retmar

Question About Reverse Mortgages

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As some of you know, I live in a retirement community of single family homes.  The list is long on the different residents.  Some are well off, others living month to month, and some who only spend the Winter months here, called "Snowbirds".  The other day I got asked a question I have no idea how to answer properly, as I know little about Reverse Mortgages.

 

The question is if ANY creditor can place a lien or garnishment on the equity in a Reverse Mortgage?  Of course, we discussed a judgment and what can be done, but, it did not answer the question I find in front of me now. And, so far, have not been able to find any reference at all anywhere I look.

 

This person has all normal protections in force, including a Homestead dated prior to current loan documents.  All income is exempt from lien or garnishment.  They are considering a Reverse Mortgage, then use the funds to clear everything up, including this one item of concern.  Yes, their goal is to avoid court, as well as the reporting of a judgment and other involved items.  Credit, as a whole, is spotless.  And, yes, it involves some violations to be used to offset balance claimed.  And, yes, it is a JDB.

 

Does anyone have any insight, or knowledge of this?  If you do, please help me.

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I'm surprised no experts have commented. I've looked at all the info I can find and see no mention of attaching liens or garnishments on the equity.

Anyone, please help me. I am now officially lost n this search.

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@retmar

Your best bet would be to contact a banker or mortgage company and ask.

In bk, a certain amount of equity in a home is exempt. In my state, the exempted amount of equity allowed in bk applies to judgment, as well. Maybe that applies to equity in reverse mortgages, as well.

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Sorry. I did some searching and wasn't able to find an answer. The HUD web site does have lists of "credit counselors". A debt fixer wouldn't be my first choice, but...

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Thanks, I'll do that. If you find anything, please share. I'll do likewise if I find anything.

Never use counselors. Thanks for checking.

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Does this help?

www.longtermcarelink.net/eldercare/using_reverse_mortgage.htm

Specically:

These proceeds can be used for any legal purpose you wish:

daily living expenses

home repairs and improvements

medical bills and prescription drugs

pay-off of existing debts

education, travel

long-term care and/or long-term care insurance

financial and estate tax plans

gifts and trusts

to purchase life insurance

or any other needs you may have.

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Thanks for the reference, "Willing"!

It didn't have the info I'm looking for, but, I did keep it as it may come in handy for others who run into that problem. One has eye problems with no family near to help her, so, this may help. She owns her home outright.

I'm beginning to think they can't attach, or place a lien on the equity, due to it being a reverse mortgage. I just want to know that this is a true statement.

I forgot I have an email address for one of our old members who works in real estate. I'm going to send off my questions tonight. I will share what I find out.

To all who commented, thanks!!!!!

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I know absolutely nothing about reverse mortgages other than others I have spoken with who say this should be loan of last resort. If this person is dealing with a JDB I would strongly suggest they speak with an experienced FDCPA attorney first. Whatever the situation I would never recommend someone tying up mortgage equity to settle a debt that has been sold by the OC.

This may be an easy short term solution that might end up being a disaster in the long term. In my opinion you should only get a reverse mortgage when it is something required for basic living expenses.

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She is in her 80's, on a limited income, since husband's passing a couple of years ago. She just wants to make everything easier for herself with the time she has left.

A friend of mine went Reverse on his property in 2001. Appraised at $140,000 (Duplex), they gave him $79000, kept balance, on account (forgot terminology). Has no complaints at all.

My BIL's MIL did one also. House at $270,000, gave her just over $200,000. she wrote a check to each child, and lived off balance. No problems. When she passed last year, all they did was give the keys to the lender and all was done.

Like you, I've heard many horror stories. Some reasonable concerns, others most likely exaggerated. We were going to go that route, but, when the recession hit, we lost over $100,000 on our home. Since my wife passed, I am staying here, either way. I refuse to allow anyone to dictate my life, which is what I would have to tolerate. Besides, I would pay almost as much. The kids already know that when I check out, if they want house, find new money, if not, take the keys to the nearest Chase and hand them over. All done.

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