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Reflections of a Reverse Mortgage 8 Years Later

July 15, 2016

There are days when I get an unexpected phone call and am reminded why I am in the reverse mortgage business. I remember the client on the other end of today’s phone call very well. I originated a reverse mortgage for Beverly back in 2008. After 8 years and many Christmas and birthday cards, it was good to hear her voice. Typically, when I hear from a past client, they are calling to ask about selling their home or if the death of a spouse effects their mortgage. This time I was being asked to refer a reputable roofing company. Imagine how good it feels to know that she respects me enough to seek my recommendation. And imagine how good it feels to be able to provide her with several.

 

19984085 - portrait of old woman with crossed hands on a white background

Avoiding the acceptance of a reverse mortgage as a solution to financial security.

This particular phone call really stands out, as I do remember Beverly, very well. I can recall our conversation at her dining room table so many years ago. Beverly had become a widow with very little in savings. She knew she needed to provide for her future and expenses she would incur while surviving on one social security. However she had depended on her husband to make financial decisions, the thought of having this responsibility now terrified her. She spent over two hours detailing all the avenues she had explored for resources, none of them panned out. She was embarrassed that she had even asked her son for help. Now here she was, considering a mortgage on her home to provide those funds, and a reverse mortgage at that! It scared her. She was hesitant, actually, she was determined to find any other solution. She sat at the table with her arms folded against her chest, steadfast in avoiding the reverse mortgage documents I was presenting. I reaffirmed that the other avenues she explored would not work. I recall vividly the moment she picked up the pen and started to put her signature on the application. She put the pen down after each page, hesitant to sign another, it was painful to watch. I imagine she perceived each signature to be nails in her coffin. Never had anyone been so skeptical, never had anyone been so cautious, never had anyone been as unshakable. She continued to question her decision throughout the approval process. Almost every day I was involved in lengthy conversations with Beverly as she vacillated on actually closing the loan. However, she eventually finalized the reverse mortgage and received a very nice equity line of credit that would be a resource to her in the future.

Fast forward to today’s call. Beverly stated she has over $80,000 in her reverse mortgage equity line of credit. She has used it to help pay for a car after an auto accident resulted in her previous vehicle being totaled. She has used it for other necessities including a new a/c unit and other minor home repairs. Now she needs a new roof and was not only calling to ask for a recommendation because I had been a trustworthy resource in the past but also because she wanted me to know how good it felt to be able to have the money needed to keep her home comfortable and well maintained.

senior writing checks

A reverse mortgage can provide the funds for unexpected expenses.

It was great to hear how happy she has been to have the funds easily available. No regrets, absolutely NONE! She declared how fortunate she had been to get the reverse mortgage and that she never worries about how she is going to handle unexpected expenses. Beverly has not only been one of my most skeptical clients, but she has also been one of the most conservative. She continues to be diligent in managing the reverse mortgage funds. She really has come a long way from “the lady who had no experience with finances.” It was great to hear the happiness in her voice. It was great to know that I have been an instrument in her security. And it is great to be a highly respected resource many years later. I gave Beverly the names and phone numbers of three trusted, professional roofers. She promised to call again once she had the quotes and let me know who she decided to use. I know she will be cautious as she makes her decision, just as she was with the reverse mortgage. And I think she will be as happy with her decision as she is with the one she made eight years ago. It was life changing, it was extremely beneficial and it was the right resolution for Beverly, then and 8 years later.

 

Live and In Person

August 25, 2014

Once again I received a call from a local senior, Ed, interested in obtaining a reverse mortgage. Ed asked if he could set an appointment to talk about what he wanted to do. We agreed on a place, day and time, he preferred to meet at his home. Although I have an office, I prefer this as well. Meeting at a client’s home enables me to see any obvious conditions that may affect the value. Sometimes it can be as simple as an old water damage spot on the ceiling that has not been taken care of after a roof repair. I can head off these issues. I also can see if the home has had any recent updates that I may not have considered in my original expected value. There are many benefits to a meeting around the kitchen table.
just sign here

When I arrived it didn’t take long for Ed to pull out a huge UPS box of documents. I am sure at one time, probably when Ed initially opened the package, they were all neatly arranged and organized. However this was no longer the case. Ed had stacks of papers. Many were marked with red sticky tabs imprinted with an arrow and the words “sign here”. Ed had followed the instructions as best he could, the package was overwhelming. Can you guess what Ed wanted me to do? Did you guess “explain the documents”? If you did, you guessed correctly. Ed had talked to his family about a reverse mortgage and one of his family members “loved” one of the spoke persons for a national reverse lender that advertises on TV. Whether it be Fred Thompson, Henry Winkler, Pat Boone or Robert Wagner, is not relevant. What really matters is that none of these celebrities will be coming to your home, talking to you on the phone or helping you through the process.

