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Reverse mortgages under review

By Judy Martel · Bankrate.com
Thursday, June 20, 2013
Posted: 9 am ET

Citing a disproportionate number of liabilities from borrowers in its reverse mortgage business, the Federal Housing Authority wants to make some quick changes. Legislation allowing that has passed its first hurdle in Congress.

The House of Representatives has passed the "Reverse Mortgage Stabilization Act," authorizing the FHA to immediately implement new requirements for what's officially called a "home equity conversion mortgage." Proposed changes to the reverse mortgage program include new reviews of borrowers' budgets, the establishment of escrow accounts for tax and insurance payments, and limits on the amount of upfront lump sums.

Reverse mortgages have been an option for homeowners who are 62 or older and want to turn their home equity into a fixed income in retirement. The lender pays a monthly payment for as long as the homeowner lives in the house or for a specified time period. The loans generally come with higher interest rates, fees and closing costs than traditional mortgages, making them an expensive option in many cases.

FHA hopes to avoid taxpayer bailout

The proposed changes to the reverse mortgage program are part of an effort by the FHA to bolster its mutual mortgage insurance fund, which was depleted during the housing crisis. The concern is that without changes, the FHA will have to ask the U.S. Treasury for taxpayer money to make up the losses.

The legislation now goes to the Senate. Peter Bell, president of the National Reverse Mortgage Lenders Association, told a Senate committee that the proposed overhaul would increase protections for consumers and improve the program's financial stability. In a statement, Bell noted that preserving the reverse mortgage program will enable it to "remain a useful tool for elderly homeowners while minimizing risks to the taxpayers."

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11 Comments
Gary Wilburn
April 08, 2014 at 3:29 pm

The wife and I share everyone's concern over the borderline illegal and at best unethical practices of Champion Mortgage.

MetLife transferred our loan back on 7/2012. This week, 4/7/2014, I received a threating mailer from Texas stating they want proof of taxes being paid. Interesting since both the county and city records show them paid. The notice Came from postmarked Santa Barbara, Ca but showing a Dallas Texas PO Box and blind 888 phone number The item read: "Champion Mortgage is a debt collector. This is an attempt to collect a debt and any information will be used for that purpose"
After 5 phone calls to Lansing, Mi I gat an answering machine.
Can anyone get the Fed's to close this boiler room down?

Wyetta Ballenger
February 28, 2014 at 8:56 am

The very same scenario that Vera Cates described (Feb.9, 2014)occurred regarding my mother's reverse mortgage loan. If I had known how unethical Champion would be regarding additional monies charged that were not mentioned in the original loan, I would have never suggested my mom apply for the reverse mortgage (Originally, First Midwest Bank was the lender who then sold the loan to Bank of America who then sold the loan to Champion).

As an example of Champion's unethicalness, it charged $327.00 for an appraisal that was never performed on the home
(no one walked around the house on the inside with me or performed any of the other activities of an appraiser: I know because I was at the home packing up my mom's belongings after she died). When I asked for details regarding the appraisal, no
one from Champion knew anything (for example, when was it done?
What company did the apraisal? What was the appraised valued?, etc.)

Vera Cates
February 09, 2014 at 6:07 am

When I first got a Reverse Mortgage loan it was through Bank of America. At first they told me I would only be charged the monthly interest on my loan. Now since Champion Mortgage took over the loan I am charged fees every month, interest, an insurance fee of $94.00 and so many other fees. I borrowed initially $73,000 on my home and with the high interest rates, the hidden fees and interest of almost $400 a month my loan balance has gone from the initial payment to over $97,000. They send someone to my door to see if I still live here and take a picture of my hand signing a form to prove it. The fees of $40 a month or more are going up and I don't think I will ever be able to pay back the loan. I took out Life Insurance to pay the balance in case of my death so my children would not lose the property and after 10 years my house will be so high I don't think my insurance would cover it. What can I do? I am almost 67 years old and being ripped off every month by these high fees and interest additions. What can be done to stop this? This was never mentioned when I took out my loan. Why do I have to pay all these added fees on top of the interest and taxes? Can the Government help us? This is so unfair on so many levels. Can you get an attorney to help you if this keeps up? Why the $94.00. They sent me a statement today saying I had not paid my property insurance and they were going to charge me that and it is paid and we have property insurance. How can they get by with this? They even charged me property taxes although they had been paid and they said it would be taken off. Hopefully it was. Can you get help in this matter?

Thank you

Glenda Johnson
January 17, 2014 at 4:52 pm

Champion Mortgage Company is the WORST and they are borderline crooks. I'm not sure how they are getting away with ripping off these innocent people, myself being one, but I think if we all keep posting our stories and bringing awareness to the public, we just might get these folks removed from doing any bank transactions.

I have an attorney that is looking into my situation and I plan on moving forward to see what can be done.

Glenda

John
December 10, 2013 at 12:24 pm

Had I known about champion mortgage, I would NEVER had let my Mom take out a reverse mortgage. No cooperation whatsoever from them after many , many calls after she died. They refused any information to me, and could not even give me a pay-off amount. I sent three thousand dollars over what was owed for the end of the month, and now they tell me I have $30.00 coming back. WHAT CAN WE DO ? This is legal thievery. Where do we go ??

gratis seks
December 08, 2013 at 4:16 am

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Yashik
September 28, 2013 at 2:00 am

your post is so beneficial, thanks for sharing.

Marion
September 07, 2013 at 2:27 pm

You have a legal right to know what you owe the title company they should have given you copies of the documents.. I closed on several home and as a closer in NYC and Tampa the closing documents after all was said and done were notarized and given to both parties the bank and the applications. If title company close which they can do they maybe you should contact a attorney to get your paper work on the deal.. Contact them and tell that you will contact a attorney if you do not receive information on the amount owed to title company. I wish you the best!!!

Marion
September 07, 2013 at 2:15 pm

I was a FHA underwriter for 15 years and never saw such cunningness regarding reverse mortgage. I realize that people do not know the real risk they are taking or the pay out once they sell their home. Is this justice or injustice to the consumer. Agents have taken this program and ran it into the ground to make the dollar. Something or someone needs to take charge.. If they are going to help the consumer then do so don't take them to the cleaners.. On some cases do they help people I believe so but not a large percentage. One man said and I quote " I have no money now they took everything. These tapes they send you and counseling you have to attend the representatives make it look so inviting but not all truth. These consumers are of the age of 62 and older how much information can they really absorb or really consume and understand very little or look outside the box.. I really hope this raises some interest in people to produce guidelines to protect us..

Unhappy
September 03, 2013 at 4:06 pm

We had q reverse and just sold our house. There are some proceeds that should havebeen distributed to us upon closing, last week, but Champion Mortgage bank is not revealing the amont owed to title company, so we are not getting our own money. How do you like that, consumers?

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