What are some issues that may affect the Reverse Mortgage transaction?

Many of our clients have owned their home for many, many years. This means that there may be issues in the ownership chain through the years that we have to work through and clear up. Here are some issues that we have come across:

• Was there an old loan that was never fully released?
• Was there an owner who has since passed away but whose name remains on title to the property?
• Do you have a copy of the Death Certificate for the owner who passed away that is certified by the County Clerks office and has an embossed seal?
• Is the property under a Revocable Trust? We and the Lender will need a full copy of the Trust to review.
• Was there a deed transferring ownership out of the property for which the Borrower had forgotten?
• Are there any “involuntary” liens like judgments and court actions?
• Are there any “voluntary” liens like mortgage loans which the Borrower does not recollect signing?
• Are there any mental health issues for the Borrowers, like Alzheimer’s, dementia, for which we will need a doctor’s letter?
• Are there any other health issues which will prevent the Borrower from signing expeditiously?
• Is there a “Power of Attorney” form that is being used? We will need to get the original and the Lender will need to approve it.

The processing of a reverse mortgage loan is like the processing of any other refinance loan. Once the Borrower has started his application with his reverse mortgage officer, we will be contacted to open the escrow and review the ownership information. Issues like those stated above come to light at this time and are resolved. Once the loan is approved and the loan documents forwarded to us, we will contact the Borrower to make arrangements to sign. The 3-day right of rescission (wait period) does apply and once that passes the Lender will fund the loan. Escrow closes, the balance of the old loan is paid off and final proceeds, if any, to the Borrower are remitted.

By the time the escrow closes arrangements have been made between Lender and Borrower on how the proceeds will be received, all in one lump sum, on a monthly basis, or otherwise.

Some numbers

The baby boomer generation in the U.S. hit age 62 in 2008. With immigrants and the existing population, we are looking at 83 million people who will be able to qualify for a Reverse Mortgage between 2008 and 2026 (when the X-generation comes into the ranks). This is definitely an exciting product that can affect the quality of life for many of our older citizens.