There are many details involved in the process of a reverse mortgage, all of which take understanding and a professional expert who has originated innumerable reverse mortgages over many years. When I go to a clients home, I plan enough time to review the program, discuss the pros and cons, address all questions and explain every document prior to their signature. Absolutely no UPS box of confusing detailed instructions, dozens and dozens of sticky red arrows indicating a needed signature and a pre-paid return package with instructions to complete and ship back the following day. If my clients are undecided, that’s OK. I have had clients sign the documents on the first visit, this happens a lot. But there are also seniors that need more time, they need to discuss their plan with family, maybe they want a family member or financial planner to sit through a consultation. That’s great, I want to know they are comfortable and have no concerns or misunderstandings.

package noSo what was the difference between the documents that arrived by UPS and the documents I hand delivered to the clients home? Number ONE, the celebrity package, had an unrealistic home value. It’s great to think that you may get a far more greater amount of funds, but it is also upsetting and discouraging when the appraisal is completed (which is a factor that determines the funds available) and it is at an amount much lower than anticipated. Maybe it’s much easier for a voice over the phone to present exaggerated numbers. But I’m here, living in the area, bumping into clients in unexpected places. Even running into a client at a restaurant on the evening of his marriage. Whether it’s at the local steak house, at Walgreens in the medication aisle or in the checkout line of Costco, I’m local and love seeing them again, whatever the circumstance. I’ve visited client’s in the hospital, gone to the veterinary emergency clinic to hold the hand of a clients daughter when they couldn’t get there and provided a much needed ride to pick up a rental car. None of this comes in a UPS box.

When it came to the closing fees, my estimated costs, in this case, were $100 less than the other package and my package included an itemized fee sheet with each vendor listed. This was something I couldn’t find in any of the UPS box contents.

So please let me introduce myself, “Hello, my name is Fred Thompson,” no that’s not right. “Hi, my name is Henry Winkler, you probably remember me as the Fonz,” oops that’s not it either. Robert Wagner? Pat Boone? No and no again.

Hi, my name is Donna Moore. I am a reverse mortgage loan originator and local expert serving the west coast of Florida, Tampa Bay, Central Florida, including The Villages and I promise you that when you give me a call, it is my voice on the other end. Whether you call 727-831-3416 (Tampa Bay), 941-421-0205 Venice, Punta Gorda, Port Charlotte or 352-342-9292 from The Villages and Ocala, it is me that answers the phone.I will give you my personal service, expertise and time to understand your needs and goals. All that does not come in a UPS box.

My personal website is  http://www.asmartsenior.com/ I can be contacted through this as well. I look forward to hearing from you.

Drinking the Water

May 20, 2014

horse at waterOver the years I have originated many reverse mortgages in St. Petersburg, Tampabay and Florida. I believe each one is a personal decision made after careful consideration and education. My clients often tell me that they have had other people talk to them about the program but did not truly understand it until we sat down and talked. First and foremost, I listen. I listen to their needs and their objectives. Then I listen to them tell me what they “think” a reverse mortgage is. Some have a lot of misinformation, some need a little clarification and some totally understand it. The biggest obstacle to overcome is often a client’s reluctance to open up about their personal situation. And as the saying goes, “you can lead a horse to water, but you can’t make them drink.” Having owned a horse in my childhood, I do know this to be true.

One client in particular, reminds me of this old adage. Linda came to my St. Petersburg office with her boyfriend. I think an accurate description would be “she was led in by her boyfriend.” Although I visit the majority of my clients in the comfort of their home, I believe it is a client’s choice, and Linda chose to come to my office. I suspect so she could easily flee when the urge hit her. Linda, the boyfriend and I discussed exactly how a reverse mortgage works and in the end Linda walked out briskly, stating adamantly that she would “never get a reverse mortgage.” Thus she was not going to drink the water she was led to by her concerned friend.

What Linda failed to mention was that she was already behind on her mortgage payments and her lender had served her a Lis Pendens, or intent to foreclose notice. Four months later, Linda and the boyfriend came back to my office. This time Linda told me that her lender had started foreclosing and time was of the essence. However, she still was objecting to the reverse mortgage.

