Help my Mom out of reverse mortgage! - Posted by Dallas

import · July 21, 2005, 2:28am

Posted by Dallas on July 23, 2005 at 10:23:33:

I meant t the end of that msg that 45000 / 1100 = 40 mo of pmts. But-----if she put 24 pmts * 1100 away 1st, = 26400, she could inv the rem 18600 @ 12% for 2 yrs and wind up with 23617. 23617/1100 = 21 more pmts, total of 45. So, she could make it 45 mo on this plan.

import · July 21, 2005, 2:28am

Posted by Dallas on July 21, 2005 at 02:28:39:

Mom has a $140,000 SFR 4br 2ba 2ga 2400 sf. Took the reverse mort lump sum option of $50,000 2 yrs ago. Bal now nearing 60,000, w/ var rate which had started at 5%. What can be done to pay this off, get her a lump sum of $30,000, while getting back into a reg mortgage? Also, $2,700 arrears on prop tax.

import · July 22, 2005, 1:46pm

reverse mortgages often misunderstood - Posted by Michael Morrongiello

Posted by Michael Morrongiello on July 22, 2005 at 13:46:44:

Dallas:
Although Reverse mortgages are becoming more mainstream and acceptable. They are still not fully understood by consumers as to how they operate.

Bob Bruss the syndicated columinist recent newsletter provides an excellent overview for folks about reverse mortgages - check out; www.bobbruss.com

Here are your mom’s options as I see them;

SELL the home. Pay off her existing mortgage debt, move into a different home, etc. and downsize.
You mom can attempt to REFINANCE the existing debt, get it paid off, and try to pull some cash out during the process.

Perhaps others can think of additional options.

Michael Morrongiello

import · July 23, 2005, 2:54am

Re: Reverse-what about this? - Posted by Dallas

Posted by Dallas on July 23, 2005 at 02:54:25:

I have wondered—and wandered outside the box! Could Mom (she’s too stubborn to sell, can’t refi) sell the house to me for 129000 @9%, pmt = 1086.34 on a 30 yr 100% LTV note; then I lease option the house to her for 145000 with rent fairly identical to my payment; then she sells note for 101000 (12%)? Now I’m giving rent credit of 300 per month = 3600 per yr. In four yrs, she could make down pmt of 14400, Then forgive my note of 125000 remaining, thereby keeping her house the whole time. The 105000 cash would pay off the 58-60K reverse mtg, leaving 45000, which divided by 48 = 52800. Looks like she’d have to sell for good to get by,

Dallas,

import · July 23, 2005, 12:29pm

Not a true arm’s length sale… - Posted by Michael Morrongiello

Posted by Michael Morrongiello on July 23, 2005 at 12:29:49:

Dallas:
While its certainly possible for you mom to sell her home (or anyone else for that matter)- an orchestrated sale from her to you with the lease back and buy back provision to her in reality is nothing more than an elaborate way to have her avoid doing a refinancing.

Thus the “paper” Debt obligation (the Deed of Trust & Note) that would be created between YOU to her would not be considered “squeaky clean” or created under a true arms length sale basis.

So, YES it can be done, but given that there was no money put down, it would make sense to probably start the Note balance at with a little lower LTV level than the $129K Note level you want to start at.

Since you will be the payor on the Note instrument, your credit profile, credit scores, employment, stabilty, etc. will all come into play along with the condition, upkeep, location, and value of the home.

We’ve participated in transactions like this in the past.

Remember if your mom stops paying rent to you for some reason in the future, YOU will still be obligated to make the payments on that Note.

Best to your success;
Michael Morrongiello
www.sunvestinc.com