Are Reverse Mortgages a Scam? with Tim Oddo
Reverse Mortgage Specialist
www.novahomeloans.com/tim.oddoAre Reverse Mortgages a Scam?
In a word…No. To be honest…Reverse Mortgages have garnered their fair share of bad press over the years some deserved, most of it although is undeserved. The assumption in financial and retirement planning communities is that this is a “loan of last resort”…with recent changes in the program since 2013 this is not a fair assessment. Let’s start by laying out the facts:
The first reverse mortgages were done as far back as 1961, the problem with these early loans was that they were not federally controlled and so each individual institution had their own rules and therefore no uniformity in lending practices.
Congress gets wind of this loan for retirees and starts to banter it around…well it takes them awhile but finally in 1988, President Reagan signs into law the HECM Bill. HECM stands for Home Equity Conversion Mortgage, for our purposes this is how the Gov’t says Reverse Mortgage. What it meant is this…HECM Bill allowed for FHA to insure reverse mortgages for the first time. This is big news, because there are more protections for the senior homeowner with the FHA insurance behind this product. So as it pertains to HECM Reverse Mortgages here is some useful general information:
• A reverse mortgage is a federally regulated program for homeowners, age 62 or older. It allows the equity in your home to pay you or pay off your existing mortgage, or a combination of these depending on individual circumstances.
• There is no MONTHLY mortgage payment on a HECM reverse mortgage. (Although you are still required to pay your property taxes and homeowner’s insurance)
• The HECM reverse mortgage provides protection for the senior homeowner, because it is a federally insured program.
• No matter what happens in the economy, or how long you live in the home, you will never be required to make a MONTHLY mortgage payment, regardless of your home’s value in the future.
• You OWN the home and remain on the title, not the lender. Upon your passing the home goes to your estate and your estate decides what to do with the property.
• Even if your loan amount exceeds the value of your home in the future, thanks to the federal FHA insurance you will never owe more than the value of the property. A HECM reverse mortgage is a non-recourse loan.
Simply stated, a Reverse Mortgage can be a very powerful tool when considering your retirement income strategy. Now, it’s not for everybody, but for the right homeowner who uses it responsibly this can be a really great tool to produce cash flow and help a senior “use their home to stay in their home”. If you have specific questions, please feel free to call me at 303-233-4500. Tim Oddo, Reverse Mortgage Specialist. NMLS #302667.
Meet Tim Oddo:
“Let’s get it done!” This is the approach Tim uses in each of his client interactions. This philosophy coupled with honest transparency is what has sustained his career in the mortgage industry for almost two decades. Tim believes that strong communication, a quick response time, and an honest assessment of individual client needs allows for the best experience for his home buyers. Before his career as a loan officer, Tim worked as an appraiser, which gives him practical insight into other areas of the mortgage process. Besides work, Tim serves on the board of A Chosen Generation and is long-time member of Kiwanis Club. These affiliations align closely with his passion for people and building strong relationships with each person he encounters.