During the four months that Linda had delayed her application, her property declined in value by an estimated $20,000. She was shocked that my new estimate was substantially lower. I never fail to tell clients that recent sales in their area will affect their value and there is no promise that someone will not have a “fire sale” which could potentially lower their homes value. This is more likely to happen over the opposite, where home values take a sudden jump in a short period of time. It was ironic that Linda said, “you should have made me sign the application four months ago.”

Linda now owed her lender additional penalty fees, lowering her net proceeds even more. I accurately estimated the reduced value and additional fees cost her $10,000 in less funds. During the course of her HECM (Home Equity Conversion Mortgage), Linda was dodging phone calls from her current lender. Repeatedly she asked me to field their calls and let them know she was in the process of a reverse mortgage. I did oblige, however her lender really wanted to speak with Linda. It was an uncomfortable middleman position.

Within a few weeks I was able to close Linda’s loan. I certainly thought that this would bring smiles to her face and the peace of mind that over 90% of reverse mortgage recipients state they feel. However, despite the situation Linda was in, she loudly announced at the closing “I still don’t want to do this.” But she continued to sign the necessary documents at the urging of her boyfriend. I probably will never understand her reasoning. The reverse mortgage saved her home from foreclosure, provided her with an additional $12,000 in an open line of credit and gave her funds to assist with other expenses for years to come. Throughout the process I never “coerced” Linda into the reverse mortgage. Her boyfriend and her banker encouraged her to see the reverse mortgage as a solution, a form of lifesaver to stay her in her home. In Linda’s case, I failed to get her to disclose her reasons for objecting. Maybe it all boils down to never being able to admit a lack of understanding or inability to say “I was wrong.”

However, five days after Linda’s closing, she gave me a call. She briefly mentioned that she had received the check for the amount of cash she had requested at the closing. Then she asked me if I had seen a recent commercial featuring a Jack Russell. She said she imagined me and my Jack being just like the commercial and she would never watch that commercial without thinking of me. BINGO! We had finally connected. It was a long process. She may never divulge her reluctance but I finally felt that Linda was happy with her decision. Her boyfriend led her to the reverse mortgage (water), her pending foreclosure made her proceed (drink). But finally I felt that she was truly glad she had and whether she wanted to say it out loud or not, I truly think she finally got her peace of mind and found the water absolutely refreshing.

 

Avoiding the obvious, sometimes it works, sometimes NOT!

February 29, 2012

A reverse mortgage can eliminate credit card debt and provide additional income.

Just when I thought I couldn’t find anything to blog about, my phone rings and another interesting meeting takes place.

I originally was given Ellen’s contact information from her Jackson Hewitt tax professional. This was a man who had done her taxes for many years and was also a trusted personal friend. Knowing Ellen’s finances and the road they were going down, Rob suggested she give me a call. At the time, Ellen had extreme losses in her stock accounts, limited income, a home paid for and rising credit card debt. Rob thought she could benefit greatly from a reverse mortgage.

I first met Rob when I spoke about the HECM (Home Equity Conversion Mortgage) also known as a reverse mortgage, to a local Tampabay organization. After the presentation Rob asked if we could meet so he could get the pros and cons, complete details and take a look at the amortization schedule of a typical reverse mortgage. Rob knew many St. Petersburg seniors who could benefit from the proceeds, Ellen was one of them. Three years ago Ellen and I spoke but she failed to face what was happening with her finances.

This week Ellen realizes that her life would have been better over the past three years had she taken the step when we first spoke. Ellen has $20,000 in credit card debt, she keeps transferring balances to avoid the interest, she is 79 years old, she is short $300 per month just to meet her obligations and next week she is starting a part-time job. Good for Ellen, she managed to find a job in a high unemployment market. Instead of traveling with her friends, attending her senior group meetings and crocheting, Ellen is going to work. Not quite the life she was expecting in her golden years.

Had Ellen done a reverse mortgage three years ago she undoubtedly would have received more funds as her home would have appraised higher. The balance in a line of credit would have been growing, thus providing more funds over time. Ellen would not have $20,000 in credit card debt!

One of the most difficult tasks of my job is to present a picture of what may happen in the future. Will I sound like a “used car salesman”? Will the client remain in denial? Will the client realize the benefits? Will the Ellen’s avoid the obvious? Or . . . will my next Ellen realize she can enjoy her retirement years, with the assistance of a government insured reverse mortgage. Sometimes I leap that hurdle, sometimes I can’t reach those that need it the most.

