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A new type of short sale just for seniors

July 11, 2009

Actually the term “short sale” is misleading. More properly it should be called a “short pay”. This is not common in the reverse mortgage origination, but sometimes I encounter clients that desperately need to get out of their conventional mortgage and into a reverse. In most cases it is the only option for them to save their home.

Recently I met Monica. When I went to her home, this very astute and young senior was just coming to face reality. The mortgage broker she had contacted when she first explored doing a reverse mortgage, convinced her to do an interest only mortgage. He promised her she would be put into a reverse the following year. This was despite the fact that the mortgage he originated had a three year prepayment penalty and by the time the three years were up she would not have enough equity to qualify. As it turns out, she already is in that situation. She never understood what her payments would escalate to and I had to break the bad news. When I got done reviewing her documents she stepped outside for a cigarette. I found her in her yard, crying…she didn’t want the granddaughter she was raising, to see her upset. This is the tough part of my job. I am now working with Monica and a firm that has been quite successful in negotiating with lenders to take short pay for the debt that is owed. I am saying a prayer that they will be able to convince her current lender to accept the funds of a reverse mortgage for the debt. The funds will be short of what she owes but this would keep her in the home she loves and enable her to continue to give her granddaughter a stable environment. This this would be a short pay reverse mortgage, not a short sale.

I will update you on Monica’s status from time to time. Wish me luck and say a prayer, she deserves a break. And as for the slimey snake that put her in this situation, he should lose his license and catch the swine flu! Nobody deserves it more!

One Comment leave one →
  1. Dick Diamond permalink
    July 14, 2009 12:51 am

    It is such a shame we have unethical loan officers who have taken advantage of people. As a reverse mortgage specialist, I am encountering this same scenario over and over and am usually not able to help them. It is sad, but the real reward is remembering how many good folks we can help.

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