Is there help available for senior citizens who have been preyed upon via reverse mortgages?

[thebreeze]

I recently found out that my ailing aunt who suffers from dementia was pressured to take out a reverse mortgage on her home of 25 years by a telemarketing co that seemed to have targeted her. They scared her about how much maintenance will have to be done to upkeep the property.

She had less than $40k left to pay on the original mortgage on a property currently valued at just over $500k. Now, a few years later, as I'm looking at things for her, she owes almost $500k on the property. As it stands, if I'm understanding the paperwork correctly, the house will now go to the bank when she dies. So, her family has effectively lost its only asset and she never told anyone or fully understood the process. This paperwork is so confusing that I don't even understand it. 

I'm sure this is common. Is there any course of action that she can take here? Does her family just need to chalk it up as an expensive lesson? These things should require someone to translate every page into layman terms before a senior citizen is allowed to sign off on it.

[Mortgage-Specialist]

Unfortunately, there isnt anything you can do. Your aunt would have had to have a government mandated third party counselor speak w her over the phone who would have made sure she understood at that time. Depending on what her home appraised for at the time she did the reverse will determine how mu h money she received. So if her home appraised for 400k at that time, they wouldve paid off the 40k and given her about 175k of her equity. So she should have these extra funds if she didnt spend it.

When she passes, her family can sell the home and keep the remaining equity if theres any left. If theres no equity then you would just let the bank take it.

In her case is appears that it was a good idea to have a lot of accessible cash and not have to make any payments toward it or the mortgage. Kind of a helpful for her but not her heirs.

[Shooting-For-800]

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@thebreeze wrote:

I recently found out that my ailing aunt who suffers from dementia was pressured to take out a reverse mortgage on her home of 25 years by a telemarketing co that seemed to have targeted her. They scared her about how much maintenance will have to be done to upkeep the property.

She had less than $40k left to pay on the original mortgage on a property currently valued at just over $500k. Now, a few years later, as I'm looking at things for her, she owes almost $500k on the property. As it stands, if I'm understanding the paperwork correctly, the house will now go to the bank when she dies. So, her family has effectively lost its only asset and she never told anyone or fully understood the process. This paperwork is so confusing that I don't even understand it. 

I'm sure this is common. Is there any course of action that she can take here? Does her family just need to chalk it up as an expensive lesson? These things should require someone to translate every page into layman terms before a senior citizen is allowed to sign off on it.

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Reverse mortgages are just like regular mortgages - there are bad ones and good ones.

How in the world can she owe $500k?  That is $50,000 per year for 9 years.

How long has she had it? 

How much cash did she pull?

In a normal reverse mortgage, it is just like selling the property when she dies. 

If she owed $200k, that is what is due on the house. 

The heir could get a normal mortgage, pay the $200k, and keep the house or sell the house and pay the $200k and keep the rest.

All reverse mortgages are not bad.

[JVille]

How do you know she owes $500k ? Have you seen the monthly statement? Depending on the product typically she gets a chuck of cash up front and the loan balance gets bigger over time. So the paperwork reflects how how the balance can ultimately grow to but it’s not what she owes now. So once again have you seen an actual monthly stmt or are you just looking at the closing documents?

[thebreeze]

Saw the two most recent statements.

[thebreeze]

I never said all reverse mortgages are bad. However, when a company calls a senior citizen and then scares them into a financial agreement that wasn't necessary, it's predatory.

[Shooting-For-800]

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@thebreeze wrote:
I never said all reverse mortgages are bad. However, when a company calls a senior citizen and then scares them into a financial agreement that wasn't necessary, it's predatory.

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Of course.

How much did she get at closing?

How much is left?

[thebreeze]

She took out 250k. She has roughly 50k left. She donated a chunk of it and got some major repairs done + helped friends out with the rest.

[Shooting-For-800]

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@thebreeze wrote:
She took out 250k. She has roughly 50k left. She donated a chunk of it and got some major repairs done + helped friends out with the rest.

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What was her interest rate?

[thebreeze]

Don't know. I'll need to go back and review the statements.