I Hate My Job

February 17, 2012

Yes, that’s right, I HATE MY JOB! Does that shock you? Most people would never make such a statement and typically I do go around affirming that “I LOVE my job!” But once in a while we all have those days. When I have one of those days I do hate my job, because one of those days means that I can’t help the person who really needs me, who really needs a reverse mortgage. Sometimes it is too late to help and this week I had one of those days where I did hate my job.

I first met Maryanne Jones (not her real name but her story is very real), at an educational seminar on reverse mortgages that I presented to Tampa Bay area seniors. My seminars are open to the public and present the pros and cons of reverse mortgages. At the time Maryanne was a 77 year old Florida senior homeowner with one existing mortgage. The proceeds from a HECM (Home Equity Conversion Mortgage), more commonly referred to as a Reverse Mortgage, would have eliminated that mortgage and freed up cash from Maryanne’s limited fixed income. After the seminar Maryanne went home and discussed her plans with her daughter and son-in-law. According to Maryanne, her son-in-law knows “absolutely everything about everything” and he advised her that a reverse mortgage was not for her. He advised her to get a home equity loan, thus giving her an additional monthly obligation on her limited income and a second mortgage.

Can you see where Maryanne is headed? Can you already tell me where Maryanne is now? If you guessed that she now owes as much as her house is worth and can’t make either of the payments, you are right on. Maryanne has not been able to make a payment since last September. Maryanne just turned 80, her foreclosure notice arrived with her birthday cards. Maryanne called me on Wednesday, her family is now ready for her to do a reverse mortgage. She no longer has remaining equity in her home, there would not be enough funds to pay off her two existing mortgages, I can’t help Maryanne out of her mess. Wednesday I hated my job! The reality is she is going to lose her home, I can’t undo the damage, I referred Maryanne to a good foreclosure attorney. I wished her luck.

I offer factual, detailed reverse mortgage information to assist seniors and their loved ones in making an educated decision. But as the old cliche goes, “you can lead a horse to water, but you can’t make him drink.” I don’t coerce, manipulate or pressure.  I also don’t sit at a table with a crystal ball and show seniors their future, I am not a psychic. But I believe that if Maryanne had come to me three years ago and told me of her families decision to take out an additional mortgage, I would have foreseen the inevitable and pointed out the pitfalls. That’s why sometimes, somedays, “I hate my job.”

However, most days, I really love my job because most days, not all, but most, I meet Florida seniors and their families that want to make an informed decision. They get the details of the government insured HECM program and they make the choice that is right for them and then I do really love my job.

Change is the Constant

January 19, 2012

Before the dramatic change in my life during the past year, we frequently enjoyed trips to Disney with our granddaughter.

Every year is a year of change, but some more so than others. Last year was a huge change for me. On a personal note, my ability to care for my husband at home changed. My husbands medical problems became unmanageable from home and it became clear that it was time for him to move to a nursing facility. This was a heartbreaking decision and one that I did not come by easily. I fought with doctors, replaced primary care physicians and changed nursing facilities, all with the intent of bringing him back home. But eventually change has to be faced. What you think you can prevent or overcome has to be accepted.

In his book, Life 101, Peter McWilliams said, “Acceptance is not a state of passivity or inaction. I am not saying you can’t change the world, right wrongs, or replace evil with good. Acceptance is, in fact, the first step to successful action. If you don’t fully accept a situation precisely the way it is, you will have difficulty changing it. Moreover, if you don’t fully accept the situation, you will never really know if the situation should be changed.” Eventually I had to accept that our lives together would be forever changed. I was moving from the role of wife and mate to healthcare surrogate, advisor, advocate and caregiver. Some things did not change: my love for my husband, the joy he has given me and my desire to be with him. But acceptance truly is the first step to successful action and after much avoidance of what had to happen, I did take that first step even though I felt like I was walking off a cliff.

As a Reverse Mortgage Specialist in Florida, I have encountered many seniors that cannot accept change. Yet often seniors experience more changes in their lives than any other segment of the population. As in my case, their spouses health changes, or in other instances they may experience a change in their own health. Family members may need to rely on them more, a spouse may pass away and a portion of income is lost (often a large portion), additional home assistance may be needed, mortgages become more difficult to pay, cost of living increases, home maintenance may be needed, 401K funds and investments lose value, medical expenses increase, funds for transportation may be required, the list is endless. And just like I experienced, it is difficult to accept. Often we feel loss of control and fight the inevitable, I know I did.

