shortly.


  1. Does Elimination of the Origination Fee Really Benefit Seniors and The Reverse Mortgage Industry? « Beth's Reverse Mortgage Blog
  2. Should One Refinance Their Reverse Mortgage? « Beth's Reverse Mortgage Blog
  3. Are You Confused on Whether to Use A Reverse Mortgage Broker, Bank Or Lender?Re « Beth's Reverse Mortgage Blog
  4. You Originate reverse mortgages…What Do You Do to Deserve all that money? « Beth's Reverse Mortgage Blog
  5. Are You Confused on Whether to Use A Reverse Mortgage Broker, Bank Or Lender? | Minnesota Reverse Mortgages SIDAC

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