Put the brakes on reverse?

In another sign of the times and how lenders are tightening in every way imaginable Wells Fargo is the latest large bank to exit the reverse mortgage market. Bank of America jumped out recently as well. This is not to say that no one is doing these types of loans anymore, it is just the banks that were bailed out by us, the taxpayers giving us less options in the lending world.

The two biggest lenders mentioned above have cited unstable home prices and also unexpected risk of foreclosure due to seniors not paying their real estate taxes. In this day and age of computers and instant information I find it hard to believe that they cannot track the tax situation of these homes. My credit card company can shut down my credit card if I try to get gas twice in one day (a feature I appreciate) but these same companies can’t tell that a home has gone delinquent in taxes and works its way through a six month to a year process of foreclosure for said taxes?

On the flip side, the reverse mortgage is not going away as HUD is still insuring them and there are smaller lenders still offering this program as well as new  lenders entering into the market all of the time. It just won’t be as easy to obtain since the banks that seem to be on every corner in my neighborhood don’t seem to be serving the needs of its local homeowners.

For anyone who is not familiar with what a reverse mortgage is, basically it was a program set up by HUD (federal government) to help seniors use the equity in their home by obtaining monthly payments or a one lump sum amount of money up front. The borrower or grandma/grandpa as the case may be is not required to ever make a payment on the loan as long as they are both alive or until they decide to sell their home. The beauty of this program is it allows seniors to use the equity they have spent a life time building up to tap into that equity without risk of losing their home and also afford them additional income so that they don’t become a burden to their children or other family members. I have seen personally how this program has helped some with a monthly income so that they can use it to pay for monthly living expenses.

I must disclose that I personally do not write reverse mortgages as I feel it is a specialty product. My company does offer this type of financing, but only through specially trained customer service reps that can take the extra time needed to help seniors with this loan program. This program at its core is a very good lending option for seniors when explained correctly and done in a way that it benefits our seniors. If anyone has any questions regarding the particulars of this program please feel free to email me and I will gladly assist you or obtain the answer from one of our professionals to help you.