Mandatory HUD counseling required for reverse mortgages does not protect or help the borrower. The counseling is never done with the final figures of the contract, which changes absolutely everything, including the terms, disclosures, costs and fees, the amount of funds (money) to the borrower and most of all the ability to understand the consequences for their particular circumstances and financial situation.
There is no counseling on the things that should matter – what the financial situation, health, long term need, legal and tax consequences are specific to each borrower of a reverse mortgage on these critical end of life issues.
A formal property appraisal was done later and came in at $530,000 – 20% less than Dad’s estimate. The salesman’s only disclosure was that the appraisal came in lower, but my parents would get the same amount of money.
In May 2005 hundreds of pages of the reverse mortgage contract were presented to my parent’s for signature. This was the first and only time my parents would see the contract with the correct figures based on the formal appraisal. Only 12 pages of the signed contract were left with my parents, none of which contained any of the critical terms of the contract such as the lien amount, right of rescission, HUD closing statement, deed of trust, closing costs, and an amendment to my parents trust (created by a clerk of the lender). My parents were never told to speak with their financial advisor or attorney about the consequences of a reverse mortgage to their retirement and financial well being.
The Reverse Mortgage my parents received: One time lump sum payment of $81,000 for their home appraised at $530,000. For this the lenders: Paid off existing mortgage $ 121,000 Charged Fees and costs $ 25,700 Property Lien $ 470,000
How it Affected Our Family
One month after signing the reverse mortgage contract, Dad passed away. It breaks my heart that Dad’s dying wish to care for Mom for the rest of her life, was stolen from him. If the terms were explained simply and honestly that for a one time cash payment of $81,000 (15% of their property value) and they would pay $25,000 in fees and costs in exchange for their home, Dad would never have agreed. Let’s be real – who in their right mind would agree to these terms?
The reverse mortgage lien prevented our family from accessing more than $400,000 equity in our home. Since Dad passed away I am a full time caregiver to Mom and have paid for her care and living expenses for the last five years with her savings, stock portfolio and social security. Today, we have no funds remaining and are in the negative every month.
This is happening everyday to someone’s parents, relative or friends. Please visit my website for information on how to protect your loved ones from predatory lenders www.ElderFinancialTerrorism.com