Eventually, as in the words of Maya Angelou, “The need for change bulldozed a road down the center of my mind”, I moved my husband to a facility that is better equipped to handle his daily medical needs and started taking small steps of acceptance. Often my reverse mortgage clients are just like me, they make small steps toward reaching a necessary decision. It’s almost funny how often I hear, “I wish I had done a reverse mortgage sooner” or “why are all my friends so negative about reverse mortgages?” The answer is change, no one likes it, yet change is more often a good thing. A Pinellas county reverse mortgage client saved her home from foreclosure, a St. Petersburg client no longer has to fast to make her mortgage payments, a Clearwater client replaced her car with reverse mortgage funds and a Tampa resident replaced his broken air conditioner. In every case there was change, positive change and life altering changing. While most people would say “but these were desperate people that had nothing else”, this government insured program is not the loan of last resort, as some may think. It has been the means to pay cash for a second home eliminating mortgage payments, the funds for a retirement fishing boat and money for a grandchild’s college education, all additional circumstances which resulted in positive changes.

With change as the constant, it is a matter of how you are going to handle the change. Are you going to follow my first reaction and try to stop it? Hide from reality? Deny it’s existence? Or will you exuberantly embrace it? For most of my clients change came first with an open mind, the willingness to learn the pros and cons of a reverse mortgage and the insight to realize the possibilities . . . the change of life that a reverse mortgage could provide. Maybe Oprah said it better than anyone, “If you want your life to be more rewarding, you have to change the way you think.” Oprah probably wasn’t talking about reverse mortgages, but I think the philosophy certainly can be applied. I’m not saying that you should run out and apply for a reverse mortgage today. I only ask that you are open to changing the way you think about reverse mortgages, about long term care, about retirement, about the future and discovering what rewards that may bring. Change truly is the constant, it’s just around the corner, are you ready?

Have You Heard a Clock Ticking?

January 23, 2010

Tick, tick, tick. The clock has been ticking on FHA condo lending. Several times as the alarm was about to go off, the clock was reset and additional time was granted. Again the clock is about to run out, February 1st is the new deadline.

I had hoped that alarm clocks would be ringing loud enough for every senior in a condominium to wake up and smell the coffee, but it seems that this has been a well kept secret and very few realize what this means to potential borrowing which includes Reverse Mortgages.

Time to know your options.

When the clock stops on February 1st, all condominium complexes will lose existing FHA approval.  New applications for FHA approval must be submitted.  Until new approvals are granted by the Federal Housing Administration, no new FHA loans will be available for condo purchases, FHA condo mortgages, including condo Reverse Mortgages. Even those projects that had been pre-approved previously will now have to be re-approved before the reverse mortgage will be issued.

Prior to this a condo owner could apply for approval and the lender involved would be required to use what is called a “FHA Spot Condo Affidavit.” This one-page document would be used when the condo had not been previously approved by the FHA. February 1st the slate will be wiped clean, all projects which had already been on the approval list will go back to square one. Each project will have to acquire new approval through one of two processes:

1. HUD Review and Approval Process (HRAP) – This is now the standard process to receive approval for condominium projects.

2. Direct Endorsement Lender Review and Approval Process (DELRAP) – This form of approval is only given to those lenders who are already approved by HUD to give approval for condominium projects.

As we all know, the wheels of government do not move quickly and this process will be no exception. One rule is that no more than 15% of the owners can be more than 30 days in arrears. In today’s economy this could eliminate many condo complexes and create hardship for many seniors seeking a reverse mortgage. We all know seniors have been especially hard hit, maintenance fees have risen but seniors did not get an increase in their social security this year. Seniors are living on a fixed income with “un” fixed and rising costs. The need and desire for reverse mortgages is greater than ever.

Other rules include 50% of the units in a condo project must be owner occupied. Florida projects can have a high ratio of non-homesteaded units, again creating additional difficulty in achieving approval. However, bank owned and vacant units previously were counted in this ratio and under the new guidelines will no longer be calculated, which will be a plus to the new process. Also, the allowance for the number of units that can be financed with FHA loans will be increased from 30% to 50%, another plus.

Once a condominium project is approved by FHA, it will still need to be re-approved every two years. This enables FHA to ensure that the buildings are kept up and continue to meet their standards. The only exception will be for new buildings, which are approved for 10 years.

If you have been on my mailing list, you already knew this was coming. You have heard the clock ticking and probably were among the several condo owners that choose to complete the process prior to the new rules. Of course there is always a chance that the clock will again be re-set. Whatever happens, condominium owners have no guarantee that their home will meet the requirements set forth by HUD.

Golda Meir said, “I must govern the clock, not be governed by it.” You may be planning to retire better with a reverse mortgage. In which case, you need confirmation that your home will qualify. Tick, tick, tick, call me and know what your options will be.