ATTORNEY NEWSLETTER
The Pitfalls of Reverse Mortgages
Problems for Surviving Spouses
Natural Disasters and Reverse Mortgages
“Reverse mortgages are just a terrible idea for seniors, unless they have no other options.” That’s what our own Ingrid M. Evans told a reporter for realtor.com covering a story this past Spring of a 79-year-old widow in danger of losing her home to a reverse mortgage lender.[1] When applying for a reverse mortgage years ago, the widow and her then-living husband removed the wife’s name from the deed because the lender told them that was the only way for the loan to be approved. The widow was assured her name could go back on the deed if her husband died first, so the couple understood she could remain in the house if her husband died first. After the husband died, however, the reverse mortgage lender foreclosed on the home because the deed was never changed to add the wife back on.
This is just one of the things that can go terribly wrong with reverse mortgages. Whatever happens down the road with these reverse mortgages, upfront costs can run as high as $15,000 to $20,000 on a $200,000 home. These high origination costs can be financially disastrous, especially for those who don’t plan to stay in their homes long or want to borrow only a small amount. Other serious downsides include accumulating interest, increased ongoing costs of maintaining your home, and the need to move for medical or other reasons. A reverse mortgage requires you to maintain the residence as your principal home and keep property tax and insurance payments current. These obligations may create a real burden in light of natural disasters like fires or the recent Hurricane Dorian on the East coast.
Natural Disaster Guidance
For some help with these issues if you have a reverse mortgage, consult a new brochure produced by the Consumer Financial Protection Bureau that offers some tips to avoid foreclosure in the event a natural disaster sets you back. You can order the free guide here: https://pueblo.gpo.gov/CFPBPubs/CFPBPubs.php?PubID=13447&utm_source=newsletter&utm_medium=email&utm_campaign=oa190904.
What to Watch For
If you are considering a reverse mortgage, seek out the advice of a professional with nothing to gain from the transaction. These are dangerous and expensive products and you need to learn all about them before you move forward in considering one. Don’t trust the lender to give you the facts and do not allow the lender to attempt to “tie in” other products to your loan. California law, for example, prohibits the cross-selling of annuities with reverse mortgages. You cannot be forced – or enticed – to use the proceeds of your reverse mortgage to purchase an annuity. Remember with any reverse mortgage that when you die the lender will take the mortgaged property unless your heirs are able to pay off the indebtedness completely.
Contact Us
If you or a loved one has lost money on a reverse mortgage or been the victim of financial elder abuse or fraud in a reverse mortgage transaction in Marin County or elsewhere in California, contact Ingrid M. Evans and the other Evans Law Firm elder abuse attorneys at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. We litigate on behalf of seniors who suffered cognitive impairment when they were talked into a reverse mortgage or were sold an annuity or life insurance with the proceeds. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
[1] Ingrid and Evans Law Firm, Inc. were not involved in the case but the realtor.com reporter covering the story reached out to Ingrid as a lawyer who focuses on financial elder abuse for her take on reverse mortgages. You can read the whole story and Ingrid’s comments here: https://www.mysanantonio.com/realestate/article/Reversal-of-Fortune-The-Mortgage-Mistake-That-13772199.php#item-85307-tbla-2.
